A major tax law passed in 2025 is now shaping how you plan for 2026 and beyond. While the legislation was lengthy and complex, the impact comes down to a handful of changes that affect how much you owe, what deductions you can claim, and how you plan for the future.

Some provisions are already in place, others officially began in 2026, and a few opportunities required action before the end of 2025. Below is a clear breakdown of what’s confirmed, what applies now, and where details are still evolving.

What This Means for You

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

While some changes automatically lower your taxable income, others depend on your age, income level, or how you earn money, which is why planning still matters.

A Higher Standard Deduction That Continues to Rise With Inflation

For the 2026 tax year, the IRS has confirmed the following standard deduction amounts:

• $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 your taxable income without requiring you to itemize. Because most taxpayers already claim the standard deduction, this change benefits a wide range of households and has no income phaseouts.

Child Tax Credit Increase

If you have dependent children, the Child Tax Credit remains higher under current law:

• The credit increased to $2,200 per qualifying child
• Beginning in 2026, the credit is indexed for inflation

Income phaseouts still apply, and eligibility requires valid Social Security numbers for both you and your child. While the credit is more generous than in prior years, higher-income households may see a reduced benefit.

Note: The exact refundable portion of the credit continues to be clarified in IRS guidance, so 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 a new additional deduction of up to $6,000 per eligible taxpayer, available through 2028.

This deduction 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 can come from multiple sources, managing withdrawals and taxable income may help preserve more of this benefit.

A Higher Estate and Gift Tax Exemption

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

If estate planning is part of your long-term strategy, this higher exemption may allow for more flexibility when it comes to gifting, trusts, and legacy planning. Even if your estate is below this threshold, it may still be a good time to review plans 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 in place:

• The deduction allows eligible owners of pass-through businesses to 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 and phaseouts can be complex, reviewing this deduction with a tax professional is especially important.

Clean Energy Tax Incentives

Clean energy tax incentives are still available in 2026, but they are more limited and more complex than in prior years. Some credits continue, while others were more valuable before the end of 2025 or now come with stricter requirements.

For homeowners, certain credits remain in place for qualifying upgrades, including energy-efficient windows and insulation, heat pumps, and renewable energy systems such as solar and battery storage. These incentives are subject to annual limits and detailed eligibility rules, so not every project will qualify. Verifying eligibility before moving forward is important.

Electric vehicle tax credits also continue 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 can change from year to year, it’s no longer safe to assume an EV purchase automatically comes with a tax credit.

Some clean energy incentives were more favorable before the end of 2025, when rules were less restrictive. If you completed qualifying purchases or upgrades before those deadlines, you may still benefit when filing. Similar decisions made in 2026 may come with smaller or no tax advantages.

Areas Where Rules Are Still Evolving

Some provisions included in the broader legislation are still being interpreted or clarified through IRS guidance. These include:

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

If any of these areas affect you, it’s important to confirm how the rules apply before taking action.

Planning Ahead

The tax rules now in effect will influence how you earn, save, invest, and plan for the future. While some opportunities required action before the end of 2025, many of the most impactful changes are ongoing and will affect your 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, we help you make sense of what applies to you and adjust your plan with clarity and confidence. From managing taxable income to coordinating long-term strategies, we’re here to help you stay aligned with your goals.