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2026 Tax Bracket Income Thresholds, Standard Deduction, and Personal Exemption
02-19-2023, 09:43 AM
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#1
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Confused about dryer sheets
Join Date: Feb 2023
Posts: 1
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2026 Tax Bracket Income Thresholds, Standard Deduction, and Personal Exemption
I need to update my ER planning to include the changes coming in 2026 when the current tax law sunsets. I am assuming that the 2017 tax bracket income thresholds, standard deduction, and personal exemptions will be adjusted to account for CPI inflation between 2017 and 2026. Can anyone confirm that my assumption is correct? I have searched this site and the internet and have found lots of conflicting information in regards to this subject. Thanks.
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02-19-2023, 09:59 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,363
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I read an article the other day that was skeptical that the rates will sunset as scheduled. It was saying that despite the GOPs complaints about deficits and the debt limit that they will be loath to be seen as allowing tax reductions to expire so they will introduce legislation to make the lower rates permanent. Meanwhile, the Dems will vote to make the lower rates permanent to be consistent with Biden s campaign promise that nobody with income under $400k would see a tax increase.
But I think that the adjustment of brackets for inflation will continue.
What I would like to see is that the lower rate be preserved for those with $400k or lower income and revert for those with over $400k of income.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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02-19-2023, 11:01 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Jan 2008
Posts: 1,671
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I would not base my planning on an assumption that tax law will change.
When I use to try to project numbers I always did it in real dollars so I didn't have to bother trying to predict inflation.
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02-19-2023, 11:04 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Posts: 5,350
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Quote:
Originally Posted by pb4uski
What I would like to see is that the lower rate be preserved for those with $400k or lower income and revert for those with over $400k of income.
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I think that would be a reasonable compromise.
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02-19-2023, 07:06 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,363
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^^^which unfortunately means that it is unlikely to see the light of day!
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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02-19-2023, 09:35 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Oct 2017
Location: Tellico Village
Posts: 2,622
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Quote:
Originally Posted by pb4uski
^^^which unfortunately means that it is unlikely to see the light of day!
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Which is a good thing for some people, those pesky successful people that keep making all of that income.
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Retired May 13th(Friday) 2016 at age 61.
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02-20-2023, 03:45 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Feb 2019
Location: St Pete
Posts: 1,241
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I have no idea what the S&P 500 will be in 2026 but I bet I can predict it far more accurately than what the pols will do over the tax code over next three years. In general, I don't expect big/rapid moves especially raising rates due to fear of a backlash.
I keep an eye on things but until action occurs I make no adjustments. For now, tax planning is a current year exercise for me as I draw from my taxable account. Once I need to tap my tax advantaged accounts before 59.5 it will get a bit more challenging as I'll be making decisions that lock me into an income stream for multiple years. The only thing I could possibly do is conversions now but that would cost me ACA subsidy in addition to paying income tax so I'll take the bird in hand now and keep my withdrawals lower since I don't have to cover taxes or HI premiums which will help my taxable last longer -hopefully till another bull takes off and I can really stretch it!
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FIREd 7/2021 at age 47
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02-20-2023, 05:31 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,719
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Quote:
Originally Posted by Donk66
I need to update my ER planning to include the changes coming in 2026 when the current tax law sunsets. I am assuming that the 2017 tax bracket income thresholds, standard deduction, and personal exemptions will be adjusted to account for CPI inflation between 2017 and 2026. Can anyone confirm that my assumption is correct? I have searched this site and the internet and have found lots of conflicting information in regards to this subject. Thanks.
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In my 10-year plan I changed 22% to 25% in the 2026 column. That's as far as I go.
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02-20-2023, 05:48 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Jul 2011
Location: Reading, MA
Posts: 1,795
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Wait!
What about the Personal Exemption and unlimited SALT Deductions?
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02-20-2023, 07:15 AM
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#10
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Thinks s/he gets paid by the post
Join Date: Jan 2008
Posts: 1,671
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Quote:
Originally Posted by TheWizard
Wait!
What about the Personal Exemption and unlimited SALT Deductions?
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I think the SALT cap is permanent. Not sure.
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02-20-2023, 07:26 AM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,140
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Quote:
Originally Posted by jebmke
I think the SALT cap is permanent. Not sure.
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I don’t think so. I think it reverts just like the standard deduction, personal exemption, tax brackets and AMT. One reason they put in the SALT cap was because they raised the standard deduction so much higher.
It’s temporary also according to Forbes:
Quote:
As with many other elements of the 2017 tax law, the SALT cap is temporary: It applies only to tax returns filed for 2018 through 2025.
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https://www.forbes.com/advisor/taxes...tax-deduction/
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Retired since summer 1999.
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02-20-2023, 07:51 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Jan 2008
Posts: 1,671
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Quote:
Originally Posted by audreyh1
I don’t think so. I think it reverts just like the standard deduction, personal exemption, tax brackets and AMT. One reason they put in the SALT cap was because they raised the standard deduction so much higher.
It’s temporary also according to Forbes:
https://www.forbes.com/advisor/taxes...tax-deduction/
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Thanks; makes sense - I'll check the code too although there is ~ zero chance the expirations go through as scheduled so I'm not particularly motivated.
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02-20-2023, 08:08 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Jul 2011
Location: Reading, MA
Posts: 1,795
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Quote:
Originally Posted by jebmke
Thanks; makes sense - I'll check the code too although there is ~ zero chance the expirations go through as scheduled so I'm not particularly motivated.
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It would take new legislation to prevent or modify the reversion already set in law, right?
That can certainly happen and will depend to a degree what happens in the election in November next year...
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02-20-2023, 08:26 AM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,719
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Quote:
Originally Posted by TheWizard
Wait!
What about the Personal Exemption and unlimited SALT Deductions?
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TBH, I will probably be gone by then, and don't need to project another uncertain financial variable.
If I project 25%, and get additional deduction(s) from that, it just means that my projection was too conservative, and I'll pay a lower tax bill than predicted.
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