The IRS has announced inflation adjustments affecting over 60 tax provisions for 2026, incorporating changes from the One Big Beautiful Bill Act (OBBBA). These updates include several Tax Cuts and Jobs Act (TCJA) provisions that are now permanent. As dental practice owners and professionals plan their year-end tax strategies, understanding these numbers is essential.
Federal Income Tax Brackets
Income tax bracket thresholds are rising across all filing statuses. The adjustments are percentage-based, meaning higher earners see larger dollar increases. For instance, while the 10% bracket ceiling rises by just $475–$950 depending on how you file, the 35% bracket threshold jumps by $8,550–$17,100.
2026 Tax Rate Structure
Single Filers:
- 10%: Up to $12,400
- 12%: $12,401 to $50,400
- 22%: $50,401 to $105,700
- 24%: $105,701 to $201,775
- 32%: $201,776 to $256,225
- 35%: $256,226 to $640,600
- 37%: Above $640,600
Married Filing Jointly:
- 10%: Up to $24,800
- 12%: $24,801 to $100,800
- 22%: $100,801 to $211,400
- 24%: $211,401 to $403,550
- 32%: $403,551 to $512,450
- 35%: $512,451 to $768,700
- 37%: Above $768,700
Head of Household:
- 10%: Up to $17,700
- 12%: $17,701 to $67,450
- 22%: $67,451 to $105,700
- 24%: $105,701 to $201,750
- 32%: $201,751 to $256,200
- 35%: $256,201 to $640,600
- 37%: Above $640,600
Married Filing Separately:
- 10%: Up to $12,400
- 12%: $12,401 to $50,400
- 22%: $50,401 to $105,700
- 24%: $105,701 to $201,775
- 32%: $201,776 to $256,225
- 35%: $256,226 to $384,350
- 37%: Above $384,350
The OBBBA permanently establishes these rates and brackets, with annual inflation adjustments continuing.
Standard Deduction Amounts
The OBBBA permanently extends the TCJA’s enhanced standard deduction with a modest increase. Annual inflation adjustments will continue.
For 2026:
- Joint filers: $32,200
- Head of household: $24,150
- Single/Married filing separately: $16,100
Investment Income: Long-Term Capital Gains
When you hold investments longer than one year, preferential tax rates apply to gains. Most assets qualify for rates of 0%, 15%, or 20% based on total income. The 0% rate generally applies when your income falls within the 12% ordinary income bracket or below. However, the top 20% capital gains rate begins at lower income levels than the highest ordinary income bracket.
2026 Capital Gains Tax Thresholds
0% Rate Applies:
- Single: Up to $49,450
- Head of household: Up to $66,200
- Joint filers: Up to $98,900
- Married filing separately: Up to $49,450
15% Rate Applies:
- Single: $49,451 to $545,500
- Head of household: $66,201 to $579,600
- Joint filers: $98,901 to $613,700
- Married filing separately: $49,451 to $306,850
20% Rate Applies:
- Single: Above $545,500
- Head of household: Above $579,600
- Joint filers: Above $613,700
- Married filing separately: Above $306,850
Note: Certain asset categories may have different rate structures
Alternative Minimum Tax Considerations
The AMT operates as a parallel tax calculation system with different rules for deductions and income recognition. When your AMT calculation produces a higher tax bill than the standard calculation, you pay the AMT amount.
2026 AMT Rate Structure
All filing statuses follow these brackets:
- 26% rate: $0 to $244,500 (half this amount for separate filers)
- 28% rate: Above $244,500
For 2026, the 28% threshold rises by $5,400 across most filing statuses.
AMT Exemption Updates
The OBBBA makes the TCJA’s increased AMT exemptions permanent with continued inflation indexing. For 2026:
- Single/Head of household: $90,100 (up $2,000)
- Joint filers: $140,200 (up $3,200)
Critical AMT Phaseout Changes
The exemption gradually disappears as income rises within specific ranges. The OBBBA makes significant changes here:
For 2026, phaseout ranges are:
- Single filers: $500,000 to $680,200
- Joint filers: $1,000,000 to $1,280,400
These ranges represent a dramatic decrease from 2025 levels ($626,350–$978,750 for singles and $1,252,700–$1,800,700 for joint filers). Additionally, the phaseout now happens twice as fast beginning in 2026.
Important: Many successful dental practice owners may find themselves newly subject to AMT due to these lower thresholds.
Family Tax Benefits
Several family-related tax provisions adjust with inflation, though not always annually. These benefits phase out as modified adjusted gross income (MAGI) increases.
Child Tax Credit
The OBBBA establishes a permanent $2,000 base credit per qualifying child, increased to $2,200 for 2025 with annual inflation adjustments thereafter. For 2026, the credit remains at $2,200 due to modest inflation. The refundable component stays at $1,700 for 2026.
Phase-out begins at these permanent (non-indexed) MAGI thresholds:
- Single/Head of household: $200,000
- Joint filers: $400,000
Adoption Credit
For 2026, families adopting children will see:
- Maximum credit: $17,670 (up $390)
- Refundable portion: $5,120 (up from $5,000)
- MAGI phaseout range: $265,080 to $305,080 (up $5,890)
Estate Planning: Gift and Estate Tax Exemptions
The OBBBA delivers major relief for estate planning. Rather than reverting to an inflation-adjusted $5 million in 2026 as previously scheduled, both the unified gift/estate tax exemption and GST tax exemption permanently increase to $15 million for 2026, with annual inflation adjustments continuing thereafter.
The annual gift tax exclusion holds steady at $19,000 per recipient per giver for 2026.
Planning Opportunities for Dental Professionals
These 2026 adjustments create several planning opportunities for dental practice owners and professionals. Higher bracket thresholds and increased standard deductions may provide tax relief. However, the reduced AMT exemption phaseout ranges pose new challenges for high-earning practitioners.
Dental CPA’s expert tax advisors can help you navigate these changes and develop strategies tailored to your practice and personal situation. Contact us today to discuss how the 2026 tax landscape affects your specific circumstances