Short answer: Five 2026 changes move real money for ordinary filers. The cap on deducting state and local tax rises to $40,400. Gambling losses stop being fully deductible, so a break-even year can now produce a tax bill. The estate exclusion is $15,000,000 per person. The section 199A phase-in band widens to $75,000 single and $150,000 joint. And the AMT exemption rises to $90,100 single — but starts phasing out at $500,000 instead of $626,350, so materially more people lose it.
Who should read on: if you own a home in a high-tax state, gamble at any scale, run a pass-through business, exercise incentive stock options, or expect to inherit, at least one of these applies to you. If none do, the standard deduction rose to $16,100 single and $32,200 joint and there is probably nothing here you need to act on.
Tax years rarely change much. 2026 is an exception: several provisions moved at once, and two of them — the state and local tax cap and the treatment of gambling losses — change the answer to questions that were settled for years. This guide covers what changed, what each change is worth, and which calculator answers it for your own numbers.
Every figure here is the published federal amount for tax years beginning in 2026. State tax is a separate question and is not covered.
The five changes at a glance
| What changed | 2026 figure | Who it reaches |
|---|---|---|
| State and local tax (SALT) deduction cap | $40,400 ($20,200 if married filing separately) | Homeowners in high-tax states who had stopped itemising |
| Gambling loss deduction | Limited to 90% | Anyone with reportable winnings, including break-even years |
| Estate tax basic exclusion | $15,000,000 per person | Estates near or above eight figures |
| Section 199A (QBI) phase-in range | $75,000 single / $150,000 joint above the threshold | Pass-through owners, especially in specified service trades |
| AMT exemption and phase-out | $90,100 exemption; phase-out starts at $500,000 | High earners, and anyone exercising incentive stock options |
The SALT cap: $10,000 becomes $40,400
From 2018 the deduction for state and local income, sales and property taxes was capped at $10,000. That single number is what pushed most American households onto the standard deduction, because for a typical filer state tax plus property tax plus mortgage interest no longer cleared the bar.
For 2026 the cap is $40,400, or $20,200 for married filing separately. There is a taper: the cap is reduced where modified adjusted gross income exceeds $505,000 ($252,500 if married filing separately), but it is never reduced below $10,000 ($5,000 married filing separately). So high earners keep at least the old cap, and everyone below the taper gets the full amount.
The practical consequence is that itemising is worth re-testing. A household paying $9,000 of state income tax and $8,000 of property tax was capped at $10,000 and almost certainly took the standard deduction. In 2026 the same household can count the full $17,000, and once mortgage interest and charitable giving are added the itemised total may well beat the $32,200 joint standard deduction. Run both sides through the itemised vs standard deduction calculator before assuming last year's answer still holds.
One number to watch for: the figure is $40,400, not $40,000. The IRS issued a correction to the state and local income tax deduction amount printed in the 2026 Form 1040-ES, and the rounder number circulated widely before that.
Gambling losses: the break-even year now costs money
Under the long-standing rule, gambling losses were deductible against gambling winnings, up to the amount of those winnings. Win $50,000 and lose $50,000, and the two cancelled: no net gambling income, no tax.
That stops in 2026. The IRS's 2026 guidance states that the gambling loss deduction on Schedule A is limited to 90% of gambling winnings; the underlying amendment to section 165(d) allows 90% of losses, still capped at winnings. In the ordinary case where losses roughly match winnings, both readings give the same answer — a tenth of your winnings remains taxable.
| Break-even year | Before 2026 | 2026 |
|---|---|---|
| Winnings reported | $50,000 | $50,000 |
| Losses deductible | $50,000 | $45,000 |
| Taxable gambling income | $0 | $5,000 |
Two things make this bite harder than the table suggests. First, the deduction sits on Schedule A, so it is available only if you itemise — which is precisely why the SALT change above matters to gamblers too. Second, winnings are gross: every reportable win counts as income before any loss is subtracted, so a year of heavy churn can push adjusted gross income far above what you actually netted, dragging other phase-outs with it. The gambling winnings tax calculator shows the gross-versus-net gap for your own figures.
Keep a contemporaneous log from 1 January. The losses only help if you can substantiate them, and a casino win/loss statement is treated as an estimate rather than proof.
The estate exclusion at $15,000,000
For people dying in 2026 the basic exclusion amount is $15,000,000 per person. Federal estate tax applies only to the amount above it, and the rate on that excess tops out at 40%.
For most families this is a non-event, and the useful thing to know is simply how far below the line you are. Two mechanics matter more than the headline number. Transfers to a surviving spouse are unlimited and untaxed — but the estate still has to file Form 706 to carry the unused exclusion across to that spouse, and failing to file is how families accidentally waste half of a combined exclusion. And a state may tax an estate its own way at a much lower threshold, which the federal figure tells you nothing about. Size the federal position with the estate tax estimator, then check the state layer separately in inheritance tax by state.
Section 199A: a wider band, and why that helps service businesses
The qualified business income deduction lets owners of pass-through businesses — sole proprietors, partnerships, S corporations — deduct up to 20% of qualifying business income. It is subject to a threshold, above which limits phase in.
For 2026 the threshold amount is $201,750 for unmarried filers and $403,500 for joint filers, with the phase-in complete at $276,750 and $553,500 respectively. That is a band of $75,000 single and $150,000 joint — wider than the $50,000 / $100,000 band that applied before.
A wider band matters most to a specified service trade or business — consultants, lawyers, doctors, accountants, financial advisers and similar — because for them the deduction does not merely get limited above the threshold, it disappears entirely once the phase-in completes. Stretching that runway by $25,000 single or $50,000 joint means the deduction fades more gradually, and it makes income-timing worth more: a deductible retirement contribution that pulls taxable income back down the band now buys back a larger slice of the deduction than it used to. The QBI deduction calculator shows where you sit in the range; 401(k) contributions are usually the cleanest lever for moving along it.
AMT: a higher exemption that fewer people keep
This is the change most likely to surprise someone. Read only the first number and 2026 looks generous; read both and it is the opposite for a lot of high earners.
| Alternative minimum tax | 2025 | 2026 |
|---|---|---|
| Exemption, unmarried | $88,100 | $90,100 |
| Exemption, married filing jointly | $137,000 | $140,200 |
| Phase-out begins, unmarried | $626,350 | $500,000 |
| Phase-out begins, married filing jointly | $1,252,700 | $1,000,000 |
The exemption went up by about 2%. The income at which you start losing it fell by $126,350 for a single filer and $252,700 for a couple. Anyone whose income sits between the new and old thresholds has moved from keeping the full exemption to having it withdrawn.
The group most exposed is people exercising incentive stock options. The bargain element on an ISO exercise is invisible to regular tax but counted for AMT, so a single exercise can create a large AMT liability in a year with no cash proceeds to pay it. If an exercise is on your calendar, model it before you sign rather than in April — the AMT calculator exists for exactly that decision.
Two interactions worth knowing. AMT disallows the state and local tax deduction entirely, so the SALT increase above is worth nothing in a year you land in AMT — the two changes can cancel each other for the same household. The QBI deduction, by contrast, is allowed against AMT.
Which of these actually applies to you
- You own a home in a high-tax state. Re-test itemising. This is the change with the widest reach and the one most likely to be worth money you are currently leaving unclaimed.
- You gamble at any scale. Start a log now, and expect a tax bill even in a flat year. If you do not itemise, losses do nothing for you at all.
- You own a pass-through business. Find your position in the phase-in band before year end, while contributions can still move it.
- You have incentive stock options. Check the AMT position before exercising, not after.
- You expect to inherit, or are planning an estate. The federal line is high; the state line may not be.
- None of the above. The standard deduction rose to $16,100 single and $32,200 joint. That is likely the whole of 2026 for you.
If you want a single number rather than five separate ones, the tax refund estimator puts the year together.
Frequently Asked Questions
Is the 2026 SALT cap $40,000 or $40,400?
$40,400, and $20,200 for married filing separately. The rounder $40,000 circulated widely, and the IRS published a correction to the state and local income tax deduction amount shown in the 2026 Form 1040-ES. Use $40,400.
Does the higher SALT cap mean I should itemise?
It means you should re-check. Itemising wins only when your total itemised deductions exceed the standard deduction, which is $16,100 single and $32,200 joint for 2026. A larger allowable SALT figure makes that more likely, particularly with mortgage interest on top, but it is arithmetic rather than a rule of thumb.
I broke even gambling. Do I really owe tax?
Under the 2026 rule, yes — roughly a tenth of your winnings remains taxable because only 90% is deductible. And the deduction requires itemising, so a break-even gambler taking the standard deduction is taxed on the full winnings figure.
Why did my AMT exposure rise when the exemption went up?
Because the phase-out threshold fell further than the exemption rose. The exemption is $90,100 for an unmarried filer in 2026, up from $88,100, but it now begins to be withdrawn at $500,000 rather than $626,350. Income between those two figures is where the change is felt.
Do these changes affect my state return?
Not directly, and possibly not at all. States set their own rules and many decouple from federal provisions. Everything on this page is federal.
Are these figures fixed, or do they move again?
Most are inflation-adjusted annually, so the dollar amounts here apply to tax years beginning in 2026 and will be restated for 2027. The structural changes — the 90% gambling limit, the wider QBI band, the reset AMT thresholds — are features of the law rather than annual adjustments.
Is my information private?
Yes. Every calculator linked from this guide runs entirely in your browser; nothing you type is uploaded.
Sources
- Internal Revenue Service — tax inflation adjustments for tax year 2026: AMT exemption and phase-out thresholds, standard deduction, estate basic exclusion.
- Internal Revenue Service — Internal Revenue Bulletin 2025-45 (Rev. Proc. 2025-32): section 199A threshold and phase-in amounts, AMT amounts.
- Internal Revenue Service — correction to the state and local income tax deduction amount in the 2026 Form 1040-ES: the $40,400 SALT cap, the $505,000 taper and the $10,000 floor.
- Internal Revenue Service — Topic no. 419, Gambling income and losses, together with 2026 Publication 505 for the 90% limitation.
- 2025 comparison figures — IRS Publication 17 (2025) and Publication 554 (2025).