- The new child savings accounts offer a one-time federal deposit of one thousand dollars for eligible children starting July 2026.
- Individual tax filers benefit from a higher standard deduction reaching thirty-two thousand two hundred dollars for married couples.
- New business provisions permit a hundred percent write-off for qualifying property placed in service after January 2025.
For tax year 2026, the Working Families Tax Cuts add new child savings accounts, increase family credits and change deductions available to households and businesses. The provisions affect 2026 returns.
Trump Accounts cannot receive funding before July 4, 2026, but eligible children can receive a one-time $1,000 federal contribution. Families and employers can add money after that date, subject to separate limits.
Individuals and employers may contribute up to $5,000 per year in aggregate. An employer may provide as much as $2,500 per year toward an employee’s or dependent’s account without treating that amount as taxable income to the employee. Parents, grandparents and other individuals cannot deduct their contributions.
Free toolSubstantial Presence Test CalculatorThe accounts must invest in certain mutual funds or exchange-traded funds tracking a U.S. stock index, such as the S&P 500. The IRS issued Revenue Procedure 2026-25 on June 29, 2026, creating a gift-tax reporting safe harbor for certain contributions.
The Internal Revenue Bulletin dated July 14, 2026, sets the annual gift-tax exclusion at $19,000 for 2026. That amount provides the reference point for qualifying transfers covered by the account rules.
Families receive a larger credit, but income limits still apply
The Child Tax Credit rises to $2,200 per qualifying child under age 17. Up to $1,700 can be refundable through the Additional Child Tax Credit, and taxpayers need at least $2,500 of earned income to claim the refundable portion.
The phaseout begins at $400,000 of modified adjusted gross income for married couples filing jointly. For all other filers, it starts at $200,000.
The adoption credit also expands. It covers up to $17,670 in qualified expenses during 2026, with as much as $5,120 refundable for the first time.
Families using dependent care flexible spending accounts can set aside up to $7,500. That limit applies to the account contribution ceiling described in the 2026 tax changes.
Standard deductions rise as charitable rules split taxpayers
The 2026 standard deduction reaches $32,200 for married couples filing jointly, $16,100 for single filers and $24,150 for heads of household.
A new above-the-line charitable deduction allows non-itemizers to deduct up to $1,000 in cash gifts. The ceiling rises to $2,000 for married couples filing jointly.
Itemizers face a different rule. They can deduct charitable contributions only to the extent those gifts exceed 0.5% of adjusted gross income.
Higher-income taxpayers face another limitation. Above the 37% bracket threshold, itemized deductions are reduced by 2/37 of the lesser of total itemized deductions or taxable income in the 37% bracket.
Businesses can write off qualifying property more quickly
The IRS says businesses can deduct 100 percent of the cost of most qualifying business property bought and placed in service after January 19, 2025. The provision reaches beyond household credits and deductions, creating a separate benefit for businesses making qualifying purchases.
The changes therefore combine account funding rules, refundable credits, standard deductions and business write-offs in one 2026 tax-year package. Employers considering contributions must track the $2,500 employee or dependent limit, while families must distinguish refundable credits from deductions and account contributions.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
