Markus Andrews

New federal tax changes for 2026 may affect what families may owe and the refunds they may receive.
The IRS has released new updates on thresholds affecting families, including the child tax credit, earned income tax credit, adoption credit and annual gift tax exclusion.

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The IRS has announced new tax inflation adjustments for 2026.
Those changes may affect just how much federal taxes families pay in taxes or receive in their refunds come tax time.

Qualifying families may see higher amounts for the child tax credit and earned income tax credit in 2026. Moreover, the adoption credit and gift tax exclusion have also been adjusted for next year.
In its Thursday announcements, the IRS also increased figures for dozens of other provisions, including federal income tax brackets and long-term capital gains brackets, among others.
The IRS announcements came a day after the agency said it would furlough nearly half its workforce due to the ongoing government shutdown. 

Read more CNBC personal finance coverage

Child tax credit for 2026

As the IRS noted in its announcement, President Donald Trump’s “big beautiful bill” enacted in July bumped the maximum child tax credit — a tax break for parents of qualifying children — to $2,200 starting in 2025. Prior to that legislation, the maximum child tax credit was $2,000 per child.
The maximum $2,200 child tax credit will be in effect for tax years 2025 and 2026, according to an IRS spokesperson. That threshold will be adjusted for inflation for tax year 2027, the spokesperson said.

The refundable portion of the child tax credit is $1,700 for 2026, according to the IRS, which is unchanged from 2025. That represents the amount families may potentially receive back as a tax refund if their tax liability is less than their child tax credit amount.

Earned income tax credit for 2026

The earned income tax credit — a tax break for low- to middle-income individuals and families — will be adjusted for 2026 based on the taxpayer’s number of children and income.
The maximum earned income tax credit, or EITC, will increase to $8,231 in 2026 for qualifying taxpayers with three or more eligible children — up from $8,046 for tax year 2025.
For qualifying taxpayers with two children, the maximum EITC will increase to $7,316 in 2026, up from $7,152 in 2025.
For taxpayers with one child, the maximum will be $4,427, up from $4,328 in 2025.
For qualifying filers with no children, the maximum amount will be $664 in 2026, up from $649 in 2025.

To qualify for the tax credit, individuals and families must be under certain thresholds for adjusted gross income.
Married couples who file jointly will completely phase out at $70,224 in adjusted gross income if they have three or more children, $65,899 in AGI with two children, $58,863 with one child and $26,820 with no children.
For other tax filing statuses — single, head of household or widowed — the EITC will completely phase out at $62,974 for those with three or more children, $58,629 for two children, $51,593 for one child and $19,540 for no children.
To qualify for the EITC, taxpayers cannot have more than $12,200 in certain investment income in 2026.

Adoption credit for 2026

The maximum credit for qualified adoption expenses rises to $17,670 in 2026, up from $17,280 in 2025. The amount of the credit that may be refundable will be $5,120 in 2026.

Gift tax exclusion changes

The annual exclusion for gifts will be $19,000 in 2026 — which is unchanged from 2025.
The annual exclusion for gifts to a spouse who is not a U.S. citizen will go up to $194,000 for 2026 — a $4,000 increase from 2025. More

ETF Strategist

ETF Street
ETF Strategist

Many young investors avoid stocks because it seems intimidating, according to a Bankrate poll.
Young people should be fully invested in stocks and avoid cash and bonds in their investment portfolios, said Josh Brown, CEO of Ritholtz Wealth Management.
Doing so doesn’t have to be complicated. An index fund that tracks the broad stock market is a good one-and-done fund for investors, according to finance experts.

Josh Brown.
Danielle DeVries | CNBC

Investing can feel daunting for newbies.
About 21% of surveyed Americans say stocks aren’t their preferred way to invest because the stock market is too intimidating, according to a Bankrate poll in January. That fear skewed higher for younger people, to 29% of Gen Z members and 24% of millennials, it found.

Putting all your money in cash or bonds may feel safe, because it seems like there’s little scope for financial loss — but this is misguided, according to financial advisors.
“When you’re young, worrying more about downside than upside is probably the biggest mistake,” said Josh Brown, CEO of Ritholtz Wealth Management. “You have to get rich before you focus on preserving your wealth.”

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In fact, young people shouldn’t be focused at all on cash positions or bonds in their investment accounts, Brown said. Instead, they should be fully invested in the stock market, he said.

Young investors have time on their side

It may seem counterintuitive that stocks are generally the safer route for young investors when it comes to building long-term financial security.
While stocks are generally more volatile than cash and bonds, stocks have also historically outperformed them over long periods — an important factor when it comes to growing wealth and beating inflation, which erodes the value of money over time, experts said.

The S&P 500, an index of the largest U.S. stocks, had an average annual return of almost 12%, including dividends, from 1928 through 2024, according to data compiled by Aswath Damodaran, a finance professor at New York University.
By comparison, 10-year U.S. Treasury bonds and corporate bonds had an average annual return of about 5% and 7% over the same period, respectively, the data shows.
Investors in their 20s and 30s have decades ahead of them for interest to compound and recoup any near-term financial losses from stocks.
“When you’re a young investor, you have something at your disposal that every professional investor dreams that they can have, which is more time,” Brown said.
“When you appreciate how much time you have, you recognize the benefit of long-term compounding,” he said. “Even though you think you’re taking more risk by buying and holding [stocks], you’re actually taking less risk.”

How to buy and hold stocks

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Buying and holding stocks is just one part of the equation — how investors hold them matters a lot, too.
Investors who are just starting out are generally best served by owning an index fund that tracks the broad stock market, instead of trying to pick individual company stocks that they or analysts think will perform well. The latter strategy is risky, since investors peg their financial outcomes to the success of a handful of stocks.
Index mutual funds and exchange-traded funds hold a basket of hundreds of stocks that track the broad market. Index funds have historically outperformed most stock pickers over long stretches of time and take a lot of the complexity out of investing, experts said.
“If you’re going to be self-directed and you’re going to do it yourself, I would utilize index [mutual] funds and index ETFs,” Brown said. “And until you’ve got six figures of pure stock market exposure at a low cost, there’s really nothing else worth talking about.”

Young investors can start out with a total market index fund, said Christine Benz, director of personal finance and retirement planning for Morningstar.
An all-stock index fund that provides U.S. and non-U.S. stock exposure, such as the Vanguard Total World Stock ETF (VT), is a good “one-and-done fund” for young investors, she said.
A balanced fund or target-date fund may also work well, she said.
Balanced funds maintain a static asset allocation — that is, the relative mix of assets such as stocks and bonds — over time. A target-date fund is similar, but gradually winds down its stock exposure as investors age.
Investors should be mindful of the type of account in which they hold their assets, advisors said. For example, it may make more sense to hold certain funds such as a target-date fund in a tax-advantaged retirement account such as a 401(k) or IRA instead of a taxable brokerage account, a type of non-retirement account, to prevent an unexpected tax bill at year-end.
This article is part of CNBC’s Let’s Get Personal (Finance) video series. Check out the full lineup of videos to help you make smarter money decisions on YouTube. More

Typically, 401(k) catch-up contributions, which apply to workers age 50 and older, can be traditional pretax or after tax Roth, depending on what 401(k) plans allow.
But starting in 2026, 401(k) catch-up contributions generally must be after tax Roth if you earned more than $145,000 during the previous year.
The change could mean impacted workers lose an upfront tax break, but it’s important to run projections with an advisor to strategize long-term.

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There’s a big change coming for 401(k) plans that could impact a popular tax break for higher earners, experts say.
For 2025, workers can defer up to $23,500 into 401(k) plans, and employees age 50 or older can save an extra $7,500, known as “catch-up contributions.” That catch-up limit jumps to $11,250 for workers age 60 to 63.    

Typically, catch-up contributions can be traditional pretax or after-tax Roth, depending on what your 401(k) plan allows. But certain higher earners soon won’t have a choice, thanks to a change enacted via the Secure 2.0 Act of 2022.
Starting in 2026, 401(k) catch-up contributions generally must be after-tax Roth if you earned more than $145,000 from your current employer during the previous year.

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In the meantime, older workers can choose between traditional and Roth 401(k) catch-up contributions, assuming their plan offers both options.
While traditional deferrals offer an upfront tax break, you will pay regular income taxes on future withdrawals. By comparison, there is no tax deduction for Roth contributions, but the funds grow tax-free.
“Now is the time to work with your advisor or tax preparer to run multi-year tax projections,” said certified financial planner Patrick Huey, owner of Victory Independent Planning in Portland, Oregon. 

This could help you decide whether to accelerate pretax catch-up contributions through 2025 or embrace Roth contributions sooner, experts say.

Pick between pretax and Roth 401(k)

In 2024, nearly all retirement plans offered catch-up contributions, but only 16% of eligible workers made these deferrals, according to a 2025 Vanguard report based on more than 1,400 plans and nearly 5 million participants.
Most catch-up contribution participants earned $150,000 or more, the report found.

However, the choice between Roth vs. pretax catch-up contributions may depend on several factors, including current and expected future tax brackets, experts say. You may also consider your effective tax rate — total tax relative to earnings — in retirement or legacy planning goals.
The “key takeaway” for investors is, “do not sit on the sidelines” as the rules change, said CFP Jared Gagne, assistant vice president and private wealth manager with Claro Advisors in Boston.   More

The IRS has unveiled higher federal tax brackets for 2026 to adjust for inflation.
The standard deduction will increase to $32,200 for married couples filing together and $16,100 for single taxpayers.
There are also changes to the long-term capital gains brackets, estate tax exemption, child tax credit eligibility and more. 
The IRS announcements come a day after the agency said it would furlough nearly half its workforce due to the ongoing government shutdown. 

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The IRS has announced new federal income tax brackets and standard deductions for 2026.
In its announcement Thursday, the agency raised the income thresholds for each bracket, which apply to tax year 2026 for returns filed in 2027.

The IRS also boosted figures for other provisions, including long-term capital gains brackets, estate and gift tax exemption and eligibility for the earned income tax credit, among others.
For 2026, the top rate of 37% applies to individuals with taxable income above $640,600 and married couples filing jointly earning $768,700 or more for 2026.

Read more CNBC personal finance coverage

Federal income tax brackets show how much you owe on each part of your “taxable income,” which you calculate by subtracting the greater of the standard or itemized deductions from your adjusted gross income.
The standard deduction will also increase in 2026, rising to $32,200 for married couples filing jointly, up from $31,500 in 2025. Starting in 2026, single filers can claim $16,100, a bump up from $15,750.
The IRS announcements come a day after the agency said it would furlough nearly half its workforce due to the ongoing government shutdown.  More

Even with the government shutdown, some student loan borrowers are receiving emails from the U.S. Department of Education that their debt will soon be discharged.
Here’s what borrowers should know.

People walk in front of the the U.S. Department of Education, amid reports that U.S. President Donald Trump’s administration will take steps to defund the federal Education Department, in Washington, U.S., February 4, 2025. 
Kevin Lamarque | Reuters

Despite the government shutdown, the U.S. Department of Education is sending out notices to student loan borrowers that their debt will soon be canceled.
“You are now eligible to have some or all of your federal student loan(s) discharged because you have reached the necessary number of payments under your Income-Based Repayment (IBR) Plan,” reads an email sent to a borrower. CNBC reviewed multiple notices to borrowers.

According to the department email, the recipient’s loan discharge will be processed “over the next several months,” and borrowers have until Oct. 21 to opt out of the relief.

Read more CNBC personal finance coverage

In July, the Education Department announced it would temporarily stop forgiving the debt of borrowers enrolled in the IBR plan. Under its terms, IBR concludes in debt erasure after 20 years or 25 years of payments, depending on the age of a borrower’s loans.
The development sparked panic among borrowers. After recent court actions and Congress’ passage of President Donald Trump’s “big beautiful bill,” which phases out several existing student loan repayment plans, IBR is the only plan available at the moment that offers debt forgiveness.
The department said that it needed to pause the relief while it responded to court orders that changed which periods counted for loan forgiveness. 
With the relief on pause, many borrowers who’d been in repayment for decades were stuck carrying a debt that — according to their loan terms — they should no longer owe.

The delayed IBR loan forgiveness became a central issue in the American Federation of Teacher’s legal battle with the Education Department. The teacher’s union, which represents nearly 2 million members, filed a lawsuit against the Trump administration in March, accusing it of depriving student loan borrowers of their rights.
The union had pointed out that if the IBR loan discharges occurred after December, borrowers could be saddled with a huge tax bill.
The American Rescue Plan Act of 2021 made student loan forgiveness tax-free at the federal level through the end of 2025. Trump’s “big beautiful bill” did not extend or make permanent that broader provision. More

The IRS has announced the long-term capital gains brackets for 2026, which apply to investments owned for more than one year. 
For 2026, single filers can earn up to $49,450 in taxable income — or $98,900 for married couples filing jointly — and still pay 0% for long-term capital gains.
You calculate taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income.
The IRS announcements come a day after the agency said it would furlough nearly half its workforce due to the ongoing government shutdown. 

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The IRS has unveiled higher capital gains tax brackets for 2026.
In its announcement Thursday, the agency boosted the taxable income limits for the long-term capital gains brackets, which apply to assets owned for more than one year.  

It also increased figures for dozens of other provisions, including federal income tax brackets, the estate and gift tax exemption, and eligibility for the earned income tax credit, among others.
The IRS announcements come a day after the agency said it would furlough nearly half its workforce due to the ongoing government shutdown. 

Read more CNBC personal finance coverage

The capital gains rate you pay is based on which bracket you fall into based on taxable income. 
You calculate taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income. For 2026, the standard deduction will rise to $16,100 for single filers and $32,200 for married couples filing jointly.
Starting in 2026, single filers will qualify for the 0% long-term capital gains rate with taxable income of $49,450 or less and married couples filing jointly are eligible with $98,900 or less.  More

Millions of Social Security beneficiaries are poised to see an inflation-adjustment to their benefits in 2026.
But the timing of the Social Security cost-of-living announcement may be delayed if the federal government shutdown continues.
Here’s what experts are watching with regard to the Social Security COLA for 2026.

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The Social Security cost-of-living adjustment for 2026 is expected to be formally announced in October. However, the federal government shutdown may affect the timing of that news.
Millions of Social Security beneficiaries are poised to get a boost to their monthly checks next year. When the Social Security COLA is announced, experts have projected the benefit increase may fall in the range of 2.7% to 2.8%, based on the most recent government inflation data.

Beneficiaries have seen several significant increases in their benefits in recent years — the largest was 8.7% in 2022 — due to higher inflation. But as the pace of inflation has come down, so have the cost-of-living adjustments.

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Still, many Social Security beneficiaries continue to face higher prices for necessities.
“They’re feeling the pinch, but the inflation numbers aren’t necessarily showing it,” said Shannon Benton, executive director at The Senior Citizens League, a nonpartisan senior group.
Here are three things to watch ahead of the Social Security COLA announcement.

Shutdown may delay COLA announcement

The Social Security cost-of-living adjustment is based on third-quarter data for the consumer price index.

On Oct. 15, the Bureau of Labor Statistics is scheduled to release the final month of data for that quarter. But that announcement may be delayed, depending on how soon Washington lawmakers are able to resolve their differences and reopen the federal government.
If the CPI data is delayed, that would affect the Social Security COLA announcement, too, according to the Department of Labor’s contingency plan.
A federal shutdown has postponed the announcement of the Social Security COLA before. In 2013, a shutdown put off the CPI release, and the COLA announcement, until Oct. 30.

Average retirement benefit may go up by $54 per month

The Social Security cost-of-living adjustment for 2026 may be around 2.7% to 2.8%, according to the latest estimates from experts released last month.
“It’s almost too close to call,” Mary Johnson, an independent Social Security and Medicare policy analyst, said of the projections based on last month’s consumer price index data. “I can’t remember it ever being this close.”
Johnson estimated last month the COLA could be 2.8%, though it was very close to 2.7%, she said. That 2.8% estimated COLA would push the average retirement benefit up by about $54.70 per month, according to Johnson.
The Senior Citizens League last month projected the 2026 COLA would be 2.7%, amounting to an increase of about $54 per month for the average retirement benefit.
Even with one more month of data, the COLA may not change by much compared with those projections, Johnson said.

Experts’ estimates for next year’s COLA have steadily increased as this year progressed. In the past several months, those projections have pointed to a 2.6% to 2.8% Social Security COLA for 2026.
That range is slightly higher than the 2.5% Social Security cost-of-living adjustment beneficiaries saw in 2025. It is also in line with the average 2.6% COLA over the past 20 years, according to The Senior Citizens League.
For longtime recipients whose benefits have increased with COLAs over the years, the distinction between the 2.5% increase that went into effect this year and the slightly higher estimates for 2026 may show up more prominently in their monthly payments, according to Benton.
“When you’re accruing over years and years of retirement, a 10th of a percent can make a difference,” Benton said.

Medicare Part B premiums may cost more

Exactly how much of a COLA increase beneficiaries may see will also depend on the size of Medicare Part B premiums, which are typically deducted directly from Social Security benefit checks.
“You don’t know the bottom line until they announce the Part B premium,” Johnson said.
The standard monthly Part B premium may go up by 11.6% or $21.50 per month, to $206.50 per month from $185, according to Medicare trustees estimates.
The Part B premium rate for the following year is frequently announced in November, though some administrations have done it earlier, according to Benton. The federal government shutdown may also affect the timing of that release, she said.

How much retirees pay for their Medicare Part B premiums is based on their income, with higher earners paying income-related monthly adjustment amounts, or IRMAAs.
While Social Security beneficiaries may see their effective COLA brought down to zero due to higher Medicare Part B premiums, they will not see their benefits reduced, due to what is known as a hold harmless provision, Benton said. More