Wealth Insights
The financial impact of 2026 tax changes

Article 7 min read Published December 4, 2025

Insights on the significant impact of tax changes for the year ahead.

Individual taxpayers continue to navigate a landscape shaped by inflation adjustments, legislative updates (“One Big Beautiful Bill Act”), and temporary provisions nearing expiration. While tax rates remain unchanged for 2026, key thresholds and deductions have shifted, impacting everything from standard deductions to credits for families and seniors. The standard deduction reflects a modest increase, and the Child Tax Credit rises slightly. At the same time, significant changes—such as a higher SALT deduction cap and expanded estate tax exemption—could influence long-term financial planning. Understanding these updates now is essential for optimizing your tax strategy and updating your wealth plan to optimize both wealth building and savings opportunities.

2026 tax planning: By the numbers

Standard deduction and senior bonus
The standard deduction continues to rise with inflation:
- Single / married filing separately: $16,100
- Married filing jointly: $32,200
- Head of household: $24,150
Seniors may benefit from an additional $6,000 bonus deduction if their AGI is under $75,000 (single) or $150,000 (joint). This is phased out above those limits and is on top of the regular senior increase.
Tax brackets remain unchanged at 10%, 12%, 22%, 24%, 32%, 35%, and 37% but income thresholds have shifted upward. The top 37% bracket starts at $640,600 (single) and $768,700 (married filing jointly). These adjustments reflect inflation and may slightly reduce bracket creep for many taxpayers.
Key credits and deductions
- Child tax credit increases to $2,200 per qualifying child in 2026.
- Earned income tax credit (EITC): The maximum benefit rises to $8,231 for families with three or more children.
- Adoption credit: Families and individuals can receive up to $17,670 credit for adoption, which is partially refundable.
- SALT deduction: The state and local taxes (SALT) deduction has been temporarily raised to $40,000, though this is phased out for high-income households.
Catch up contributions to employer plans for individuals ages 50 and older increases to $8,000 while the ‘super’ catch-up for ages 60-63 remains unchanged at $11,250.

2026 tax planning: A look at what’s new or changing for 2026

529 plan expansion

A key expansion for 529 plans for K-12 expenses in 2026 doubles the withdrawal limit, increasing the maximum tax-free withdrawal from $10,000 per year to $20,000 per year for non-tuition qualified expenses. This 2026 expansion follows the July 2025 expansion of the definition of qualified education expenses for K-12 education to include books, materials, testing fees, dual enrollment fees, educational therapies and tutoring costs.

There is no overall maximum withdrawal amount for college from a 529 plan. However, the amount you can withdraw tax-free is limited to the total of your qualified educational expenses for the year, minus any scholarships, grants, or claimed tax credits. For college, non-qualified expenses are subject to income tax and a 10% penalty on the earnings portion.

For a full list of qualified non-tuition expenses, visit my529.org.

Trump Child Savings Accounts

Effective in 2026, children under the age of 18 are eligible for a new tax deferred savings account. The “Trump Child Savings Accounts” are treated like IRAs. Parents may contribute up to $5,000 each year and employers may also contribute up to $2,500 per year to an employee or dependent of an employee. It is important to note that distributions shall not be allowed before the dependent reaches the age of 18.

These accounts will be automatically established and funded with $1,000 for eligible children born between January 1, 2025 and December 31, 2028. Employer contributions to Trump Child Savings Accounts may have ERISA implications, so it’s important to consult with your employer or plan administrator.

Itemized deduction reduction

Beginning in 2026, taxpayers in the 37% income tax bracket will be subject to a reduction of their itemized deductions. The deduction will be reduced by 2/37ths of the lesser of (1) itemized deductions otherwise allowed, or (2) the amount of taxable income to which the 37% bracket applies.

Charitable deduction for non-itemizers

Non-itemizers may receive a charitable contribution deduction up to $1,000 ($2,000 for joint returns).

Charitable deduction floor for itemizers

Starting in 2026, 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 AGI) before being able to benefit from the charitable deduction.

2026 tax planning: The bottom line

The 2026 tax landscape offers both incremental adjustments and innovative savings tools. Staying informed and planning early may help you minimize liabilities and help maximize benefits.