You hopefully already know that the standard deduction tends to rise each year to account for inflation.
But it’s not the only tax break with thresholds that tend to increase annually. Limits on certain federal income tax credits also typically receive inflation adjustments each year.
The IRS has announced that the following three tax credits are among those whose limits will rise for the 2026 tax year — the one for which your tax return is due by April 2027.
Unfortunately, the value of several other tax credits is subject to inflation adjustments.
1. Earned income credit
This tax credit is for eligible workers. More specifically, it’s for folks with earned income, such as wages.
The earned income credit is refundable. That basically means it not only reduces your tax bill, but it also might result in you receiving a tax refund or receiving a bigger refund than otherwise. So, you can take advantage of the credit regardless of whether you owe taxes, assuming you’re otherwise eligible.
Income limits: The earned income tax credit is only available to folks with low to moderate incomes. For 2026, you might be eligible for it if your adjusted gross income (AGI) is less than:
- Married filing jointly: $26,820 to $70,224, depending on whether and how many of your children qualify for the credit (up from $26,214 to $68,675 for 2025)
- All other tax-filing statuses: $19,540 to $62,974, depending on whether and how many of your children qualify for the credit (up from $19,104 to $61,555)
Credit limits: For 2026, the maximum amount that this credit is worth ranges from $664 (if you have no qualifying children) to $8,231 (if you have three or more qualifying children). Those amounts have increased from $649 and $8,046, respectively, for 2025.
2. Adoption credit
This tax break is for certain expenses associated with the legal adoption of a child, such as adoption fees, court costs and attorney fees.
The adoption credit used to be nonrefundable, meaning it could lower your tax bill but wouldn’t affect your tax refund. But a recent federal law, the One Big Beautiful Bill Act, changed that. As of 2025, it’s partially refundable, meaning that a portion of the credit’s value could be added to your tax refund if you are due a refund.
Income limits: For 2026, the maximum value of the adoption credit is available to eligible taxpayers with a modified AGI (found on your tax return) of $265,080 or less (up from $259,190 for 2025). The credit is not available at all to those earning $305,080 or more (up from $299,190). Eligible taxpayers with a modified AGI of more than $265,080 but less than $305,080 can take advantage of the adoption credit in part but not in full.
Credit limits: For 2026, the adoption credit is worth up to $17,670 (up from $17,280 for 2025). Of that amount, up to $5,120 is refundable.
3. Child tax credit
This tax break is for taxpayers who are raising a child or relative and meet other requirements.
The child tax credit is partially refundable.
Income limits: The One Big Beautiful Bill Act made permanent the previously temporarily increased income limits for the child tax credit. Those limits are $200,000 for an individual and $400,000 for a married couple filing a joint return.
Credit limits: In the past, the child tax credit was typically worth up to $2,000 and that amount was not adjusted for inflation. But the One Big Beautiful Bill Act changed that. As of 2025, it’s worth up to $2,200 and that amount will be adjusted for inflation. The IRS has not announced an inflation adjustment for the 2026 tax year, however.
The One Big Beautiful Bill Act also called for the refundable portion of the child tax credit to be adjusted for inflation, setting it at $1,700 as of 2025. The IRS has yet to announce an inflation adjustment for the refundable portion for 2026, though.
Tax credits with static limits
Unfortunately, the value of most tax credits is being eroded by inflation over time because they lack inflation adjustments.
The following tax credits are examples. Their maximum values remain:
- Credit for other dependents: $500 per eligible person
- American opportunity tax credit: $2,500 per eligible student
- Lifetime learning credit: $2,000 per tax return
- Retirement savings contributions credit: $1,000 per return for individual taxpayers and $2,000 per return for married couples filing jointly
If you’re wondering whether you’re eligible for a given tax credit, check out the IRS’ free Interactive Tax Assistant tool.
If you’re wondering how to get more tax credit limits indexed to inflation, take that up with your representatives in the U.S. Senate and House. Tax credits are typically a matter of federal law, meaning that the only way for them to change is if Congress passes legislation.
Add a Comment