Administrative, Procedural, and Miscellaneous

.

Part III

Administrative, Procedural, and Miscellaneous

26 CFR 601.602: Tax forms and instructions.

(Also Part I, §§ 1, 23, 24, 32, 42, 45R, 55, 59, 62, 63, 125, 132(f), 135, 137, 146, 147,

148, 152, 179, 179D, 199A, 213, 220, 221, 448, 461, 512, 513, 529A, 642, 831, 877,

877A, 911, 1274A, 2032A, 2503, 2523, 2801, 4161, 4261, 4611, 6033, 6039F, 6323,

6334, 6601, 6651, 6652, 6695, 6698, 6699, 6721, 6722, 6726, 7345, 7430, 7702B,

9831; 1.148-5.)

Rev. Proc. 2025-32

Table of Contents

SECTION 1. PURPOSE

SECTION 2. CHANGES

SECTION 3. MODIFICATION OF REV. PROC. 2024-40

SECTION 4. 2026 ADJUSTED ITEMS

Code

Section 1

.01 Tax Rate Tables ................................................................................ 1(j)(2) (A)-(D)

1 Unless otherwise specified, all references to "section" or "§" are to provisions of the Internal Revenue

Code.

2

.02 Unearned Income of Minor Children Subject to the "Kiddie Tax" ..................... 1(g)

.03 Maximum Capital Gains Rate.......................................................................... 1(h)

.04 Adoption Credit ................................................................................................. 23

.05 Child Tax Credit ................................................................................................. 24

.06 Earned Income Credit ....................................................................................... 32

.07 Rehabilitation Expenditures Treated as Separate New Building ................... 42(e)

.08 Low-Income Housing Credit .......................................................................... 42(h)

.09 Employee Health Insurance Expense of Small Employers ............................. 45R

.10 Exemption Amounts for Alternative Minimum Tax ............................................. 55

.11 Alternative Minimum Tax Exemption for a Child Subject to the

"Kiddie Tax" .................................................................................................... 59(j)

.12 Certain Expenses of Elementary and Secondary School Teachers .....62(a)(2)(D)

.13 Transportation Mainline Pipeline Construction Industry Optional

Expense Substantiation Rules for Payments to Employees

Under Accountable Plans .............................................................................. 62(c)

.14 Standard Deduction .......................................................................................... 63

.15 Cafeteria Plans ............................................................................................... 125

.16 Qualified Transportation Fringe Benefit ........................................................ 132(f)

.17 Income from United States Savings Bonds for Taxpayers Who Pay

Qualified Higher Education Expenses ............................................................. 135

.18 Adoption Assistance Programs ....................................................................... 137

.19 Private Activity Bonds Volume Cap ............................................................. 146(d)

.20 Loan Limits on Agricultural Bonds ........................................................... 147(c)(2)

.21 General Arbitrage Rebate Rules .................................................................. 148(f)

.22 Safe Harbor Rules for Broker Commissions on Guaranteed

Investment Contracts or Investments Purchased for

a Yield Restricted Defeasance Escrow ........................................................... 148

.23 Gross Income Limitation for a Qualifying Relative.............................. 152(d)(1)(B)

.24 Election to Expense Certain Depreciable Assets ............................................ 179

.25 Energy Efficient Commercial Buildings Deduction ........................................ 179D

.26 Qualified Business Income ............................................................................ 199A

.27 Eligible Long-Term Care Premiums.......................................................213(d)(10)

.28 Medical Savings Accounts............................................................................... 220

.29 Interest on Education Loans............................................................................ 221

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.30 Limitation on Use of Cash Method of Accounting ............................................ 448

.31 Threshold for Excess Business Loss ........................................................... 461(l)

.32 Treatment of Dues Paid to Agricultural or Horticultural Organizations......... 512(d)

.33 Insubstantial Benefit Limitations for Contributions Associated with

Charitable Fund-Raising Campaigns .......................................................... 513(h)

.34 Aggregate Limitation on Contributions to ABLE Accounts ............................. 529A

.35 Special Rules for Credits and Deductions ....................................................... 642

.36 Tax on Insurance Companies Other than Life Insurance Companies ............. 831

.37 Expatriation to Avoid Tax ................................................................................. 877

.38 Tax Responsibilities of Expatriation ............................................................... 877A

.39 Foreign Earned Income Exclusion ...................................................................911

.40 Debt Instruments Arising Out of Sales or Exchanges.................................. 1274A

.41 Limitation on Aggregate Decrease in the Value of Qualified Real Property in

Decedent's Gross Estate............................................................................. 2032A

.42 Annual Exclusion for Gifts and Annual Exception for Covered Gifts and Covered

Bequests Received from a Covered Expatriate ............. 2503(b); 2523(i); 2801(c)

.43 Tax on Arrow Shafts ...................................................................................... 4161

.44 Passenger Air Transportation Excise Tax ...................................................... 4261

.45 Tax on Certain Uses of Crude Oil and Petroleum Products............................4611

.46 Reporting Exception for Certain Exempt Organizations with

Nondeductible Lobbying Expenditures ..................................................6033(e)(3)

.47 Notice of Large Gifts Received from Foreign Persons ................................ 6039F

.48 Persons Against Whom a Federal Tax Lien Is Not Valid................................ 6323

.49 Property Exempt from Levy ....................................................................... 6334(a)

.50 Exempt Amount of Wages, Salary, or Other Income ................................. 6334(d)

.51 Interest on a Certain Portion of the Estate Tax Payable in Installments ..... 6601(j)

.52 Failure to File Tax Return .............................................................................. 6651

.53 Failure to File Certain Information Returns, Registration Statements, etc. .... 6652

.54 Other Assessable Penalties with Respect to the Preparation of

Tax Returns for Other Persons ...................................................................... 6695

.55 Failure to File Partnership Return ................................................................. 6698

.56 Failure to File S Corporation Return .............................................................. 6699

.57 Failure to File Correct Information Returns ................................................... 6721

.58 Failure to Furnish Correct Payee Statements ............................................... 6722

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.59 Failure to File Return with Respect to Qualified Opportunity Zones and Rural

Opportunity Zones………………………………………………………………... 6726

.60 Revocation or Denial of Passport in Case of Certain Tax Delinquencies ...... 7345

.61 Attorney Fee Awards ..................................................................................... 7430

.62 Periodic Payments Received Under Qualified Long-Term Care

Insurance Contracts or Under Certain Life Insurance Contracts .............7702B(d)

.63 Qualified Small Employer Health Reimbursement Arrangement ................... 9831

SECTION 5. EFFECTIVE DATE

SECTION 6. EFFECT ON OTHER DOCUMENTS

SECTION 7. DRAFTING INFORMATION

SECTION 1. PURPOSE

This revenue procedure modifies certain sections of Rev. Proc. 2024-40, 2024-45

I.R.B. 1100, to reflect the amendments to the Internal Revenue Code (Code) by Public

Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful

Bill Act (OBBBA). This revenue procedure sets forth inflation-adjusted items for 2026

for various Code provisions as in effect on October 9, 2025.

The inflation-adjusted items for the Code sections set forth in section 4 of this

revenue procedure are generally determined by reference to § 1(f). To the extent

amendments to the Code are enacted for 2025 or 2026 after October 9, 2025,

taxpayers should consult additional guidance to determine whether these adjustments

remain applicable for 2026.

SECTION 2. CHANGES

.01 Section 70101 of the OBBBA amends § 1(j) to make the tax rate tables that were

effective for taxable years beginning after December 31, 2017, and before January 1,

2026, permanent. The existing seven tax rates of 10%, 12%, 22%, 24%, 32%, 35%,

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and 37% remain in effect for individual taxpayers. The existing four tax rates of 10%,

24%, 35%, and 37% remain in effect for estates and trusts.

.02 Section 70402 of the OBBBA adds § 23(a)(4) which provides that so much of the

credit allowed under § 23(a)(1) as does not exceed $5,000 is treated as a refundable

credit. This amount is adjusted for inflation for taxable years beginning after December

31, 2025.

.03 Section 70104 of the OBBBA amends § 24 to make the increased and expanded

child tax credit under § 24(h) that were effective for taxable years beginning after

December 31, 2017, and before January 1, 2026, permanent. In addition, the OBBBA

amends § 24(h)(2) to provide that the maximum amount of child tax credit is $2,200 for

any taxable year beginning in 2025. This amount is adjusted for inflation for taxable

years beginning after December 31, 2025.

.04 Section 71305 of the OBBBA removes § 36B(f)(2)(B), which limited the tax

increase from excess advance payments for certain households, effective for taxable

years beginning after December 31, 2025. Accordingly, the inflation adjustment to

§ 36B(f)(2)(B) is removed from this revenue procedure.

.05 Section 70422(a) of the OBBBA amends § 42(h)(3)(I) to increase the amount

used under § 42(h)(3)(C)(ii) to calculate the State housing credit ceiling for calendar

years beginning after December 31, 2025.

.06 Section 70401 of the OBBBA amends § 45F to increase the amount of employer

provided childcare credit and provide for adjustment of the maximum amount of the

allowable credit for inflation. Section 70401(b) of the OBBBA amends § 45F(b)(2) by

increasing the maximum credit amounts to $500,000 ($600,000 if the employer is an

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eligible small business) for taxable years beginning after December 31, 2025. These

amounts will be adjusted for inflation for taxable years beginning after December 31,

2026.

.07 Section 70107 of the OBBBA amends § 55(d)(4) to make the temporary

increases of the exemption amounts and the phaseout threshold amounts that were

effective for taxable years beginning after December 31, 2017, and before January 1,

2026, permanent. Section 55(d)(4)(B) as amended provides that the $1,000,000

amount described in § 55(d)(4)(A)(ii)(I) is not adjusted for inflation for any taxable year

beginning before January 1, 2027.

.08 Section 70102 of the OBBBA amends § 63(c)(7) to make the temporary

increases of the basic standard deduction amounts provided in § 63(c)(2) that were

effective for taxable years beginning after December 31, 2017, and before January 1,

2026, permanent, and further increased the base amounts. As a result, § 63(c)(7) as

amended by the OBBBA provides that, for taxable years beginning after December 31,

2024, the basic standard deduction amounts provided in § 63(c)(2) are increased to

$15,750 for single individuals and married individuals filing separate returns; $23,625 for

heads of households; and $31,500 for married individuals filing a joint return and

surviving spouses. These amounts are adjusted for inflation for taxable years beginning

after 2025. See section 3 of this revenue procedure for removal of section 2.15(1) of

Rev. Proc. 2024-40.

.09 Section 70412 of the OBBBA amends § 127(c)(1)(B) to make the temporary

expansion of the term "educational assistance" to include employer payments of

principal or interest on any qualified education loan made before January 1, 2026,

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permanent. The maximum exclusion amount of $5,250 will be adjusted for inflation for

taxable years beginning after 2026.

.10 Section 70306 of the OBBBA amends § 179 by increasing the maximum amount

a taxpayer may expense under § 179(b)(1) and the phaseout threshold amount under

§ 179(b)(2). The OBBBA amendments to § 179 apply to property placed in service in

taxable years beginning after December 31, 2024. Under § 179(b)(1), the maximum

amount allowable is $2,500,000. Under § 179(b)(2), the $2,500,000 amount is reduced

by the amount by which the cost of § 179 property placed in service during the taxable

year exceeds $4,000,000, but not below $0. These amounts are adjusted for inflation

for taxable years beginning after December 31, 2025. See section 3 of this revenue

procedure for removal of section 2.25 of Rev. Proc. 2024-40.

.11 Section 70507 of the OBBBA terminated § 179D for property the construction of

which begins after June 30, 2026.

.12 Section 70105 of the OBBBA amended § 199A(i) to add a minimum deduction of

$400. Additionally, a taxpayer will be required to have a minimum of $1,000 of qualified

business income to be eligible for the deduction, effective for taxable years beginning

after December 31, 2025. The $400 and $1,000 amounts in § 199A(i) will be adjusted

for inflation for taxable years beginning after 2026.

13 Section 70115 of the OBBBA amended § 529A(b)(2)(B)(i) to vary the manner in

which the aggregate annual limitation on contributions made after December 31, 2025,

is adjusted for inflation from that provided in § 2503(b). Accordingly, the inflation

adjustment to the amount under § 529A(b)(2)(B)(i) is separately added to this revenue

procedure.

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.14 Section 70106 of the OBBBA amends § 2010(c)(3) by increasing the basic

exclusion amount to $15,000,000 for calendar year 2026. The basic exclusion amount

is a component of the applicable exclusion amount described in § 2010(c)(2) and is

used in determining the applicable credit amount against estate tax described in

§ 2010(c)(1) and the applicable credit amount against gift tax described in § 2505(a)(1).

For calendar year 2026, the generation-skipping transfer exemption amount under

§ 2631(c) is equal to $15,000,000. These numbers are adjusted for inflation for taxable

years beginning after December 31, 2026. The basic exclusion amount will be adjusted

for inflation for calendar year 2027 and future years.

.15 Section 70433(a) of the OBBBA amends § 6041(a) to increase the threshold

amount for reporting payments made in the course of a trade or business. Section

70433(c) and (d) of the OBBBA amends §§ 6041A(a)(2) (requiring reporting for

remuneration for services) and 3406(b)(6) (requiring backup withholding for payments

reportable under § 6041), respectively, to cross-reference the § 6041(a) threshold. For

payments made after December 31, 2025, the base threshold under section 6041(a) is

$2,000. This base threshold amount is adjusted for inflation for returns required to be

filed in calendar year 2027.

.16 Section 70421(d)(2)(A) of the OBBBA adds § 6726, which, effective for taxable

years beginning after July 4, 2025, imposes a penalty for failure to file a return in the

time and manner prescribed for a qualified opportunity fund or qualified rural opportunity

fund under § 6039K. Section 6726(b) provides for a penalty of $500 per day with a

maximum penalty of $10,000 per return ($50,000 if the gross assets of the fund are

greater than $10,000,000). Section 6726(c) provides penalties of $2,500 per day with a

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maximum penalty is $50,000 per return ($250,000 if the gross assets of the fund are

greater than $10,000,000), if the failure to file is due to intentional disregard. These

amounts are effective for taxable years that begin after the enactment of the OBBBA.

These amounts are adjusted for inflation for returns required to be filed in calendar

years beginning after 2026.

SECTION 3. 2025 ADJUSTED ITEMS AS MODIFIED, SUPERSEDED OR

SUPPLEMENTED

.01 Removal of Section 2.15(1) of Rev. Proc. 2024-40. Section 63(c)(7) as amended

by the OBBBA provides the standard deduction amounts under § 63(c)(2) for any

taxable year beginning in 2025 as follows:

Filing Status

Standard

Deduction

Married Individuals Filing Joint Returns and Surviving Spouses

(§ 1(j)(2)(A))

Heads of Households (§ 1(j)(2)(B))

$31,500

Unmarried Individuals (other than Surviving Spouses and Heads of

Households) (§ 1(j)(2)(C))

$15,750

Married Individuals Filing Separate Returns (§ 1(j)(2)(D))

$15,750

$23,625

Accordingly, section 2.15(1) of Rev. Proc. 2024-40 is removed.

.02 Removal of Section 2.25 of Rev. Proc. 2024-40.

(1) Section 179(b)(1) as amended by the OBBBA provides that the maximum

amount allowable for expensing under § 179 is $2,500,000 for any taxable year

beginning in 2025. Section 179(b)(2) as amended by the OBBBA provides that, for any

taxable year beginning in 2025, the $2,500,000 amount is reduced by the amount by

which the cost of § 179 property placed in service during the taxable year exceeds

$4,000,000, but not below $0. Accordingly, section 2.25 of Rev. Proc. 2024-40 is

10

removed.

(2) Conforming change. The Table of Contents of Rev. Proc. 2024-40 is modified

by removing the entry for section 2.25, "Election to Expense Certain Depreciable

Assets."

SECTION 4. 2026 ADJUSTED ITEMS

.01 Tax Rate Tables. For taxable years beginning in 2026, the tax rate tables under

§ 1 are as follows:

TABLE 1 - Section 1(j)(2)(A) –Married Individuals Filing Joint Returns and Surviving

Spouses

If Taxable Income Is:

The Tax Is:

Not over $24,800

10% of the taxable income

Over $24,800 but not over

$100,800

$2,480 plus 12% of the excess

over $24,800

Over $100,800 but not over

$211,400

Over $211,400 but not over

$403,550

$11,600 plus 22% of the excess

over $100,800

$35,932 plus 24% of the excess

over $211,400

Over $403,550 but not over

$512,450

$82,048 plus 32% of the excess

over $403,550

Over $512,450 but not over

$768,700

$116,896 plus 35% of the

excess over $512,450

Over $768,700

$206,583.50 plus 37% of the

excess over $768,700

TABLE 2 - Section 1(j)(2)(B) – Heads of Households

If Taxable Income Is:

The Tax Is:

Not over $17,700

10% of the taxable income

Over $17,700 but

not over $67,450

$1,770 plus 12% of

the excess over $17,700

Over $67,450 but

not over $105,700

$7,740 plus 22% of

the excess over $67,450

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Over $105,700 but

not over $201,750

$16,155 plus 24% of

the excess over $105,700

Over $201,750 but

not over $256,200

$39,207 plus 32% of

the excess over $201,750

Over $256,200 but

not over $640,600

$56,631 plus 35% of

the excess over $256,200

Over $640,600

$191,171 plus 37% of

the excess over $640,600

TABLE 3 - Section 1(j)(2)(C) – Unmarried Individuals (other than Surviving Spouses and

Heads of Households)

If Taxable Income Is:

The Tax Is:

Not over $12,400

10% of the taxable income

Over $12,400 but

not over $50,400

$1,240 plus 12% of

the excess over $12,400

Over $50,400 but

not over $105,700

$5,800 plus 22% of

the excess over $50,400

Over $105,700 but

not over $201,775

$17,966 plus 24% of

the excess over $105,700

Over $201,775 but

not over $256,225

$41,024 plus 32% of

the excess over $201,775

Over $256,225 but

not over $640,600

Over $640,600

$58,448 plus 35% of

the excess over $256,225

$192,979.25 plus 37% of

the excess over $640,600

TABLE 4 - Section 1(j)(2)(D) – Married Individuals Filing Separate Returns

If Taxable Income Is:

The Tax Is:

Not over $12,400

10% of the taxable income

Over $12,400 but

not over $50,400

$1,240 plus 12% of

the excess over $12,400

Over $50,400 but

not over $105,700

$5,800 plus 22% of

the excess over $50,400

12

Over $105,700 but

not over $201,775

$17,966 plus 24% of

the excess over $105,700

Over $201,775 but

not over $256,225

$41,024 plus 32% of

the excess over $201,775

Over $256,225 but

not over $384,350

$58,448 plus 35% of

the excess over $256,225

Over $384,350

$103,291.75 plus 37% of

the excess over $384,350

TABLE 5 - Section 1(j)(2)(E) – Estates and Trusts

If Taxable Income Is:

The Tax Is:

Not over $3,300

10% of the taxable income

Over $3,300 but

not over $11,700

$330 plus 24% of

the excess over $3,300

Over $11,700 but

not over $16,000

$2,346 plus 35% of

the excess over $11,700

Over $16,000

$3,851 plus 37% of

the excess over $16,000

.02 Unearned Income of Minor Children Subject to the "Kiddie Tax". For taxable

years beginning in 2026, the amount in § 1(g)(4)(A)(ii)(I), which is used to reduce the

net unearned income reported on the child's return that is subject to the "kiddie tax," is

$1,350. This $1,350 amount is the same as the amount provided in § 63(c)(5)(A), as

adjusted for inflation. The same $1,350 amount is used for purposes of § 1(g)(7) to

determine whether a parent may elect to include a child's gross income in the parent's

gross income and to calculate the "kiddie tax." For example, one of the requirements

for the parental election is that a child's gross income is more than the amount referred

to in § 1(g)(4)(A)(ii)(I) but less than 10 times that amount; thus, a child's gross income

for 2026 must be more than $1,350 but less than $13,500.

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.03 Maximum Capital Gains Rate (§ 1(h), § 1(j)(5)). For taxable years beginning in

2026, the maximum zero rate amounts and maximum 15 percent rate amounts under

§ 1(j)(5)(B), as adjusted for inflation, are as follows:

Filing Status

Maximum Zero

Rate Amount

Maximum15%

Rate Amount

Married Individuals Filing Joint Returns and

Surviving Spouse

$98,900

$613,700

Married Individuals Filing Separate Returns

$49,450

$306,850

Heads of Household

$66,200

$579,600

All Other Individuals

$49,450

$545,500

Estates and Trusts

$3,300

$16,250

.04 Adoption Credit.

(1) Adoption Credit for Children with Special needs. For taxable years beginning in

2026, under § 23(a)(3), the credit allowed for an adoption of a child with special needs

is $17,670.

(2) Adoption Credit Limitation. For taxable years beginning in 2026, under

§ 23(b)(1), the maximum credit allowed for other adoptions is the amount of qualified

adoption expenses up to $17,670. The available adoption credit begins to phase out

under § 23(b)(2)(A) for taxpayers with modified adjusted gross income in excess of

$265,080 and is completely phased out for taxpayers with modified adjusted gross

income of $305,080 or more. See section 4.18 of this revenue procedure for the

adjusted items relating to adoption assistance programs.

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(3) Refundable Portion. For taxable years beginning in 2026, the amount used in

§ 23(a)(4) to determine the amount of the credit under § 23 that may be refundable is

$5,120.

.05 Child Tax Credit.

(1) Maximum amount of the credit. For taxable years beginning in 2026, the

maximum amount of the credit allowed under § 24(a) is $2,200.

(2) Refundable portion. For taxable years beginning in 2026, the amount used in

§ 24(d)(1)(A) to determine the amount of the credit under § 24 that may be refundable is

$1,700.

.06 Earned Income Credit.

(1) In general. For taxable years beginning in 2026, the following amounts are

used to determine the earned income credit under § 32(b). The "earned income

amount" is the amount of earned income at or above which the maximum amount of the

earned income credit is allowed. The "threshold phaseout amount" is the amount of

adjusted gross income (or, if greater, earned income) above which the maximum

amount of the credit begins to phase out. The "completed phaseout amount" is the

amount of adjusted gross income (or, if greater, earned income) at or above which no

credit is allowed. The threshold phaseout amounts and the completed phaseout

amounts shown in the table below for married taxpayers filing a joint return include the

increase provided in § 32(b)(2)(B), as adjusted for inflation for taxable years beginning

in 2026. The threshold phaseout amounts and the completed phaseout amounts shown

in the table below for taxpayers with all other filing statuses also apply to married

taxpayers who are not filing a joint return and satisfy the special rules for separated

spouses in § 32(d).

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Number of Qualifying Children

Item

One

Two

Three or More

None

Earned Income Amount

$13,020

$18,290

$18,290

$8,680

Maximum Amount of Credit

$4,427

$7,316

$8,231

$664

Threshold Phaseout Amount

(Married Filing Jointly)

$31,160

$31,160

$31,160

$18,140

Completed Phaseout

Amount (Married Filing

Jointly)

$58,863

$65,899

$70,244

$26,820

Threshold Phaseout Amount

(All other filing statuses)

$23,890

$23,890

$23,890

$10,860

Completed Phaseout

Amount (All other filing

statuses)

$51,593

$58,629

$62,974

$19,540

The instructions for the Form 1040 series provide tables showing the amount of the

earned income credit for each type of taxpayer.

(2) Excessive Investment Income. For taxable years beginning in 2026, the

earned income tax credit is not allowed under § 32(i) if the aggregate amount of certain

investment income exceeds $12,200.

.07 Rehabilitation Expenditures Treated as Separate New Building. For calendar

year 2026, the per low-income unit qualified basis amount under § 42(e)(3)(A)(ii)(II) is

$8,700.

.08 Low-Income Housing Credit. For calendar year 2026, the amount used under

§ 42(h)(3)(C)(ii) to calculate the State housing credit ceiling for the low-income housing

credit is the greater of (1) $3.416 multiplied by the State population, or (2) $3,953,600.

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.09 Employee Health Insurance Expense of Small Employers. For taxable years

beginning in 2026, the dollar amount in effect under § 45R(d)(3)(B) is $34,100. This

amount is used under § 45R(c) for limiting the small employer health insurance credit

and under § 45R(d)(1)(B) for determining who is an eligible small employer for purposes

of the credit.

.10 Exemption Amounts for Alternative Minimum Tax. For taxable years beginning in

2026, the exemption amounts under § 55(d)(1) are:

Filing status

Joint Returns or Surviving Spouses

Exemption

amount

$140,200

Unmarried Individuals (other than Surviving Spouses)

$90,100

Married Individuals Filing Separate Returns

$70,100

Estates and Trusts

$31,400

For taxable years beginning in 2026, under § 55(b)(1), the excess taxable income

above which the 28 percent tax rate applies is:

Filing status

Excess taxable

income

Married Individuals Filing Separate Returns

$122,250

All Other Taxpayers

$244,500

For taxable years beginning in 2026, the amounts used under § 55(d)(2) to

determine the phaseout of the exemption amounts are:

17

Filing status

Threshold Phaseout

Amount

Complete Phaseout

Amount

Joint Returns or Surviving Spouses

$1,000,000

$1,280,400

Unmarried Individuals (other than

Surviving Spouses)

$500,000

$680,200

Married Individuals Filing Separate

Returns

$500,000

$640,200

Estates and Trusts

$104,800

$167,600

.11 Alternative Minimum Tax Exemption for a Child Subject to the "Kiddie Tax." For

taxable years beginning in 2026, for a child to whom the § 1(g) "kiddie tax" applies, the

exemption amount under §§ 55(d) and 59(j) for purposes of the alternative minimum tax

under § 55 may not exceed the sum of (1) the child's earned income for the taxable

year, plus (2) $9,750.

.12 Certain Expenses of Elementary and Secondary School Teachers. For taxable

years beginning in 2026, under § 62(a)(2)(D), the amount of the deduction allowed

under § 162 that consists of expenses paid or incurred by an eligible educator in

connection with books, supplies (other than nonathletic supplies for courses of

instruction in health or physical education), computer equipment (including related

software and services) and other equipment, and supplementary materials used by the

eligible educator in the classroom is $350.

.13 Transportation Mainline Pipeline Construction Industry Optional Expense

Substantiation Rules for Payments to Employees Under Accountable Plans. For

calendar year 2026, an eligible employer may pay certain welders and heavy equipment

mechanics an amount up to $23 per hour for rig-related expenses that are deemed

substantiated under an accountable plan if paid in accordance with Rev. Proc. 2002-41,

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2002-1 C.B. 1098. If the employer provides fuel or otherwise reimburses fuel expenses,

an amount up to $14 per hour is deemed substantiated if paid in accordance with Rev.

Proc. 2002-41.

.14 Standard Deduction.

(1) In general. For taxable years beginning in 2026, the standard deduction

amounts under § 63(c)(2) are as follows:

Filing Status

Standard

Deduction

Married Individuals Filing Joint Returns and Surviving Spouses

(§ 1(j)(2)(A))

$32,200

Heads of Households (§ 1(j)(2)(B))

$24,150

Unmarried Individuals (other than Surviving Spouses and Heads of

Households) (§ 1(j)(2)(C))

$16,100

Married Individuals Filing Separate Returns (§ 1(j)(2)(D))

$16,100

(2) Dependent. For taxable years beginning in 2026, the standard deduction

amount under § 63(c)(5) for an individual who may be claimed as a dependent by

another taxpayer cannot exceed the greater of (1) $1,350, or (2) the sum of $450 and

the individual's earned income.

(3) Aged or blind. For taxable years beginning in 2026, the additional standard

deduction amount under § 63(f) for the aged or the blind is $1,650. The additional

standard deduction amount is increased to $2,050 if the individual is also unmarried and

not a surviving spouse.

.15 Cafeteria Plans. For taxable years beginning in 2026, the dollar limitation under

§ 125(i) on voluntary employee salary reductions for contributions to health flexible

19

spending arrangements is $3,400. If the cafeteria plan permits the carryover of unused

amounts, the maximum carryover amount is $680.

.16 Qualified Transportation Fringe Benefit. For taxable years beginning in 2026, the

monthly limitation under § 132(f)(2)(A) regarding the aggregate fringe benefit exclusion

amount for transportation in a commuter highway vehicle and any transit pass is $340.

The monthly limitation under § 132(f)(2)(B) regarding the fringe benefit exclusion

amount for qualified parking is $340.

.17 Income from United States Savings Bonds for Taxpayers Who Pay Qualified

Higher Education Expenses. For taxable years beginning in 2026, the exclusion under

§ 135, regarding income from United States savings bonds for taxpayers who pay

qualified higher education expenses, begins to phase out for modified adjusted gross

income above $152,650 for joint returns and $101,800 for all other returns. The

exclusion is completely phased out for modified adjusted gross income of $182,650 or

more for joint returns and $116,800 or more for all other returns.

.18 Adoption Assistance Programs. For taxable years beginning in 2026, under

§ 137(a)(2), the amount that can be excluded from an employee's gross income for the

adoption of a child with special needs is $17,670. For taxable years beginning in 2026,

under § 137(b)(1) the maximum amount that can be excluded from an employee's gross

income for the amounts paid or expenses incurred by an employer for qualified adoption

expenses furnished pursuant to an adoption assistance program for adoptions by the

employee is $17,670. The amount excludable from an employee's gross income begins

to phase out under § 137(b)(2)(A) for taxpayers with modified adjusted gross income in

excess of $265,080 and is completely phased out for taxpayers with modified adjusted

20

gross income of $305,080 or more. See section 4.04 of this revenue procedure for the

adjusted items relating to the adoption credit.

.19 Private Activity Bonds Volume Cap. For calendar year 2026, the amounts used

under § 146(d) to calculate the State ceiling for the volume cap for private activity bonds

is the greater of (1) $135 multiplied by the State population, or (2) $397,625,000.

.20 Loan Limits on Agricultural Bonds. For calendar year 2026, the loan limit amount

on agricultural bonds under § 147(c)(2)(A) for first-time farmers is $682,700.

.21 General Arbitrage Rebate Rules. For bond years ending in 2026, the amount of

the computation credit determined under § 1.148-3(d)(4) of the Income Tax Regulations

is $2,170.

.22 Safe Harbor Rules for Broker Commissions on Guaranteed Investment Contracts

or Investments Purchased for a Yield Restricted Defeasance Escrow. For calendar

year 2026, under § 1.148-5(e)(2)(iii)(B)(1) of the Income Tax Regulations, a broker's

commission or similar fee for the acquisition of a guaranteed investment contract or

investments purchased for a yield restricted defeasance escrow is reasonable if (1) the

amount of the fee that the issuer treats as a qualified administrative cost does not

exceed the lesser of (A) $51,000, and (B) 0.2 percent of the computational base (as

defined in § 1.148-5(e)(2)(iii)(B)(2)) or, if more, $5,000; and (2) for any issue, the issuer

does not treat more than $145,000 in brokers' commissions or similar fees as qualified

administrative costs for all guaranteed investment contracts and investments for yield

restricted defeasance escrows purchased with gross proceeds of the issue.

.23 Gross Income Limitation for a Qualifying Relative. For taxable years beginning in

2026, the exemption amount referred to in § 152(d)(1)(B) is $5,300.

21

.24 Election to Expense Certain Depreciable Assets. For taxable years beginning in

2026, under § 179(b)(1), the aggregate cost of any § 179 property that a taxpayer elects

to treat as an expense cannot exceed $2,560,000 and, under § 179(b)(5)(A), the cost of

any sport utility vehicle that may be taken into account under § 179 cannot exceed

$32,000. Under § 179(b)(2), the $2,560,000 limitation under § 179(b)(1) is reduced (but

not below zero) by the amount by which the cost of § 179 property placed in service

during the 2026 taxable year exceeds $4,090,000.

.25 Energy Efficient Commercial Buildings Deduction. For taxable years beginning

in 2026, the applicable dollar value used to determine the maximum allowance of the

deduction under § 179D(b)(2) is $0.59 increased (but not above $1.19) by $0.02 for

each percentage point by which the total annual energy and power costs for the

buildings are certified to be reduced by a percentage greater than 25 percent. For

taxable years beginning in 2026, the applicable dollar value used to determine the

increased deduction amount for certain property under § 179D(b)(3) is $2.97 increased

(but not above $5.94) by $0.12 for each percentage point by which the total annual

energy and power costs for the building are certified to be reduced by a percentage

greater than 25 percent.

.26 Qualified Business Income. For taxable years beginning in 2026, the threshold

amounts under § 199A(e)(2) and phase-in range amounts under § 199A(b)(3)(B) and

§ 199A(d)(3)(A) are:

22

Filing Status

Threshold

amount

Phase-in range

amount

Married Individuals Filing Joint Returns

$403,500

$553,500

Married Individuals Filing Separate

Returns

$201,775

$276,775

All Other Returns

$201,750

$276,750

.27 Eligible Long-Term Care Premiums. For taxable years beginning in 2026, the

limitations under § 213(d)(10), regarding eligible long-term care premiums includible in

the term "medical care" are as follows:

Attained Age Before the Close of the Taxable Year

Limitation on Premiums

40 or less

$500

More than 40 but not more than 50

$930

More than 50 but not more than 60

$1,860

More than 60 but not more than 70

$4,960

More than 70

$6,200

.28 Medical Savings Accounts.

(1) Self-only coverage. For taxable years beginning in 2026, the term "high

deductible health plan" as defined in § 220(c)(2)(A) means, for self-only coverage, a

health plan that has an annual deductible that is not less than $2,900 and not more than

$4,400, and under which the annual out-of-pocket expenses required to be paid (other

than for premiums) for covered benefits do not exceed $5,850.

(2) Family coverage. For taxable years beginning in 2026, the term "high

deductible health plan" means, for family coverage, a health plan that has an annual

deductible that is not less than $5,850 and not more than $8,750, and under which the

23

annual out-of-pocket expenses required to be paid (other than for premiums) for

covered benefits do not exceed $10,700.

.29 Interest on Education Loans. For taxable years beginning in 2026, the $2,500

maximum deduction for interest paid on qualified education loans under § 221 begins to

phase out under § 221(b)(2)(B), as adjusted for inflation, for taxpayers with modified

adjusted gross income in excess of $85,000 ($175,000 for joint returns), and is

completely phased out for taxpayers with modified adjusted gross income of $100,000

or more ($205,000 or more for joint returns).

.30 Limitation on Use of Cash Method of Accounting. For taxable years beginning in

2026, a corporation or partnership meets the gross receipts test of § 448(c) for any

taxable year if the average annual gross receipts of such entity for the 3-taxable-year

period ending with the taxable year which precedes such taxable year does not exceed

$32,000,000.

.31 Threshold for Excess Business Loss. For taxable years beginning in 2026, in

determining a taxpayer's excess business loss, the amount under § 461(l)(3)(A)(ii)(II) is

$256,000 ($512,000 for joint returns).

.32 Treatment of Dues Paid to Agricultural or Horticultural Organizations. For

taxable years beginning in 2026, the limitation under § 512(d)(1), regarding the

exemption of annual dues required to be paid by a member to an agricultural or

horticultural organization, is $212.

24

.33 Insubstantial Benefit Limitations for Contributions Associated with Charitable

Fund-Raising Campaigns.

(1) Low cost article. For taxable years beginning in 2026, for purposes of defining

the term "unrelated trade or business" for certain exempt organizations under

§ 513(h)(2), "low cost articles" are articles costing $13.90 or less.

(2) Other insubstantial benefits. For taxable years beginning in 2026, under § 170,

the $5, $25, and $50 guidelines in section 3 of Rev. Proc. 90-12, 1990-1 C.B. 471 (as

amplified by Rev. Proc. 92-49, 1992-1 C.B. 987, and modified by Rev. Proc. 92-102,

1992-2 C.B. 579), for the value of insubstantial benefits that may be received by a donor

in return for a contribution, without causing the contribution to fail to be fully deductible,

are $13.90, $69.50 and $139, respectively.

.34 Aggregate Limitation on Contributions to ABLE Accounts. For taxable years

beginning in 2026, $20,000 (instead of instead of the amount under provided in section

4.42(1) of this revenue procedure) is included in the aggregate limitation on

contributions to ABLE accounts under § 529A(b)(2)(B)(i).

.35 Special Rules for Credits and Deductions. For taxable years beginning in 2026,

the amount of the deduction under § 642(b)(2)(C)(i) is $5,300.

.36 Tax on Insurance Companies Other than Life Insurance Companies. For taxable

years beginning in 2026, under § 831(b)(2)(A)(i) the amount of the limit on net written

premiums or direct written premiums (whichever is greater) is $2,900,000 to elect the

alternative tax for certain small companies under § 831(b)(1) to be taxed only on taxable

investment income.

25

.37 Expatriation to Avoid Tax. For calendar year 2026, under § 877A(g)(1)(A),

unless an exception under § 877A(g)(1)(B) applies, an individual is a covered expatriate

if the individual's "average annual net income tax" under § 877(a)(2)(A) for the five

taxable years ending before the expatriation date is more than $211,000.

.38 Tax Responsibilities of Expatriation. For taxable years beginning in 2026, the

amount that would be includible in the gross income of a covered expatriate by reason

of § 877A(a)(1) is reduced (but not below zero) by $910,000 pursuant to § 877A(a)(3).

.39 Foreign Earned Income Exclusion. For taxable years beginning in 2026, the

foreign earned income exclusion amount under § 911(b)(2)(D)(i) is $132,900.

.40 Debt Instruments Arising Out of Sales or Exchanges. For calendar year 2026, a

qualified debt instrument under § 1274A(b) has stated principal that does not exceed

$7,462,600, and a cash method debt instrument under § 1274A(c)(2) has stated

principal that does not exceed $5,330,500.

.41 Limitation on Aggregate Decrease in Value of Qualified Real Property in

Decedent's Gross Estate. For an estate of a decedent dying in calendar year 2026, if

the executor elects to use the special use valuation method under § 2032A for qualified

real property, the aggregate decrease in the value of qualified real property resulting

from electing to use § 2032A for purposes of the estate tax cannot exceed $1,460,000.

.42 Annual Exclusion for Gifts and Annual Exception for Covered Gifts and Covered

Bequests Received from a Covered Expatriate.

(1) For calendar year 2026, the first $19,000 of gifts to any person (other than gifts

of future interests in property) are not included in the total amount of taxable gifts under

§ 2503 made during that year.

26

(2) For calendar year 2026, the first $194,000 (instead of the amount provided in

paragraph (1) of this section 4.42) of gifts to a spouse who is not a citizen of the United

States (other than gifts of future interests in property) are not included in the total

amount of taxable gifts under §§ 2503 and 2523(i)(2) made during that year.

(3) The tax imposed under § 2801 on the receipt of covered gifts or covered

bequests from a covered expatriate shall apply only to the extent that the value of

covered gifts and covered bequests received during calendar year 2026 exceeds

$19,000.

.43 Tax on Arrow Shafts. For calendar year 2026, the tax imposed under

§ 4161(b)(2)(A) on the first sale by the manufacturer, producer, or importer of any shaft

of a type used in the manufacture of certain arrows is $0.65 per shaft.

.44 Passenger Air Transportation Excise Tax. For calendar year 2026, the tax under

§ 4261(b)(1) on the amount paid for each domestic segment of taxable air

transportation is $5.30. For calendar year 2026, the tax under § 4261(c)(1) on any

amount paid (whether within or without the United States) for any international air

transportation, if the transportation begins or ends in the United States, generally is

$23.40. Under § 4261(c)(3), however, a lower rate of tax applies under § 4261(c)(1) to

a domestic segment beginning or ending in Alaska or Hawaii, and the tax applies only to

departures. For calendar year 2026, the rate of tax is $11.70.

.45 Tax on Certain Uses of Crude Oil and Petroleum Products. For calendar year

2026, the tax imposed under § 4611(a) on crude oil received at a United States refinery

and petroleum products entered into the United States for consumption, use, or

warehousing is $0.27 per barrel.

27

.46 Reporting Exception for Certain Exempt Organizations with Nondeductible

Lobbying Expenditures. For taxable years beginning in 2026, the annual per person,

family, or entity dues limitation to qualify for the reporting exception under § 6033(e)(3)

(and section 5.05 of Rev. Proc. 98-19, 1998-1 C.B. 547), regarding certain exempt

organizations with nondeductible lobbying expenditures, is $147 or less.

.47 Notice of Large Gifts Received from Foreign Persons. For taxable years

beginning in 2026, § 6039F authorizes the Secretary of the Treasury or the Secretary’s

delegate to require recipients of gifts from certain foreign persons to report these gifts if

the aggregate value of gifts received in the taxable year exceeds $20,573.

.48 Persons Against Whom a Federal Tax Lien Is Not Valid. For calendar year 2026,

a federal tax lien is not valid against (1) certain purchasers under § 6323(b)(4) who

purchased personal property in a casual sale for less than $2,000, or (2) a mechanic's

lienor under § 6323(b)(7) who repaired or improved certain residential property if the

contract price with the owner is not more than $10,010.

.49 Property Exempt from Levy. For calendar year 2026, the value of property

exempt from levy under § 6334(a)(2) (fuel, provisions, furniture, and other household

personal effects, as well as arms for personal use, livestock, and poultry) cannot exceed

$11,980. The value of property exempt from levy under § 6334(a)(3) (books and tools

necessary for the trade, business, or profession of the taxpayer) cannot exceed $5,990.

.50 Exempt Amount of Wages, Salary, or Other Income. For taxable years

beginning in 2026, the dollar amount used to calculate the amount determined under

§ 6334(d)(4)(B) is $5,300.

28

.51 Interest on a Certain Portion of the Estate Tax Payable in Installments. For an

estate of a decedent dying in calendar year 2026, the dollar amount used to determine

the "2-percent portion" (for purposes of calculating interest under § 6601(j)) of the estate

tax extended as provided in § 6166 is $1,940,000.

.52 Failure to File Tax Return. In the case of any return required to be filed in 2027,

the amount of the addition to tax under § 6651(a) for failure to file an income tax return

within 60 days of the due date of such return (determined with regard to any extensions

of time for filing) will not be less than the lesser of $535 or 100 percent of the amount

required to be shown as tax on such return.

.53 Failure to File Certain Information Returns, Registration Statements, etc. For

returns required to be filed in 2027, the penalty amounts under § 6652(c) are:

(1) for failure to file a return required under § 6033(a)(1) (relating to returns by

exempt organization) or § 6012(a)(6) (relating to returns by political organizations):

Scenario

Daily Penalty

Maximum Penalty

Organization (§ 6652(c)(1)(A))

$25

Lesser of $13,000 or

5% of gross receipts

of the organization for

the year.

Organization with gross receipts

exceeding $1,339,500 (§ 6652(c)(1)(A))

$130

$66,500

Managers (§ 6652(c)(1)(B))

$10

$6,500

Public inspection of annual returns and

reports (§ 6652(c)(1)(C))

$25

$13,000

Public inspection of applications for

exemption and notice of status

(§ 6652(c)(1)(D))

$25

No Limit

29

(2) for failure to file a return required under § 6034 (relating to returns by certain

trust) or § 6043(b) (relating to terminations, etc., of exempt organizations):

Scenario

Daily

Penalty

Maximum

Penalty

Organization or trust (§ 6652(c)(2)(A))

$10

$6,500

Managers (§ 6652(c)(2)(B))

$10

$6,500

Split-Interest Trust (§ 6652(c)(2)(C)(ii))

$25

$13,000

Any trust with gross income exceeding $334,500

(§ 6652(c)(2)(C)(ii))

$130

$66,500

(3) for failure to file a disclosure required under § 6033(a)(2):

Scenario

Daily

Penalty

Maximum

Penalty

Tax–exempt entity (§ 6652(c)(3)(A))

$130

$66,500

Failure to comply with written demand

(§ 6652(c)(3)(B)(ii))

$130

$13,000

.54 Other Assessable Penalties with Respect to the Preparation of Tax Returns for

Other Persons. In the case of any failure relating to a return or claim for refund filed in

2027, the penalty amounts under § 6695 are:

30

Scenario

Per Return or

Claim for Refund

Maximum

Penalty

Failure to furnish copy to taxpayer (§ 6695(a))

$65

$33,000

Failure to sign return (§ 6695(b))

$65

$33,000

Failure to furnish identifying number (§ 6695(c))

$65

$33,000

Failure to retain copy or list (§ 6695(d))

$65

$33,000

Failure to file correct information returns

(§ 6695(e))

$65 per return

and item in

return

$33,000

Negotiation of check (§ 6695(f))

$665 per check

No limit

Failure to be diligent in determining eligibility for

head of household filing status, child tax credit,

American Opportunity tax credit, and earned

income credit (§ 6695(g))

$665 per failure

No limit

.55 Failure to File Partnership Return. In the case of any return required to be filed

in 2027, the dollar amount used to determine the amount of the penalty under

§ 6698(b)(1) is $260.

.56 Failure to File S Corporation Return. In the case of any return required to be

filed in 2027, the dollar amount used to determine the amount of the penalty under

§ 6699(b)(1) is $260.

.57 Failure to File Correct Information Returns. In the case of any failure relating to a

return required to be filed in 2027, the penalty amounts under § 6721 are:

(1) for persons with average annual gross receipts for the most recent three

taxable years of more than $5,000,000, for failure to file correct information returns:

31

Scenario

Penalty Per Return

Calendar Year

Maximum

General Rule (§ 6721(a)(1))

$340

$4,191,500

Corrected on or before 30 days after

required filing date (§ 6721(b)(1))

$60

$698,500

Corrected after 30th day but on or before

August 1, 2026 (§ 6721(b)(2))

$130

$2,095,500

(2) for persons with average annual gross receipts for the most recent three

taxable years of $5,000,000 or less, for failure to file correct information returns:

Scenario

Penalty Per Return

Calendar Year

Maximum

General Rule (§ 6721(d)(1)(A))

$340

$1,397,000

Corrected on or before 30 days after

required filing date (§ 6721(d)(1)(B))

$60

$244,500

Corrected after 30th day but on or before

August 1, 2026 (§ 6721(d)(1)(C))

$130

$698,500

(3) for failure to file correct information returns due to intentional disregard of the

filing requirement (or the correct information reporting requirement):

32

Scenario

Penalty Per Return

Calendar Year

Maximum

Return other than a return required to be

filed under §§ 6045(a), 6041A(b), 6050H,

6050I, 6050J, 6050K, or 6050L

(§ 6721(e)(2)(A))

Greater of (i) $690, or (ii) No limit

10% of aggregate

amount of items required

to be reported correctly

Return required to be filed under

§§ 6045(a), 6050K, or 6050L

(§ 6721(e)(2)(B))

Greater of (i) $690, or (ii)

5% of aggregate amount

of items required to be

reported correctly

Return required to be filed under

§ 6050I(a) (§ 6721(e)(2)(C))

Greater of (i) $34,930, or No limit

(ii) amount of cash

received up to $139,500

Return required to be filed under § 6050V

(§ 6721(e)(2)(D))

Greater of (i) $690, or (ii) No limit

10% of the value of the

benefit of any contract

with respect to which

information is required to

be included on the return

No limit

.58 Failure to Furnish Correct Payee Statements. In the case of any failure relating

to a statement required to be furnished in 2027, the penalty amounts under § 6722 are:

(1) for persons with average annual gross receipts for the most recent three

taxable years of more than $5,000,000, for failure to furnish correct payee statements:

Scenario

Penalty Per

Statement

Calendar Year

Maximum

General Rule (§ 6722(a)(1))

$340

$4,191,500

Corrected on or before 30 days after

required furnishing date (§ 6722(b)(1))

$60

$698,500

Corrected after 30th day but on or

before August 1, 2026 (§ 6722(b)(2))

$130

$2,095,500

33

(2) for persons with average annual gross receipts for the most recent 3 taxable

years of $5,000,000 or less, for failure to furnish correct payee statements:

Scenario

Penalty Per

Statement

$340

Calendar Year

Maximum

$1,397,000

Corrected on or before 30 days after required

furnishing date (§ 6722(d)(1)(B))

$60

$244,500

Corrected after 30th day but on or before

August 1, 2026 (§ 6722(d)(1)(C))

$130

$698,500

General Rule (§ 6722(d)(1)(A))

(3) for failure to furnish correct payee statements due to intentional disregard of the

requirement to furnish a payee statement (or the correct information reporting

requirement):

Scenario

Penalty Per

Statement

Calendar Year

Maximum

Payee statement other than a statement

required under §§ 6045(b), 6041A(e) (in

respect of a return required under

§§ 6041A(b)), 6050H(d), 6050J(e),

6050K(b), or 6050L(c) (§ 6722(e)(2)(A))

Greater of (i) $690,

or (ii) 10% of

aggregate amount of

items required to be

reported correctly

No limit

Payee statement required under §§ 6045(b),

6050K(b), or 6050L(c) (§ 6722(e)(2)(B))

Greater of (i) $690,

or (ii) 5% of

aggregate amount of

items required to be

reported correctly

No limit

.59 Failure to Comply with Information Reporting Requirements Relating to Qualified

Opportunity Funds and Qualified Rural Opportunity Funds. In the case of any return

required to be filed in 2027, the penalty amount under § 6726 for failure to file a return in

the time and manner prescribed for a qualified opportunity fund or qualified rural

34

opportunity fund under § 6039K is $510 per day with a maximum penalty of $10,000 per

return ($51,000 if the gross assets of the fund are greater than $10,230,000). If the

failure to file in the time and manner prescribed is due to intentional disregard, then the

penalty is $2,550 per day with a maximum penalty is $51,000 per return ($255,000 if the

gross assets of the fund are greater than $10,230,000).

.60 Revocation or Denial of Passport in Case of Certain Tax Delinquencies. For

calendar year 2026, the amount of a serious delinquent tax debt under § 7345 is

$66,000.

.61 Attorney Fee Awards. For fees incurred in calendar year 2026, the attorney fee

award limitation under § 7430(c)(1)(B)(iii) is $260 per hour.

.62 Periodic Payments Received Under Qualified Long-Term Care Insurance

Contracts or Under Certain Life Insurance Contracts. For calendar year 2026, the

stated dollar amount of the per diem limitation under § 7702B(d)(4), regarding periodic

payments received under a qualified long-term care insurance contract or periodic

payments received under a life insurance contract that are treated as paid by reason of

the death of a chronically ill individual, is $430.

.63 Qualified Small Employer Health Reimbursement Arrangement. For taxable

years beginning in 2026, to qualify as a qualified small employer health reimbursement

arrangement under § 9831(d), the arrangement must provide that the total amount of

payments and reimbursements for any year cannot exceed $6,450 ($13,100 for family

coverage).

35

SECTION 5. EFFECTIVE DATE

.01 2025 Inflation-Adjusted Items. Section 3 of this revenue procedures applies to

taxable years beginning in 2025.

.02 2026 Inflation-Adjusted Items. Except as provided in section 5.03 of this revenue

procedure, section 4 of this revenue procedure applies to taxable years beginning in

2026.

.03 Calendar Year Rule. Section 4 of this revenue procedure applies to transactions

or events occurring in calendar year 2026 for purposes of sections 4.07 (rehabilitation

expenditures treated as separate new building), 4.08 (low-income housing credit), 4.13

(transportation mainline pipeline construction industry optional expense substantiation

rules for payments to employees under accountable plans), 4.19 (private activity bonds

volume cap), 4.20 (loan limits on agricultural bonds), 4.21 (general arbitrage rebate

rules), 4.22 (safe harbor rules for broker commissions on guaranteed investment

contracts or investments purchased for a yield restricted defeasance escrow), 4.37

(expatriation to avoid taxes), 4.40 (debt instruments arising out of sales or exchanges),

4.41 (limitation on aggregate decrease in value of qualified real property in decedent's

gross estate), 4.42 (annual exclusion for gifts and annual exception for covered gifts

and covered bequests received from a covered expatriate), 4.43 (tax on arrow shafts),

4.443 (passenger air transportation excise tax), 4.45 (tax on certain uses of crude oil

and petroleum products), 4.48 (persons against whom a federal tax lien is not valid),

4.49 (property exempt from levy), 4.51 (interest on a certain portion of the estate tax

payable in installments), 4.60 (revocation or denial of passport in case of certain tax

delinquencies), 4.61 (attorney fee awards), and 4.62 (periodic payments received under

36

qualified long-term care insurance contracts or under certain life insurance contracts) of

this revenue procedure.

SECTION 6. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2024-40 is modified.

SECTION 7. DRAFTING INFORMATION

The principal author of this revenue procedure is Michael Finn of the Office of

Associate Chief Counsel (Income Tax & Accounting). For further information regarding

this revenue procedure, contact Mr. Finn at (202) 317-4718 (not a toll-free call).