Beyond the Brackets: 2026 Tax Changes
Every so often, tax law changes in ways that force us to rethink long‑held assumptions. Sometimes those changes are loud and obvious—new brackets, higher rates, expiring provisions. Other times, the changes are quieter, more technical, and easier to miss, yet just as impactful over time.
As we enter 2026, we find ourselves in the second camp.
Despite years of speculation about looming tax hikes and expiring laws, 2026 is not defined by higher marginal tax rates or a sweeping overhaul of the tax code. Instead, it’s defined by structural refinements—small rule changes that subtly shift incentives, alter planning strategies, and reward intentionality.
I know many of you are in the thick of preparing your taxes for 2025. However, there is no better time to consider changes for the current year and think clearly about how they may affect your situation. Here are the most relevant changes, along with a few thoughts on how to consider them.
The Big One That Didn’t Happen: No TCJA Sunset
For years, the assumption was simple: tax rates were going up in 2026. The lower marginal brackets created by the Tax Cuts and Jobs Act (TCJA) were set to expire after 2025. Many planners, including us, modeled projections not sure if the lower tax rates brought by TCJA would endure.
That unknown is now clarified.
The One Big Beautiful Bill made the TCJA individual tax brackets permanent. The familiar 10%, 12%, 22%, 24%, 32%, 35%, and 37% brackets remain in place, with only inflation adjustments going forward. This matters because it removes urgency where many expected it. There is no forced income acceleration, no last‑minute Roth panic, no cliff in January 2026.
Stability, at least for now, is the headline.
Standard Deductions Continue to Rise
Along with the brackets, the historically high standard deduction is also here to stay. For 2026:
Married filing jointly can deduct $32,200
Single filers can deduct $16,100
Heads of household can deduct $24,150
This keeps the majority of taxpayers firmly in “standard deduction territory.” Itemizing remains the exception, not the rule.
And yet—charitable giving now complicates that story.
Charitable Giving: A Meaningful Shift in How Deductions Work
Charitable deductions received one of the most notable structural updates in 2026. The changes affect both itemizers and non‑itemizers, but in very different ways.
A New Above‑the‑Line Deduction for Non‑Itemizers
For the first time in years, taxpayers who take the standard deduction can also deduct charitable giving. Beginning in 2026:
Single filers can deduct up to $1,000 of cash donations
Married couples filing jointly can deduct up to $2,000
The deduction is above the line, meaning it reduces AGI before your decision to itemize or take the standard deduction
Cash gifts only given directly to charities; donor‑advised funds and private foundations are excluded
This is a meaningful change. Reducing AGI can affect far more than just income taxes—it can influence phaseouts, credits, and benefit eligibility. For many households who give consistently but never itemize, this restores at least some tax recognition of that generosity.
A New Floor for Itemized Charitable Deductions
Itemizers, however, face a new hurdle.
Starting in 2026, charitable deductions are only allowed to the extent they exceed 0.5% of adjusted gross income. Think of it like a deductible on an insurance policy: the first portion provides no tax benefit. For example, with $200,000 of AGI, the first $1,000 of charitable giving produces no deduction. Only amounts above that threshold count. This change didn’t exist before, and it quietly reduces the value of routine, annual giving for higher‑income households. Layered on top of this is another limitation: for taxpayers in the highest bracket, the value of itemized deductions is capped at roughly 35%, even if their marginal rate is higher.
And I know what you’re thinking. To answer your question: no, you can’t take both the above the line deduction along with the itemized deduction.
The takeaway? Charitable giving still matters—but how and when you give now matters more.
Retirement Savings: Roth Catch‑Ups Become Mandatory for Some
SECURE 2.0, passed back in 2022, introduced a change that finally takes effect in 2026, and it catches many people by surprise. I too forgot about this rule!
If you are:
Age 50 or older, and
Your prior‑year W‑2 wages exceeded $150,000
Then all catch‑up contributions must be Roth contributions.
This applies to 401(k)s, 403(b)s, TSP, and governmental 457 plans. It does not apply to IRAs, SEP IRAs, or SIMPLE IRAs. Practically speaking, this means higher current‑year taxable income for affected savers. The tradeoff, of course, is greater tax‑free flexibility later. Whether that’s a good deal depends on your broader tax picture, your time horizon, and your goals. As with most things, context matters.
Estate Planning: A Quiet but Significant Win
Estate planning was another area long expected to change dramatically in 2026.
That didn’t happen either.
The lifetime estate and gift tax exemption is now permanently set at $15 million per person, or $30 million for married couples, indexed for inflation. The feared “use‑it‑or‑lose‑it” reduction never arrived. For most families, this removes urgency. For others, it provides clarity. Either way, it reinforces an important truth: estate planning is about more than taxes. Control, legacy, and intent still matter far more than exemption math.
However, even “permanent” changes to the tax code are subject to change in future legislation. For those expecting very large estates at the end of their lives, utilizing one spouse’s full lifetime exemption in a permanent trust can take advantage of these historically high exclusions before they return to more normal amounts.
What 2026 Is Really About
If there’s a theme to 2026, it’s this: Rates didn’t rise. Deductions didn’t disappear. But the rules increasingly reward:
Thoughtful timing
AGI awareness
Account‑level strategy
Intentional giving
Broad, one‑size‑fits‑all assumptions are less useful. The levers still exist, but they’re smaller and more specific. As always, the right strategy depends on your situation, your goals, and what you’re trying to accomplish—not just this year, but over decades.
If you have questions about how these changes apply to you, or if you’d like help thinking through the tradeoffs, I’m happy to talk.
Prosperity, after all, rarely comes from reacting. It comes from understanding, choosing deliberately, and taking action.
Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial, investment, legal, or other professional advice. While we strive to ensure the accuracy and completeness of the content, we make no guarantees regarding its reliability or suitability for any particular purpose. Readers should consult with a qualified financial advisor before making any investment decisions. As a fiduciary Registered Investment Advisor (RIA), we are committed to acting in your best interests. However, past performance is not indicative of future results, and all investments carry risks, including the potential loss of principal.
