 
.  
 
 
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 
Section1 
.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 
3 
 
.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 
4 
 
.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%, 
5 
 
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 
6 
 
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, 
7 
 
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. 
8 
 
     .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 
9 
 
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)) 
$31,500  
Heads of Households (§ 1(j)(2)(B)) $23,625  
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  
 
     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 i s 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 - Se ction 1(j)(2)(A) –Married Individuals Filing Joint Returns and Surviving 
Spouses 
 
 
TABLE 2 - Section 1(j)(2)(B) – Heads of Households 
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  
 $11,600 plus 22% of the excess 
over $100,800  
 Over $211,400 but not over 
$403,550 
 $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 
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  
11 
 
 
TABLE 3 - Section 1(j)(2)(C) – Unmarried Individuals (other than Surviving Spouses and 
Heads of Households) 
 
 
TABLE 4 - Section 1(j)(2)(D) – Married Individuals Filing Separate Returns 
 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  
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  
 $58,448 plus 35% of  
the excess over $256,225  
 Over $640,600   $192,979.25 plus 37% of  
the excess over $640,600   
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 
 
 
TABLE 5 - Section 1(j)(2)(E) – Estates and Trusts 
 
     .02 U nearned 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. 
 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  
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  
13 
 
     .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) A doption 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. 
14 
 
        (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 Ch ild 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) R efundable 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 E arned 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).   
15 
 
                                                      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 Re habilitation 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-I ncome 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. 
16 
 
     .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 E xemption Amounts for Alternative Minimum Tax.  For taxable years beginning in 
2026, the exemption amounts under § 55(d)(1) are: 
Filing status Exemption 
amount 
Joint Returns or Surviving Spouses $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 C ertain 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 T ransportation 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, 
18 
 
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) A ged 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 C afeteria 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 I ncome 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 A doption 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 Loa n 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 G eneral 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 S afe 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 G ross 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 E nergy 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 Q ualified 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) F amily 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 Li mitation 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 T hreshold 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 T reatment 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) O ther 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 A ggregate 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 S pecial 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 T ax 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 T ax 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 D ebt 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 Li mitation 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 A nnual 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 T ax 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 N otice 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 P ersons 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 P roperty 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 E xempt 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 F ailure 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 F ailure 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 F ailure 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 F ailure 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) 
10% of aggregate 
amount of items required 
to be reported correctly 
No limit 
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 
No limit 
 
Return required to be filed under 
§ 6050I(a) (§ 6721(e)(2)(C)) 
Greater of (i) $34,930, or 
(ii) amount of cash 
received up to $139,500  
No limit 
 
Return required to be filed under § 6050V 
(§ 6721(e)(2)(D)) 
Greater of (i) $690, or (ii) 
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 
Calendar Year 
Maximum 
General Rule (§ 6722(d)(1)(A)) $340  $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  
 
        (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 A ttorney 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 P eriodic 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 Q ualified 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.    
     .02 202 6 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 C alendar 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).  