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What the 2026 Tax Brackets Mean for You (And How to Plan Around Them)

The IRS just released new 2026 tax brackets and deduction changes under the One Big Beautiful Bill, and the updates could have a real impact on your financial plan.


For high-income professionals and business owners, understanding these shifts now can help you make strategic moves before they take effect. Let’s unpack what’s changing, what it means for you, and how to plan ahead.


The Key 2026 Tax Changes

  1. Inflation-Adjusted Tax Brackets: Each income bracket has been adjusted higher to account for inflation. That means you can earn a little more before moving into the next tax tier.

  2. Higher Standard Deductions: The standard deduction will increase to help offset cost-of-living adjustments. For married couples filing jointly, it rises to $31,200, and for single filers, to $15,600. Seniors aged 65+ can add an additional deduction on top.

  3. A Higher SALT Deduction Cap: The State and Local Tax (SALT) deduction cap is increasing from $10,000 to $40,000 through 2029. This will offer meaningful relief to those living in higher-tax states, though phaseouts apply as income rises.

  4. Permanent 37% Top Bracket and TCJA Extensions: The 37% top federal tax bracket will remain in place, and several key provisions of the 2017 Tax Cuts & Jobs Act (TCJA) will continue beyond 2025.

  5. Expanded Deductions for Everyday Workers

    • Overtime pay may now qualify for an additional deduction.

    • Vehicle loan interest can be deducted for qualifying work-related vehicles.

    • Tips for service workers are also eligible for certain deductions.

  6. Estate and Gift Tax Adjustments: The estate and gift tax exemption jumps to $15 million per person, or $30 million for married couples, in 2026. This opens new opportunities for high-net-worth individuals to pass wealth efficiently.


What It Means for You

Even though these changes look like “tax relief,” the bigger story is how you respond. Planning around these adjustments can significantly impact your bottom line.

  • For high earners: The higher thresholds and deductions create room to shift income, accelerate charitable giving, or pursue Roth conversions before brackets change again.

  • For homeowners: The higher SALT cap provides limited relief, but combining it with proactive state tax planning can enhance deductions further.

  • For retirees: Those nearing or in retirement can benefit from the senior deduction and new estate thresholds, but proactive withdrawal and gifting strategies are essential to avoid surprises later.


Smart Planning Moves to Consider Now

  1. Reevaluate your withholding and estimated payments

    1. Make sure your 2025 withholdings align with the 2026 bracket changes to avoid over- or under-paying taxes.

  2. Explore Roth conversions in low-income years

    1. Converting pre-tax retirement funds now could help lock in lower rates before future adjustments potentially reduce this window.

  3. Maximize charitable giving

    1. Donor-advised funds (DAFs) or appreciated stock donations allow you to stack deductions before potential sunset provisions phase out current benefits.

  4. Revisit estate and gifting strategies

    1. The $15M exemption per person creates a powerful planning opportunity for business owners and families, especially before inflation or legislation shifts again.

  5. Work with your tax and financial planning team

    1. Many of these changes overlap with investment, retirement, and estate decisions. A coordinated approach helps ensure nothing slips through the cracks.

Final Thoughts

Tax law is always evolving, but the biggest wins come from planning early, not reacting late. Understanding these changes now gives you time to fine-tune your strategy, capture deductions, and position your wealth efficiently before 2026.


If you’re unsure how these adjustments might affect your plan, explore what personalized tax planning could look like for your situation. Small moves now can lead to major savings later



Disclaimer: This blog is for educational purposes only and does not constitute financial advice. Please consult with your attorney, advisor, tax professional, or mortgage lender before making a major purchase decision.


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