For savvy taxpayers, the 2026 tax year is an opportunity to help realign your financial strategies to take full advantage of new deductions while navigating more complex rules for high earners. By understanding these changes now, you can spend this year making the moves that may lead to a much smoother and financially confident 2027 filing season.
There are quite a few changes this year, but here are three key areas to focus on:
1. Optimize Your Savings with Higher Contribution Limits
The most straightforward strategy for retirement planning is simply to save more. With 401(k), 403(b), and 457 plan limits increasing to $24,500 and IRA limits rising to $7,500, you should look to increase your payroll deferrals or automatic IRA contributions starting this month.
If you are over the age of 50, you can save an additional $8,000, bringing the total possible contribution limit to $32,500. And for some plans, participants ages 60, 61, 62, and 63 have an even higher contribution limit of $11,250.
- Actionable Step: Immediately increase your percentage contribution to your workplace retirement plan to hit the higher limits. If you have an IRA, adjust your monthly savings to reach the new cap. These increased contributions compound tax-deferred (or tax-free in a Roth), giving you a major leg up.
2. Prepare for the Mandatory Roth Catch-Up Shift
Starting this year, high earners aged 50 and over whose wages exceed $150,000 must use a Roth (after-tax) account to make their $8,000 catch-up contribution.
While you lose the immediate tax deduction on those catch-up dollars, you gain tax-free growth and tax-free withdrawals in retirement. If you anticipate being in a higher tax bracket in retirement, embracing the Roth catch-up is a smart move.
- Actionable Step: Review your 2025 W-2 and talk to your HR/payroll administrator. If you are subject to this rule, adjust your budget now, as your take-home pay might slightly decrease (since you’re paying taxes on the contribution upfront).
3. Leverage the New/Higher Deductions
For many taxpayers, the significantly higher Standard Deduction ($32,200 for joint filers) will still make itemizing unnecessary. However, the new temporary deductions can provide an extra boost.
Seniors (age 65+) may take advantage of the additional $6,000 bonus deduction. This is available in addition to the standard deduction, helping to provide substantial relief. Tipped workers and those with high overtime should also ensure their qualified tips and overtime are tracked and claimed for the new deductions, as this can help lower taxable income without needing to itemize.
- Actionable Step: If you are age 65 or older, confirm with your advisor that you meet the MAGI thresholds for the full senior deduction. If you are a high-earning worker who receives tips or overtime, keep meticulous records to claim the full benefit of those new tax breaks.
These 2026 tax changes create specific windows of opportunity. Make sure your portfolio and income strategy are fully streamlined for these changes. Understanding these updates now is your biggest advantage in making smart tax moves throughout the year.
Want to learn more tax strategies for this year? Register for our upcoming webinar here.
Sources:
https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500
This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives. The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed. This blog is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney.
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