Wealth Insights

Strategic year-end tax planning considerations

Take advantage of recent legislation and time-sensitive financial strategies that may help reduce taxable income and increase available deductions.

Key takeaways

• There are still opportunities to reduce your tax burden for 2026. Tax legislation introduced several opportunities that may help eligible taxpayers reduce taxable income and increase available deductions.
• Catch-up contribution changes for high earners. Workers age 50 and older are eligible to make larger retirement plan catch-up contributions, although higher-income earners may be required to make those contributions to Roth accounts.
• Senior taxpayer deductions. Taxpayers age 65 and older may qualify for an additional deduction of up to $6,000 per person, subject to income limits.
• SALT deduction cap. The state and local tax deduction cap increased from $10,000 to $40,000, offering enhanced benefits for many taxpayers in high-tax jurisdictions.
• New deductions available. Additional deduction opportunities may be available for qualified overtime pay, tip income, unreimbursed teacher expenses and certain auto loan interest.
• Child tax credit. Families benefit from a larger permanent child tax credit and expanded flexibility for 529 education savings plans.
• Required minimum distributions. Qualified charitable distributions from IRAs may help retirees satisfy required minimum distributions while potentially lowering adjusted gross income.

The end of the year is rapidly approaching, and there is still time to reduce your taxable income if you take the right steps. The passing of the “One Big Beautiful Bill Act” created new ways to potentially lower your tax burden, even for this year.

Below are a few highlights on tax changes enacted in 2026 as well as tips to potentially reduce your 2026 tax burden.

New in 2026

• Increase in workplace retirement plan catchup limits with income limitations – Employees who are between 50 and 59 or 64+ are eligible to contribute an extra $8,500 (that increases to $11,250 for those 60, 61, 62 and 63 years old) annually as a catch-up contribution to their workplace retirement plans. However, beginning in 2026, income thresholds have been implemented restricting these contributions to Roth accounts for high earners.

  “If your catch-up contributions are made on a pre-tax basis, contributing the full amount may reduce your current taxable income,” says Maya Brill, Senior Wealth Strategist at Regions Bank in Dallas. “However, in 2026 and beyond, individuals with prior-year wages exceeding the applicable threshold ($150,000 in 2025) must make retirement plan catch-up contributions on a Roth (or after-tax) basis rather than a pre-tax basis, which does not reduce taxable income.”

• Increased deduction for seniors - Effective for years 2025-2028, taxpayers 65 years and older may take an additional $6,000 ($12,000 for married couples when both spouses are over 65) deduction over and above the standard deduction. The deduction is phased out by 6% of AGI above $75,000 single ($150,000 married filing jointly).

• State and Local Tax (SALT) deduction cap increase - The new legislation increases the cap on the SALT deduction from $10,000 to $40,000.

  “This increase is effective for years 2025-2029 and reverts back to $10,000 in 2030,” says Brill. “The cap is phased down for those with MAGI above $505,000, but not below $10,000.”

  Note: Both the cap and phase-out thresholds will increase by 1% annually.

• Overtime pay deduction – A new deduction of up to $12,500 ($25,000 for joint returns) is available to offset qualified overtime compensation for tax years 2025-2028. This deduction is available to itemizers and non-itemizers. The deduction begins to phase out for taxpayers with Modified Adjusted Gross Income (MAGI) above $150,000 single ($300,000 married filing jointly). “Qualified overtime compensation” is defined as the premium portion required by the Fair Labor Standards Act and reported separately.
• Unreimbursed teacher expenses deduction - Beginning with the 2026 tax year, eligible K-12 educators may claim an unlimited itemized deduction on Schedule A for qualified unreimbursed classroom and instructional expenses exceeding the standard above-the-line cap ($350 for 2026).
• Tips income deduction – Taxpayers in traditionally and customarily tipped industries may now receive a deduction of up to $25,000 for qualified tips. The deduction is available to both itemizers and non-itemizers but phases out for joint filers with AGI over $300,000 ($150,000 for others).
• Increased child tax credit – The One Big Beautiful Bill Act increased the child tax credit. The maximum credit is $2,200 per qualifying child in 2026, and indexed annually for inflation.
• Car loan interest deduction - Taxpayers can now deduct up to $10,000 of interest incurred from debt used to purchase a qualified passenger vehicle for which final assembly occurred in the United States. This deduction is available for debt incurred between 2025-2028 and is phased out by $200 for every $1,000 of the taxpayer’s modified AGI in excess of $100,000 for single filers or $200,000 for joint filers.
• 529 Plan expansion – Annual distribution limits from 529 Plans for elementary, secondary or religious school expenses increase to $20,000 (from $10,000) beginning in 2026. The definition of qualifying expenses expanded to include a broader range of educational costs, including tuition, materials, tutoring, standardized test fees and educational therapies for students with disabilities.

• Trump Child Savings Accounts – A Trump Account is a tax-advantaged custodial investment account created for children under age 18. Contributions are made with after-tax dollars (no income limits for participation) and generally are limited to $5,000 per year from all sources combined, with the limit indexed for inflation beginning in 2027.

  Children born between January 1, 2025, and December 31, 2028 are eligible for a one-time $1,000 federal seed contribution, which does not count toward the annual contribution limit. The account is controlled by a parent or other custodian until the child reaches age 18, at which point control transfers to the beneficiary and is subject to applicable tax and distribution rules. Further details regarding Trump Account eligibility, contribution limits and applicable regulations are provided below.

• Limitation on Itemized Deductions – In 2026, the new “2/37ths limitation” on itemized deductions caps the value of itemized deductions for taxpayers with taxable income exceeding the 37% tax bracket. Taxpayers in the highest tax bracket (37%) will have their itemized deductions reduced by 2/37ths on the lesser of their total itemized deductions or the amount of taxable income (including itemized deductions) above the threshold of the 37% tax bracket.

  Brill notes that for 2026, the threshold for single filers is $640,600 and married filing jointly is $768,700.

• Charitable Deduction Rule Changes – As of January 1, 2026, nonitemizers may receive a charitable contribution deduction up to $1,000 ($2,000 for joint returns).

  However, on the flip side, taxpayers who itemize their deductions will be required to have their charitable contributions exceed 0.5% of the taxpayer’s contribution base, generally a taxpayer’s adjusted gross income, before being able to benefit from the charitable deduction.

In addition to the changes for 2026, Brill shares a few additional last-minute financial moves to consider to potentially reduce your 2026 tax bill.

1. Consider bunching your charitable contributions

The increased standard deduction levels limit the benefits of itemizing deductions for some. But you may be able to maximize the value of your charitable contributions if you bunch them together.

“Instead of making one charitable contribution this year, for example, of $20,000, and another contribution next year of the same amount, you may want to consider bunching them together and do both this year,” notes Brill. “This way you’ve given $40,000 which may increase the likelihood that itemizing deductions results in additional tax benefits.”

“It is important to note that the 0.5% floor on charitable contributions may reduce the amount of benefit received.”

2. Reduce your adjusted gross income

If you’re retired and receiving Social Security, your adjusted gross income plays a significant role in whether you have to pay taxes on those benefits. Your adjusted gross income may also affect how much you pay for Medicare.

“In cases where you have a required minimum distribution (RMD) from an IRA, you may be able to reduce your adjusted gross income (AGI) through qualified charitable distributions made directly from an individual retirement account,” says Brill. A qualified charitable contribution - up to $111,000 (2026) - could significantly impact your AGI.

“If the money goes directly from your IRA to a charity, it satisfies your RMD and may reduce your adjusted gross income. It’s true that you won’t receive a charitable deduction for the contribution, but you also don’t have to include the required minimum distribution in your AGI,” she says.

3. Use your annual exclusion for gifts - or lose it

Each year, you can give other people cash or goods worth up to a certain amount and avoid owing any gift tax. For 2026, that amount is $19,000.

You may gift the annual exclusion amount to as many people as you would like. So can your spouse, which doubles the exclusion amount to $38,000. If you give over the excluded amount to any one person, the excess generally reduces your remaining lifetime gift and estate tax exemption and may require filing a gift tax return.

Just remember that the exclusion resets every year, so if you don’t use it one year, you cannot carry it over to the following year. For those making taxable gifts, the lifetime maximum (in 2026) that is covered by the exemption is $15 million ($30 million for married couples filing jointly). If you gift beyond the exclusion and the exemption amounts during your lifetime, then you will end up paying taxes on the excess gifts. Tax rates for gifts over the lifetime exemption is 40%.

The next step toward minimizing your tax bill

“To make the most of these strategies, talk with your Regions Wealth Advisor and your tax professional,” says Brill. Your tax professional can help you estimate which marginal tax bracket you’ll be in, and your Wealth Advisor can run cash flow projections to help you understand the financial implications of charitable contributions and gifts.

“Plan for the advising process to take anywhere from a couple of weeks to a month,” says Brill. “Be sure to have updated financial statements and salary information available to help ensure your projections will be as accurate as possible.”

Talk with your Regions Wealth Advisor about:

1. Setting up an appointment to review your income for the year.
2. What strategic charitable contributions and gifts might be worth pursuing before the end of the year.

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