York, North Yorkshire, Dec. 15, 2025 (GLOBE NEWSWIRE) -- Expat Tax Online, a leading U.S. tax preparation service for Americans abroad, announced today the major 2026 IRS tax inflation adjustments prompted by the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. These adjustments formally implement several newly enacted tax relief provisions—such as the expanded Child Tax Credit (CTC), tax-free treatment of tips and overtime, and a $6,000 senior deduction—and apply to the 2025 tax year (returns filed in 2026).
2026 Tax Inflation Adjustment Under the One Big Beautiful Bill
The Internal Revenue Service (IRS) has released its official 2026 tax inflation adjustments, which put into effect several measures created by the One Big Beautiful Bill Act (OBBBA) signed into law on July 4, 2025.
While the OBBBA introduced new tax reliefs such as tax-free treatment of tips and overtime, a $6,000 senior deduction, and an expanded Child Tax Credit (CTC), the specific dollar amounts for 2026 are determined by the IRS’s annual inflation update rather than the statute itself. These new thresholds apply to the 2025 tax year (returns filed in 2026).
Key 2026 Inflation Figures (IRS Revenue Procedure 2025-32)
- Foreign Earned Income Exclusion (FEIE): $132,900 per qualifying taxpayer.
- Standard Deduction: $15,750 (single) | $31,500 (married jointly) | $23,625 (head of household).
- Child Tax Credit (CTC): $2,200 per child for 2025 and indexed for inflation starting in 2026 under OBBBA.
- Senior Bonus Deduction: Additional $6,000 for taxpayers aged 65 and older, effective through 2028.
- Marginal Tax Brackets: All brackets shift upward for inflation across every filing status.
These updates complement OBBBA’s broader tax-relief goals while adjusting income thresholds to protect taxpayers from “bracket creep.”
What This Means for U.S. Expats
For Americans living overseas, these figures influence how much income can be excluded or credited on a U.S. return. The higher FEIE means a slightly larger portion of foreign earnings can be excluded, while the inflation-indexed Child Tax Credit can modestly increase benefits for families abroad.
Expats working in strong-currency countries such as the UK, Australia, and Switzerland, should reassess whether the Foreign Tax Credit (FTC) or the FEIE provides the better result in 2026.
“The latest IRS adjustments fine-tune the numbers introduced under OBBBA,” said Clark Stott of Expat Tax Online. “For U.S. expats, even a small change in the FEIE or deduction thresholds can shift the balance between exclusions, credits, and total tax owed.”
Practical Takeaways for Expats
- Recalculate using 2026 figures. Compare FEIE vs. FTC outcomes before filing.
- Note that OBBBA benefits expire after 2028. Plan ahead for possible changes to credits and deductions.
- Stay compliant with FBAR and FATCA. Reporting thresholds remain unchanged, but penalties remain significant.
- Seek expert advice. Professional expat tax guidance can ensure accurate filings under the new thresholds.
About Expat Tax Online
Expat Tax Online is a U.S. tax-preparation service dedicated to Americans living abroad. Since 2009, the firm has helped tens of thousands of expats in more than 170 countries file accurate, IRS-compliant returns through an efficient online process.
For more information or to review the 2026 inflation adjustments in detail, visit Expat Tax Online
About Expat Tax Online
Expat Tax Online is a specialist tax-service provider for Americans living abroad. Their team of IRS-licensed tax professionals supports US expatriates — including dual citizens and Green-Card holders — with filing US federal tax returns, navigating international tax credits, dealing with the Streamlined Tax Amnesty programme, and staying compliant while overseas. They emphasise transparent pricing, secure document handling, and experienced “expat-specialist” CPAs/EAs. They also offer country-specific tax guides (UK, UAE, Australia, Germany, etc.) and run a dedicated online community of US expats for peer support and tips.
Press inquiries
Expat Tax Online
https://www.expattaxonline.com
Clark Stott
hello@expattaxonline.com
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