Tax season always brings a mix of anticipation and anxiety. You’ve spent a year working hard, making financial decisions, and watching your portfolio grow. The last thing you want is to be blindsided by changes in the tax code that leave you scrambling to adjust your strategy.
For 2026, the tax landscape has shifted in ways that could meaningfully affect your financial plan. The One Big Beautiful Bill Act, signed into law in July 2025, introduced changes that go beyond simple inflation adjustments. From expanded deductions for seniors to increased retirement contribution limits, these updates create both opportunities and complexities. Understanding what’s changed can help you make decisions that preserve more of your wealth while staying compliant with the latest regulations.
Standard Deduction and Bracket Adjustments
The standard deduction receives its annual inflation adjustment for 2026. Married couples filing jointly will see their standard deduction rise to $32,200, while single filers and those married filing separately get $16,100, and heads of households receive $24,150. These increases reflect the IRS’s effort to keep pace with inflation, though the adjustments lag behind current price levels in many cases.
Tax brackets also widened for 2026, creating a situation where you can earn slightly more before moving into the next rate tier. The practical effect varies by income level. If your earnings remain stable from 2025 to 2026, you might see a modest increase in your take-home pay thanks to these expanded brackets. However, inflation’s current trajectory means these adjustments may feel less impactful than the numbers suggest.
New Senior Deduction Creates Significant Savings
One of the most substantial changes affects taxpayers aged 65 and older. Beginning with the 2025 tax year, individuals age 65 and older can claim an additional $6,000 deduction beyond the standard deduction, or $12,000 for married couples where both spouses qualify. This deduction applies whether you itemize or take the standard deduction, making it accessible to a broad range of seniors.
The benefit phases out for higher earners. Taxpayers with modified adjusted gross income over $75,000 for singles or $150,000 for joint filers see this deduction reduced. Despite the phaseout, many retirees will qualify for at least partial benefits. This provision runs through 2028, creating a four-year window for enhanced tax savings during retirement years.
For couples in their mid-70s managing required minimum distributions from retirement accounts, this deduction could offset some of the tax burden those withdrawals create. Strategic timing of income and deductions becomes even more valuable when factoring in this new benefit.
SALT Deduction Cap Quadruples for High-Tax States
The state and local tax deduction underwent dramatic changes that particularly benefit those in high-tax jurisdictions. The SALT deduction cap increased from $10,000 to $40,000 for most filers starting in tax year 2025, with the cap rising 1% annually through 2029 before reverting to $10,000 in 2030.
This expansion comes with important limitations. The benefit is reduced by 30% of the amount by which modified adjusted gross income exceeds $500,000 for joint filers, though all taxpayers retain a minimum SALT deduction of $10,000. For 2026, the cap increases to $40,400, and the income threshold where phaseouts begin rises to $505,000.
Homeowners in states like New York, California, New Jersey, and Connecticut stand to benefit most significantly. If you’re paying substantial property taxes plus state income taxes, the expanded cap could make itemizing worthwhile where it previously wasn’t. The key consideration involves whether your total itemized deductions exceed the standard deduction once you factor in the higher SALT cap.
Retirement Contribution Limits Rise
Retirement savers see increased contribution limits across multiple account types for 2026. The amount individuals can contribute to 401(k) plans rises to $24,500, up from $23,500 for 2025, while IRA contribution limits increase to $7,500.
Catch-up contributions also received adjustments. Workers aged 50 and older can contribute an additional $8,000 to their 401(k) plans, bringing their total potential contribution to $32,500. A higher catch-up contribution limit applies for employees aged 60 through 63, which remains at $11,250. This “super catch-up” provision recognizes that these years often represent peak earning periods when accelerated savings becomes possible.
IRA catch-up contributions for those 50 and older increased to $1,100, allowing a combined maximum IRA contribution of $8,600 for this age group. These higher limits create opportunities to shelter more income from current taxation while building retirement assets.
One significant change affects high earners making catch-up contributions. Starting January 1, 2026, participants age 50 or older who earned over $150,000 in the previous year must make their catch-up contributions in a Roth account only. This requirement means foregoing the immediate tax deduction on catch-up amounts, though Roth accounts offer tax-free growth and withdrawals in retirement.
Health Savings Account Expansions
Health Savings Accounts gained additional flexibility through recent legislation. Telehealth and other remote care services can now be received before meeting a high-deductible health plan’s deductible, with individuals still able to contribute to their HSA even after using telehealth before meeting the deductible. This change became permanent for plan years starting on or after January 1, 2025.
Looking ahead to 2026, bronze and catastrophic health insurance plans are treated as HSA-compatible starting January 1, 2026, whether purchased through an insurance exchange or not. This expansion makes HSA eligibility available to a broader group of people who previously couldn’t access these triple-tax-advantaged accounts.
For those eligible to use HSAs, annual contribution limits for 2026 increased to $4,400 for individuals with self-only coverage and $8,750 for family coverage. HSAs deserve consideration in your overall tax strategy since contributions reduce current taxable income, funds grow tax-deferred, and withdrawals for qualified medical expenses carry no tax burden.
Estate and Gift Tax Adjustments
Estate planning considerations shift with inflation-adjusted exclusion amounts. Estates of decedents who die during 2026 have a basic exclusion amount of $15,000,000, up from $13,990,000 for estates of decedents who died in 2025. This increase provides additional room for wealth transfer strategies.
The annual gift tax exclusion remains at $19,000 for 2026, unchanged from 2025. However, gifts to non-citizen spouses increased to $194,000 for calendar year 2026. These figures inform decisions about lifetime gifting strategies and intergenerational wealth transfer.
Work With Us
Tax planning for 2026 demands attention to a complex array of changes affecting everything from daily retirement contributions to year-end charitable giving strategies. The expanded SALT deduction helps those in high-tax states, enhanced senior deductions provide relief for older taxpayers, and increased retirement contribution limits create opportunities for accelerated savings. These provisions work together with inflation adjustments and new Roth requirements to create a tax environment that rewards strategic planning.
At Brogan Financial, we help clients turn tax law changes into actionable strategies that preserve wealth and support long-term goals. Our team stays current with evolving regulations so you can focus on what matters most in your life. We’ll analyze how these 2026 updates affect your specific situation, from calculating the optimal mix of traditional and Roth retirement contributions to determining whether the expanded SALT deduction makes itemizing worthwhile for your circumstances.
Tax planning doesn’t end with filing your return each April. The decisions you make throughout the year about retirement contributions, investment sales, charitable gifts, and income timing all influence your final tax bill. Schedule a consultation with Brogan Financial today to develop a comprehensive tax strategy that takes full advantage of the opportunities available in 2026 while positioning you for success in the years ahead.For weekly financial insights and knowledge, tune in to ‘More Living with Jim Brogan’ every Saturday morning at 9 on 98.7 FM WO
