Tax Updates

Your 2026 Tax Numbers: Standard Deduction $16,100 Single, $32,200 Joint

A planning recap as year-end approaches: the IRS figures for tax year 2026 — the returns most of us will file in early 2027 — were released in October 2025 in Revenue Procedure 2025-32, incorporating the amendments from the One Big Beautiful Bill Act. The key numbers for planning:

• Standard deduction: $16,100 single · $32,200 married filing jointly · $24,150 head of household
• SALT deduction cap: $40,400 for 2026 (up from $40,000 in 2025)
• Child tax credit: still up to $2,200 per qualifying child; the refundable portion is up to $1,700
• Educator expense deduction: $350

Year-end planning for 2026 starts from these figures — talk to us if you would like to see how they change your picture.

Source: IRS Revenue Procedure 2025-32 · IRS News Release IR-2025-103 ↗

Adopted a Child? The IRS May Be Sending You Money

On October 16, the IRS (News Release IR-2026-123) said it has begun issuing refunds to more than 50,000 taxpayers who claimed the adoption tax credit and had carryforwards from 2020–2024. Under a clarified interpretation, for tax year 2025 only, those carryforwards can increase the refundable portion of the credit, up to $5,000 per qualifying child.

The IRS will adjust accounts and mail the refunds automatically — no amended return is required. Affected taxpayers should receive a notice, generally within 30 days of the adjustment. If your family adopted in recent years, keep an eye on your mail, and you are welcome to bring the notice to us for a review. One exception: if your 2025 return left the carryforward off, or you filed on extension, the adjustment may not be automatic — talk to us before assuming you are covered.

Source: IRS News Release IR-2026-123 ↗

Marketplace Health Insurance: Avoid a Surprise Tax Bill

On October 14, the Treasury Department and the IRS issued proposed regulations implementing the Working Families Tax Cuts changes to the Premium Tax Credit — the credit that helps eligible families afford health insurance bought through the Marketplace. The proposals add stronger eligibility checks and verification, aimed at improper claims.

These are proposed rules, not final ones. Separately, starting with 2026 returns there is no longer a cap on repaying excess advance Premium Tax Credits, so a mid-year income jump can mean a larger bill at filing time. If you buy coverage through the Marketplace and claim this credit, expect verification of eligibility to get stricter in coming filing seasons — keep your Form 1095-A and income records in order.

Source: U.S. Department of the Treasury, press release ↗ · IRS News Release IR-2026-121 ↗

Owe the IRS? Interest Is 7% a Year

The IRS rates on tax overpayments and underpayments for the quarter beginning October 1, 2026 (announced in IR-2026-98, Rev. Rul. 2026-15): individuals pay and receive 7%; corporations receive 6% (4.5% on the portion of an overpayment over $10,000) and pay 7% (9% for large corporate underpayments). Interest is compounded daily.

What this means for you: an unpaid balance keeps growing at 7% a year, on top of any penalties. Paying down what you can — or setting up an installment agreement — stops part of that growth.

Source: IRS News Release IR-2026-98 ↗

New IRS Per Diem Rates for Business Travel (from October 1, 2026)

Under IRS Notice 2026-60, the high-low substantiation rates for travel on or after October 1, 2026 are $329 per day for high-cost localities and $230 per day for all other localities in the continental U.S. (the meal portions are $86 and $74). The transportation-industry meal rate stays at $80 (continental U.S.) / $86 (outside), and the incidental-expenses-only rate stays at $5 per day.

What this means for you: if your business reimburses employee travel under an accountable plan, you can switch to the new rates now, or keep last year's rates through December 31 under the transition rule. Self-employed individuals cannot use the high-low rates for lodging, but can use the federal meal and incidental rates.

Source: IRS Notice 2026-60 (full text) ↗

Selling Farmland to a Farmer? Pay the Tax Over Four Years

Proposed regulations (REG-117095-25, announced September 28 in IR-2026-115) explain the Section 1062 election: if you sell qualified farmland to a qualified farmer, you may pay the tax on the gain in four equal annual installments — 25% a year. The land must have been used, or leased, for farming for substantially all of the prior 10 years, and a legally enforceable restriction must keep it in farm use for at least 10 years after the sale. The election applies to sales in taxable years beginning after July 4, 2025 — which for calendar-year individuals means sales in 2026 or later. Taxpayers may rely on the proposed regulations until final rules are issued.

What this means for you: for farm families thinking about selling to an active farmer, this can turn one big tax bill into four manageable ones — but the paperwork, especially the farm-use covenant, has to be right from the start.

Source: IRS News Release IR-2026-115 ↗

Disaster Damage? Deducting Your Loss Just Got Easier

The Doug LaMalfa Federal Disaster Tax Relief Certainty Act (signed September 11, 2026) writes the favorable disaster-loss rules into law for major federally declared disasters with incident periods beginning after December 28, 2019 and before January 1, 2027: no 10%-of-AGI floor (only a $500 per-casualty floor), the loss may be claimed in the year of the disaster or the prior year, and it can be added to the standard deduction — no itemizing required. Disaster numbers and incident periods can be checked on FEMA's website.

What this means for you: if a federally declared disaster damaged your home or property, your loss is now much easier to deduct than under the old rules — even if you take the standard deduction.

Source: Thomson Reuters report on the Act (H.R. 5366) ↗

Wildfire Relief Payments May Be Tax-Free

The same Act adds Section 139M: qualified wildfire relief payments received in taxable years beginning in 2026 or later — compensating for losses, expenses or damages from federally declared wildfires declared after December 31, 2014 and before January 1, 2027 — are generally excluded from federal taxable income. Amounts already reimbursed by insurance do not qualify, and the same expenses cannot also be deducted or used to increase basis.

What this means for you: if you received relief payments after a Colorado wildfire, they may not be taxable at all — bring the paperwork to us before you report them as income.

Source: Texas Society of CPAs article ↗

Employer Credit for Paid Family and Medical Leave Is Now Permanent — and Broader

The Working Families Tax Cuts made the Section 45S employer credit permanent, and IRS Notice 2026-28 (August 5, 2026) explains the expanded rules. The credit is 12.5% to 25%, capped at 12 weeks per employee, and can now be based on wages paid during leave or — new — on premiums paid for a qualifying paid-leave insurance policy, even if no employee actually took leave that year. Employers may elect to count employees after six months of service; qualifying employees must customarily work at least 20 hours per week. Leave required by state or local law counts toward eligibility, but not toward the credit amount itself.

What this means for you: if you have employees, offering paid family or medical leave now comes with a permanent federal credit. Colorado employers should also check how it coordinates with the state's FAMLI program.

Source: Insurance Business report on Notice 2026-28 ↗

Business Interest Limit (Section 163(j)): The EBITDA-Based Cap Is Back, Starting With 2025

In updated FAQs (Fact Sheet 2025-09), the IRS clarified the One Big Beautiful Bill changes to the business interest deduction limit. For tax years beginning after December 31, 2024, depreciation, amortization and depletion are added back when computing adjusted taxable income (ATI) — which generally raises the 30%-of-ATI cap. The floor-plan financing definition now also covers certain trailers and campers. The limit still applies at the partnership level (excess interest is allocated to partners) and at the S corporation level, and businesses meeting the gross receipts test — about $32 million for 2026 — remain exempt.

What this means for you: if your business carries significant debt and equipment, more of your interest may be deductible for 2025 and 2026 — worth a fresh look at your numbers before year-end.

Source: IRS FAQ update (Fact Sheet 2025-09) ↗