1. Higher Standard Deductions

Good news for taxpayers—the standard deduction has increased:

• Single: $16,100
• Head of Household: $24,150
• Married Filing Jointly: $32,200

This means more of your income is shielded from taxes, reducing your overall tax bill.

2. Adjusted Tax Brackets

Income tax brackets have shifted upward slightly due to inflation. While rates remain the same (10%–37%), the income thresholds are higher, which could lower your effective tax rate.

3. Expanded SALT Deduction

If you live in a state with high property or income taxes, you’ll benefit from the State and Local Tax (SALT) deduction cap increase:

• Up to $40,000 for joint filers
• Up to $20,000 for separate filers

This is a big win for homeowners in high-tax states.

4. New Above-the-Line Deductions

The new tax law introduces temporary deductions for:

• Reported tips (up to $25,000)
• Overtime earnings (up to $12,500)
• Senior bonus deduction (up to $6,000 for those 65+)

These can reduce your taxable income even if you don’t itemize.

5. Retirement Contribution Increases

Saving for retirement just got easier:

• 401(k): Up to $24,500
• Catch-up contributions: $8,000 for age 50+, $11,250 for ages 60–63
• IRA: Up to $7,500

Maxing out contributions can lower your taxable income and boost your future savings.

6. Higher Capital Gains Thresholds

The income threshold for the 0% long-term capital gains rate has increased:

• Up to $49,450 for singles
• Up to $98,900 for married filing jointly

This means more investors can benefit from tax-free gains.

7. Family and Education Credits

• Child Tax Credit: Increased to $2,200 per qualifying child
• Adoption Credit: Now $17,670
• Education Savings: 529 plans remain a powerful tool for tax-free growth

Action Steps for 2026

• Review your withholding to avoid surprises.
• Maximize retirement contributions early in the year.
• Take advantage of new deductions and credits.
• Consider itemizing if you live in a high-tax state.

Tax changes can feel overwhelming, but understanding them helps you plan smarter and keep more money in your pocket. Start reviewing your finances now to make the most of these updates.

Schedule a tax planning session with our advisors today and ensure you’re ready for 2026.