IRS 2026 tax updates may change family refunds, credits

The IRS has announced new tax inflation adjustments for 2026.

Those changes may affect just how much federal taxes families pay in taxes or receive in their refunds come tax time.

Qualifying families may see higher amounts for the child tax credit and earned income tax credit in 2026. Moreover, the adoption credit and gift tax exclusion have also been adjusted for next year.

In its Thursday announcements, the IRS also increased figures for dozens of other provisions, including federal income tax brackets and long-term capital gains brackets, among others.

The IRS announcements came a day after the agency said it would furlough nearly half its workforce due to the ongoing government shutdown. 

As the IRS noted in its announcement, President Donald Trump’s “big beautiful bill” enacted in July bumped the maximum child tax credit — a tax break for parents of qualifying children — to $2,200 starting in 2025. Prior to that legislation, the maximum child tax credit was $2,000 per child.

The maximum $2,200 child tax credit will be in effect for tax years 2025 and 2026, according to an IRS spokesperson. That threshold will be adjusted for inflation for tax year 2027, the spokesperson said.

The refundable portion of the child tax credit is $1,700 for 2026, according to the IRS, which is unchanged from 2025. That represents the amount families may potentially receive back as a tax refund if their tax liability is less than their child tax credit amount.

The earned income tax credit — a tax break for low- to middle-income individuals and families — will be adjusted for 2026 based on the taxpayer’s number of children and income.

The maximum earned income tax credit, or EITC, will increase to $8,231 in 2026 for qualifying taxpayers with three or more eligible children — up from $8,046 for tax year 2025.

For qualifying taxpayers with two children, the maximum EITC will increase to $7,316 in 2026, up from $7,152 in 2025.

For taxpayers with one child, the maximum will be $4,427, up from $4,328 in 2025.

For qualifying filers with no children, the maximum amount will be $664 in 2026, up from $649 in 2025.

To qualify for the tax credit, individuals and families must be under certain thresholds for adjusted gross income.

Married couples who file jointly will completely phase out at $70,224 in adjusted gross income if they have three or more children, $65,899 in AGI with two children, $58,863 with one child and $26,820 with no children.

For other tax filing statuses — single, head of household or widowed — the EITC will completely phase out at $62,974 for those with three or more children, $58,629 for two children, $51,593 for one child and $19,540 for no children.

To qualify for the EITC, taxpayers cannot have more than $12,200 in certain investment income in 2026.

The maximum credit for qualified adoption expenses rises to $17,670 in 2026, up from $17,280 in 2025. The amount of the credit that may be refundable will be $5,120 in 2026.

The annual exclusion for gifts will be $19,000 in 2026 — which is unchanged from 2025.

The annual exclusion for gifts to a spouse who is not a U.S. citizen will go up to $194,000 for 2026 — a $4,000 increase from 2025.