A major tax law passed in 2025 is now beginning to shape financial planning for 2026 and beyond. While the legislation itself was lengthy and complex, its practical impact comes down to a handful of changes that influence how much you owe, what deductions you may be eligible for, and how you plan for the future.

Some provisions took effect at the start of 2026, others apply as you file future tax returns, and several continue to be clarified through IRS guidance. Below is a clear breakdown of what is in place, what applies this year, and where details are still evolving.

What This Means for You

At a high level, the law permanently extends several tax rules that were previously set to expire, adjusts key deductions for inflation, and introduces targeted benefits for specific groups, including families, seniors, and business owners.

Some changes automatically reduce taxable income, while others depend on factors such as age, income level, or how you earn money. That’s why thoughtful planning still plays an important role in making the most of these rules.

A Higher Standard Deduction That Continues to Rise With Inflation

For the 2026 tax year, the standard deduction amounts are:

• $16,100 if you file as single
• $32,200 if you’re married filing jointly
• $24,150 if you file as head of household

These higher deductions reduce taxable income without requiring itemization. Because most taxpayers already claim the standard deduction, this change benefits a wide range of households and does not include income phaseouts.

Child Tax Credit Increase

Income phaseouts still apply. For 2026, the Child Tax Credit is $2,200 per qualifying child and begins to phase out when modified adjusted gross income exceeds $200,000 for single filers and $400,000 for married couples filing jointly. Eligibility also requires valid Social Security numbers for both the taxpayer and the child. As a result, higher-income households may receive a reduced credit or may not qualify for the full amount.

Note: While the credit amount and income thresholds are established under current law, the exact refundable portion and related mechanics continue to be clarified through IRS guidance. Families should review how the credit applies to their specific situation each year.

An Additional Deduction for Seniors Age 65 and Older

If you’re age 65 or older, you may qualify for an additional deduction of up to $6,000 per eligible taxpayer. This deduction is currently available through 2028.

It is subject to income limits and begins to phase out if your modified adjusted gross income exceeds:

• $75,000 if you file as single
• $150,000 if you file jointly

Because retirement income often comes from multiple sources, managing withdrawals and taxable income may help preserve more of this benefit.

A Higher Estate and Gift Tax Exemption

As of 2026, the federal estate and gift tax exemption remains historically high at approximately $15 million per person, with annual inflation adjustments.

This higher exemption can create additional flexibility for gifting, trust strategies, and legacy planning. Even if your estate is well below this threshold, reviewing existing plans may be worthwhile, especially if they were created under older rules.

Ongoing Benefits for Business Owners

If you own a business or are self-employed, the Qualified Business Income (QBI) deduction remains available:

• Eligible owners of pass-through businesses may deduct a portion of qualified income
• It applies to sole proprietorships, partnerships, S corporations, and certain LLCs
• Income thresholds and limitations still apply, particularly for higher earners and specified service businesses

Because eligibility rules and phaseouts can be complex, reviewing this deduction as part of a broader tax strategy remains important.

Clean Energy Tax Incentives

Clean energy tax incentives continue in 2026, but eligibility rules are more detailed and restrictive than in prior years. While several credits remain available under current law, qualifying for them now depends on meeting more specific criteria.

For homeowners, certain credits may still apply to qualifying improvements such as energy-efficient windows and insulation, heat pumps, and renewable energy systems including solar panels and battery storage. These incentives are subject to annual limits, technical requirements, and documentation rules, so eligibility should be confirmed before starting a project.

Electric vehicle tax credits also remain available in 2026, but far fewer vehicles qualify. Eligibility depends on factors such as final assembly location, battery sourcing requirements, vehicle price caps, and the buyer’s income. Because qualifying models and rules can change, it’s important to verify eligibility at the time of purchase rather than assume a credit will apply.

Compared with earlier versions of these programs, current incentives place greater emphasis on sourcing, income limits, and compliance. As a result, similar purchases or upgrades may yield different tax outcomes depending on timing and individual circumstances.

Areas Where Rules Are Still Evolving

Some provisions included in the broader legislation continue to be clarified through IRS guidance, including:

• Potential deductions related to tip and overtime income, which may apply only in limited situations and are subject to income thresholds
• New child-related savings programs that have been discussed publicly but are still awaiting full implementation details
• Certain clean energy and electric vehicle incentives, where eligibility and timelines depend on the specific credit involved

If any of these areas affect your situation, confirming how the rules apply before taking action is important.

Planning Ahead

The tax rules now in effect influence how you earn, save, invest, and plan for the future. While some opportunities under prior rules are no longer available, many of the most impactful provisions are ongoing and can shape financial decisions for years to come.

Whether you’re supporting a family, preparing for retirement, running a business, or thinking about long-term legacy planning, understanding how these rules fit into your broader financial picture is key.

At Navalign Wealth Partners, we work alongside you to interpret how these rules apply to your situation and adjust your plan with clarity and confidence. From managing taxable income to coordinating long-term strategies, we’re here to support you every step of the way.