IRS Revenue Procedure 2025-32 covers more than just tax brackets and the standard deduction. Here's a focused breakdown of the other important figures updated for tax year 2026 — including the Earned Income Tax Credit, Alternative Minimum Tax, estate and gift tax exclusions, and several lesser-known inflation adjustments that affect millions of filers.
Earned Income Tax Credit (EITC)
The EITC is a refundable credit for low-to-moderate income workers and families. It's one of the most valuable credits in the tax code — "refundable" means it can reduce your tax bill below zero and result in a payment to you even if you owe no tax.
For 2026, the maximum EITC amounts are:
| Number of Qualifying Children | Maximum EITC (2026) | 2025 Amount |
|---|---|---|
| 3 or more | $8,231 | $7,830 |
| 2 | $7,281 | $6,960 |
| 1 | $4,390 | $4,213 |
| 0 (childless workers) | $649 | $632 |
To claim the EITC, your earned income and adjusted gross income must both fall below the income limits for your filing status and number of children. Investment income is also capped — for 2026, you can't have more than $11,950 in investment income and still claim the credit.
The EITC phases in as income rises, reaches its maximum, then phases out. Married filers receive a wider phase-out range than single filers, which means married couples can claim the full credit at higher income levels.
Alternative Minimum Tax (AMT)
The AMT is a parallel tax system designed to ensure higher-income taxpayers pay at least a minimum amount of tax, regardless of deductions. You calculate your taxes under both the regular system and the AMT, then pay whichever is higher.
For 2026, the AMT exemption amounts — the income threshold below which AMT doesn't apply — are:
| Filing Status | 2026 AMT Exemption | Phase-out Begins At |
|---|---|---|
| Single / Head of Household | $90,100 | $635,900 |
| Married Filing Jointly | $140,200 | $1,271,900 |
| Married Filing Separately | $70,100 | $635,900 |
| Estates and Trusts | $31,500 | $105,100 |
The AMT affects relatively few middle-income taxpayers today — the higher exemption amounts introduced by the TCJA and made permanent by the One Big Beautiful Bill Act pushed most households well below the threshold. It's more relevant for high earners with large incentive stock option exercises, significant miscellaneous deductions, or substantial depreciation adjustments.
Estate and Gift Tax
The federal estate tax applies to the transfer of wealth at death above a certain exemption amount. The annual gift tax exclusion covers gifts you make during your lifetime.
Federal Estate Tax Exemption
For 2026, the federal estate and gift tax lifetime exemption is $15,000,000 per person (up from $13,990,000 in 2025). A married couple can effectively shelter up to $30,000,000 from federal estate tax by combining their exemptions through portability elections. Estates above this threshold are taxed at rates up to 40%. The vast majority of estates — over 99% — fall below the exemption and owe no federal estate tax.
Annual Gift Tax Exclusion
The annual gift tax exclusion for 2026 is $19,000 per recipient (up from $18,000 in 2025). You can give up to $19,000 to any number of people in a calendar year without it counting against your lifetime exemption or requiring a gift tax return. A married couple can give up to $38,000 to each recipient by "gift splitting." The exclusion for gifts to a non-citizen spouse increases to $194,000.
Qualified Transportation Fringe Benefits
The monthly limit for employer-provided transit passes and qualified parking increases to $340 per month for 2026 (up $15 from 2025). Amounts provided up to this limit are excluded from employee income — a straightforward pre-tax benefit worth up to $4,080 per year.
Flexible Spending Account (FSA) Limits
Health Flexible Spending Accounts let you set aside pre-tax dollars for qualified medical expenses. For 2026:
- Health FSA contribution limit: $3,400 per employee (up from $3,300 in 2025)
- FSA carryover maximum: $680 (up from $660)
- Dependent care FSA: Remains at $5,000 per household (set by statute, not inflation-adjusted)
Adoption Credit
The maximum adoption credit for 2026 is $17,280 per eligible child (up from $16,810 in 2025). The credit begins to phase out for taxpayers with modified AGI above $259,190 and is completely phased out at $299,190. Qualifying expenses include adoption fees, court costs, attorney fees, and travel expenses.
Foreign Earned Income Exclusion
U.S. citizens and resident aliens living abroad may exclude up to $132,900 of foreign earned income from U.S. taxation in 2026 (up from $130,000 in 2025). This exclusion is available to qualifying taxpayers under the bona fide residence or physical presence tests.
What These Numbers Mean in Practice
- If you're a low-to-moderate income worker: Check EITC eligibility every year — many eligible taxpayers miss the credit. Our income tax calculator factors in common credits including the EITC.
- If you exercise stock options: AMT planning is critical. A large ISO exercise in a single year can trigger significant AMT liability. Consider spreading exercises across tax years.
- If you have a taxable estate: The $15 million exemption is historically high. Annual gifting ($19,000 per recipient) is a simple strategy to gradually reduce estate size.
- If you have an FSA: Use-it-or-lose-it rules still apply beyond the carryover limit. Plan your elections carefully at open enrollment.
Source
All figures sourced from IRS Revenue Procedure 2025-32 and IRS IR-2025-103. For the full picture of 2026 changes, see our guides on 2026 tax brackets and the 2026 standard deduction.
How These 2026 Updates Affect Real Filers
The Earned Income Tax Credit, Alternative Minimum Tax, and estate tax rules all reflect 2026 inflation adjustments and legislative changes. Here's what each update means in practice for different types of filers.
2026 EITC — Maximum Credit Amounts
- No qualifying children: up to $649 (single filer)
- One qualifying child: up to $4,328
- Two qualifying children: up to $7,152
- Three or more qualifying children: up to $8,046
Investment income cannot exceed $11,950 or you're disqualified regardless of earned income. The EITC is one of the most commonly unclaimed credits — particularly among low-income workers without children who qualify for the smaller credit, and self-employed filers who may not realize net self-employment income counts as earned income for EITC purposes.
Planning Around the EITC Phase-Out
If your income is near the EITC phase-out thresholds, small changes in income or filing status can significantly affect your credit amount. Contributing to a pre-tax 401(k) or traditional IRA reduces your AGI — potentially increasing your EITC if you're in the phase-out range. Even a $500 traditional IRA contribution can shift your credit amount meaningfully when you're near the edge of the phase-out.
AMT in 2026 — Who Needs to Check
The Alternative Minimum Tax applies a separate calculation that disallows certain preferences and deductions, then taxes AMTI at 26% (on the first $232,600) or 28% above that. You pay whichever is higher — regular tax or AMT. The 2026 exemption is $89,925 for single filers and $139,850 for married filing jointly. Most middle-income taxpayers are not subject to AMT. However, filers with large ISO (Incentive Stock Option) exercises, significant state tax deductions above the SALT cap, or other preference items should run an AMT check before finalizing their return.
Estate Tax in 2026
The estate and gift tax exemption for 2026 is approximately $13.99 million per individual ($27.98 million for married couples with portability). The top estate tax rate remains 40%. For most families, the estate tax is not a concern at these exemption levels. However, families with estates approaching the $14 million threshold — or anticipating future growth toward it — should consult an estate planning attorney, particularly given the uncertainty around future legislative changes to exemption levels.
Use our income tax calculator to estimate your 2026 federal liability, and see the IRS EITC Assistant at irs.gov to verify your eligibility for the credit.