The IRS released its annual inflation adjustments for tax year 2026 in Revenue Procedure 2025-32, incorporating amendments from the One, Big, Beautiful Bill . More than 60 tax provisions were adjusted, affecting tax rate schedules, standard deduction amounts, credit limits, and estate tax exclusions.

This guide summarizes the key changes for tax year 2026 (returns filed in 2027) and explains what they mean for individuals and businesses.

Tax Rate Schedules for 2026

The top tax rate remains 37% for individual single taxpayers with incomes greater than $640,600 ($768,700 for married couples filing jointly). The other rates and thresholds are :

• 35% for incomes over $256,225 ($512,450 for joint filers)

• 32% for incomes over $201,775 ($403,550 for joint filers)

• 24% for incomes over $105,700 ($211,400 for joint filers)

• 22% for incomes over $50,400 ($100,800 for joint filers)

• 12% for incomes over $12,400 ($24,800 for joint filers)

• 10% for incomes of $12,400 or less ($24,800 for joint filers)

Alternative Minimum Tax Exemption

For tax year 2026, the AMT exemption amount is **$90,100** for unmarried individuals and begins to phase out at $500,000. For married couples filing jointly, the exemption is **$140,200**, with phase-out beginning at $1,000,000 .

Estate Tax Exclusion

Estates of decedents who die during 2026 have a basic exclusion amount of **$15,000,000**, up from $13,990,000 for estates of decedents who died in 2025 . This significant increase is a direct result of the One, Big, Beautiful Bill.

Adoption Credit

The maximum credit allowed for adoptions for tax year 2026 is the amount of qualified adoption expenses up to **$17,670**, up from $17,280 for 2025. Up to $5,120 of this credit may be refundable .

Employer-Provided Childcare Credit Expansion

The One, Big, Beautiful Bill significantly enhanced the employer-provided childcare tax credit for tax year 2026. The maximum credit increases from $150,000 to **$500,000**, and to $600,000 if the employer is an eligible small business . This provision is designed to encourage employers to provide childcare benefits to their employees.

Earned Income Tax Credit

The tax year 2026 maximum Earned Income Tax Credit amount is **$8,231** for qualifying taxpayers with three or more qualifying children, up from $8,046 for tax year 2025 .

The Federal Scholarship Tax Credit (Beginning 2027)

Beginning January 1, 2027, individual taxpayers may be able to claim a federal scholarship tax credit for certain cash contributions of up to $1,700 to Scholarship Granting Organizations (SGOs) . An SGO is a charity that awards scholarships to help students pay for elementary and secondary educational expenses.

Important details include:

• A state or the District of Columbia must choose to participate and provide a list of SGOs to the IRS before taxpayers can donate and claim the credit

• The credit is nonrefundable but can be carried forward for up to 5 years

• The IRS issued proposed regulations in October 2026 to implement the credit

How Nova Tax & Accounting Services Can Help

Nova Tax & Accounting Services helps individuals and businesses understand the 2026 inflation adjustments and plan for the new credit provisions. Our CPAs stay current with IRS guidance and can help you maximize your eligible benefits.

For more information, visit https://novataxservices.com/ or schedule a free consultation.

Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Tax laws are subject to change, and individual circumstances vary. Consult a qualified tax professional for advice regarding your specific situation.

Blog 3: Small Business Filing and Recordkeeping: An IRS Guide for 2026

Introduction: The Foundation of Compliance

There are approximately 57 million small businesses and self-employed taxpayers in the United States, including corporations and partnerships with assets under $10 million, sole proprietors, independent contractors, and gig workers . For all of them, accurate filing and recordkeeping are the foundation of tax compliance and financial health.

The Taxpayer Advocate Service (an independent organization within the IRS) published updated guidance in May 2026 outlining small business filing and recordkeeping requirements . This guide summarizes the key points.

Filing Requirements by Entity Type

The federal tax forms a business must file depend on its entity type :

Sole Proprietor

• Income Tax: Form 1040/1040-SR, Schedule C or F

• Self-Employment Tax: Form 1040/1040-SR, Schedule SE

• Estimated Tax: Form 1040-ES

• Employment Taxes: Forms 940 and 941, 944, or 943

Partnership

• Annual Return of Income: Form 1065

• Partner’s Income Tax: Form 1040/1040-SR, Schedule E

Corporation (C or S)

• C Corporation Income Tax: Form 1120

• S Corporation Income Tax: Form 1120-S

• Estimated Tax: Form 1120-W (C-Corp only)

• S Corporation Shareholder Income Tax: Form 1040/1040-SR, Schedule E

Recordkeeping Requirements

The Taxpayer Advocate Service emphasizes that good records can assist in preparing financial records, tracking property and deductions, knowing where to target funding, and reducing expenditures to optimize profit . At a minimum, records should track:

• Gross Receipts: All income from business operations

• Inventory: Including any merchandise withdrawn from sale for personal use

• Expenses: All costs incurred in running the business

The IRS provides several publications to assist small businesses, including Publication 334 (Tax Guide for Small Business), Publication 583 (Starting a Business and Keeping Records), and Publication 463 (Travel, Gift, and Car Expenses) .

Estimated Tax Payments

If you expect to owe self-employment tax of $1,000 or more** for 2026, you may need to make estimated tax payments using Form 1040-ES . For 2026, the maximum amount of self-employment income subject to Social Security tax is **$184,500 .

Small business owners and self-employed individuals should calculate their estimated payments carefully to avoid underpayment penalties.

The Value of Professional Guidance

The Taxpayer Advocate Service notes that the federal tax forms vary depending on business type, and that small business taxpayers should understand their filing requirements to file accurate returns . A qualified CPA can help you determine which forms apply to your business, set up a recordkeeping system, and calculate estimated tax payments accurately.

How Nova Tax & Accounting Services Can Help

Nova Tax & Accounting Services provides tax preparation, bookkeeping, and advisory services for small businesses across Northern Virginia and Washington DC. Our CPAs help business owners meet their filing obligations, maintain accurate records, and plan for estimated tax payments.

For more information, visit https://novataxservices.com/ or schedule a free consultation.

Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Tax laws are subject to change, and individual circumstances vary. Consult a qualified tax professional for advice regarding your specific situation.