Let's clear something up right away, because this trips people up more than almost anything else in the tax world: there is a fundamental and important difference between tax avoidance and tax evasion. One is not only legal — it's smart financial planning. The other is a federal crime.
The IRS itself says it plainly: taxpayers have the right to reduce, avoid, or minimize their taxes by legitimate means. Shaping and planning your financial life to reduce your tax burden within the law isn't cheating — it's exactly what a good financial advisor is supposed to help you do. Tax evasion, by contrast, involves deliberate deception: hiding income, fabricating deductions, concealing assets. That's where the handcuffs come out. Knowing the difference — and working with people who know how to operate confidently on the right side of that line — is one of the most valuable things any family can do for their long-term financial health.
With that framing in mind, here's what's new in the tax world this month.
If you're married and only one spouse works, there's a retirement savings opportunity hiding in plain sight. Many couples don't realize that the non-working spouse can still contribute to their own IRA — up to $7,500 in 2026, plus an additional $1,100 catch-up contribution if they're 50 or older. That's a potential $17,200 in combined IRA contributions for a couple, regardless of whether one spouse has zero earned income. The only requirement is that the working spouse's taxable compensation covers the combined total. For couples looking to maximize tax-advantaged savings — especially those approaching retirement — this is a strategy worth revisiting every year.
On the Roth IRA front, joint filers with adjusted gross income under $242,000 can make full Roth contributions in 2026. The window phases out between $242,000 and $252,000. If you're in that range, this may be your last year to contribute directly — or it may be the right time to look at a backdoor Roth strategy instead.
Big news for families with young children: the child and dependent care credit just got significantly more generous. Starting with 2026 returns, the credit covers up to 50% of qualifying care expenses — up from 35% — on up to $3,000 per child ($6,000 for two or more). That pushes the maximum credit to $1,500 for one child and $3,000 for two or more, nearly triple what it was in 2025. Summer day camp costs qualify. Overnight camp does not. If you're paying for childcare to enable both spouses to work, make sure this is on your radar when tax planning season arrives.
And if your children have summer jobs this year, there are real tax opportunities there too. Kids who owed no federal income tax in 2025 and don't expect to owe in 2026 can claim exempt status on their W-4, meaning nothing gets withheld from their paycheck. And if your business employs your under-18 children, no Social Security or Medicare tax is owed on their wages — a meaningful savings that many small business owners aren't taking advantage of.
On the bigger legislative picture, here's what you need to know: don't expect sweeping new tax changes before the November midterm elections. Republicans and Democrats are both floating proposals — everything from additional tax cuts to new measures aimed at high earners — but the political math in Congress makes major legislation unlikely this year. The current reconciliation effort is expected to be narrowly focused on immigration enforcement funding, not taxes.
What is happening is that the Trump administration is using its regulatory authority to drive some meaningful retirement savings changes. A new executive order last week directed the creation of "Trump IRAs" — government-sponsored accounts launching by January 1, 2027, for people who don't have access to a workplace retirement plan. The administration is also pushing a $1,000 annual government match for eligible low-income savers. The mechanics are still being worked out, but the direction is clearly toward expanding access to tax-advantaged retirement savings.
There's also growing momentum — though no certainty — around indexing capital gains to inflation, which would allow investors to adjust their cost basis upward for inflation before calculating a taxable gain. For long-held assets, this could meaningfully reduce capital gains taxes. The idea would almost certainly face legal challenges if pursued without congressional action, but it's worth watching.
One more item that affects employers and small business owners: The child and dependent care credit expansion aside, there are quieter but useful fringe benefit rules worth knowing. Employer-provided education assistance of up to $5,250 per year is tax-free to employees — and this includes help paying off student loans, not just tuition for current coursework. If you run a business and want to offer a compelling, tax-efficient benefit that doesn't break the bank, this is one that often gets overlooked.
And in the category of "things that are changing faster than most people realize": Medical marijuana dispensaries operating in legal states just received significant federal tax relief. The Justice Department reclassified medical marijuana from a Schedule I to a Schedule III controlled substance, meaning dispensaries can now deduct ordinary business expenses on their federal returns — something that was previously prohibited. Recreational marijuana remains Schedule I for now, but broader reclassification is on the regulatory agenda. If you have investments or business interests in this space, the tax picture is shifting.
The theme running through all of this is one we come back to every month: the tax code rewards people who understand it and plan around it — legally, strategically, and proactively. Most families leave real money on the table simply because no one ever pointed out these opportunities.
That's a gap we can close together.
If anything here sparked a question about your own situation, let's set up a time to talk. There's no obligation — just a conversation about making sure your financial plan is working as hard as you are.
Disclaimer: This is educational content about tax law changes, not personal tax advice. For your specific situation, especially around itemizing vs. standard deduction, consult a qualified tax professional who can run the numbers for your unique circumstances.