A new year means new tax rules. For 2026, several significant changes took effect: some that put more money in your pocket, some that reduce benefits you may have counted on, and a few that are entirely new. Here's a clear breakdown of what changed and what it means for you.
Quick Summary: What Changed in 2026?
| Category | Change |
|---|---|
| Tax brackets | Slightly wider (inflation adjustment) |
| Capital gains thresholds | Higher across all rates |
| Charitable deductions | New floor for itemizers; new deduction for non-itemizers |
| Child & dependent care | Bigger credits and FSA limits |
| Clean energy credits | Expired |
| Retirement contribution limits | Higher across the board |
| 1099 reporting thresholds | Raised from $600 to $2,000 |
| Standard deduction | Modestly higher |
| Student loan forgiveness | Taxable again |
| Estate/gift tax | Lifetime exemption rises to $15 million |
Tax Brackets: More Income Taxed at Lower Rates
Tax brackets expanded modestly in 2026 to keep pace with inflation. This means a slightly larger portion of your income falls into lower tax brackets — a small but real benefit.
2026 key thresholds:
10% bracket tops out at: $24,800 (married filing jointly) / $12,400 (single)
37% bracket starts at: $768,700 (joint) / $640,600 (single)
Capital Gains Tax: Higher Income Thresholds for Each Rate
Long-term capital gains rates didn't change, but the income thresholds to qualify for each rate went up.
0% rate (tax-free gains):
Married filing jointly: up to $98,900
Single: up to $49,450
Head of household: up to $66,200
15% rate: Applies between the 0% and 20% thresholds.
20% rate begins at:
Married filing jointly: $613,701
Single: $545,501
Head of household: $579,601
If your income falls within the 0% bracket, your long-term investment gains are completely tax-free for the year.
Charitable Deductions: A Mixed Picture
For Itemizers: A New Floor
Starting in 2026, charitable deductions on Schedule A are only deductible to the extent they exceed 0.5% of your adjusted gross income (AGI).
Example: If your AGI is $100,000, only donations above $500 are deductible. The first $500 provides no deduction.
For C corporations, the floor is even higher: donations are only deductible above 1% of taxable income.
Planning note: Consider "bunching" multiple years of charitable giving into a single tax year to clear the floor more effectively. Talk with your advisor about the best strategy for your situation.
For Non-Itemizers: A New Benefit
If you take the standard deduction, you can now deduct cash charitable gifts up to $1,000 ($2,000 for married filing jointly) — even without itemizing. This is new in 2026.
Child & Dependent Care: Significant Improvements
Working parents see three meaningful improvements in 2026:
Child & Dependent Care Credit — $1,500 for one dependent; $3,000 for two or more dependents.
Dependent Care FSA limit — Increased from $5,000 to $7,500 per year.
Employer Child Care Credit — Up to $500,000 (or $600,000 for small employers) for businesses that provide childcare benefits.
Gambling Losses: Partial Deduction Eliminated
Gamblers can now only deduct 90% of gambling losses, down from 100%.
What this means: If you win $10,000 and lose $10,000 in the same year, you can only deduct $9,000 of your losses — and you'll owe tax on the remaining $1,000.
Clean Energy Tax Credits: Expired
Several popular clean energy incentives are gone:
Electric vehicle (EV) tax credit — Ended September 30, 2025
Residential clean energy credit (solar panels, etc.) — Expired December 31, 2025
Energy-efficient home improvement credit — Also expired December 31, 2025
Business clean energy credits — Various credits are phasing out through mid-2026
If you were planning to use these credits, it's too late for the personal credits. Check with a tax advisor on any business-related clean energy investments.
1099 Reporting Thresholds: Less Paperwork
The threshold for Form 1099-MISC and 1099-NEC rises from $600 to $2,000 (effective for forms sent in early 2027 for 2026 payments). Casinos are also expected to see the Form W-2G threshold rise to $2,000.
This means far fewer 1099 forms issued for small payments — less paperwork for businesses and independent contractors alike.
Retirement Account Contribution Limits: Higher Across the Board
401(k) Plans
Contribution Type | 2026 Limit |
Regular | $24,500 |
Age 50+ catch-up | $8,000 |
Age 60–63 "super catch-up" | $11,250 |
SIMPLE Plans
Contribution Type | 2026 Limit |
Regular | $17,000 |
Age 50+ catch-up | $4,000 |
Age 60–63 catch-up | $5,250 |
IRAs
Contribution Type | 2026 Limit |
Regular | $7,500 |
Age 50+ catch-up | $1,100 |
Other Retirement Notes
Qualified Charitable Distributions (QCDs): The annual limit rises to $111,000 for those age 70½ and older. QCDs remain one of the most tax-efficient ways for retirees to give to charity.
New Roth catch-up rule: If you're 50 or older and earned more than $150,000 in 2025, your 401(k) catch-up contributions must go into a Roth account in 2026. Pre-tax catch-up contributions are no longer allowed for high earners.
New long-term care exception: You can now withdraw up to $2,600 per year from a retirement account before age 59½ to pay long-term care insurance premiums — without the usual 10% early withdrawal penalty.
New "Trump Accounts" for Children (Starting July 4, 2026)
A new type of savings account for minors becomes available July 4, 2026:
Parents can contribute up to $5,000 per year
The federal government contributes $1,000 for children born between 2025 and 2028
The accounts invest in stock index funds and function similarly to a hybrid 529/Roth IRA
Education Updates
529 Plans
Tax-free withdrawals for K-12 education expenses increase from $10,000 to $20,000 per year. Additional K-12 expenses are also now covered.
Student Loan Forgiveness — Now Taxable
Student loan forgiveness received in 2026 and beyond is taxable income again. The temporary tax-free treatment that applied from 2021 through 2025 has expired.
If you have $50,000 in student loans forgiven this year, that $50,000 is added to your taxable income.
Teacher Expense Deduction
The educator expense deduction increases to $350 per teacher ($700 for married educators filing jointly where both are teachers).
Healthcare Changes
Premium Tax Credits (ACA/Obamacare Subsidies)
The enhanced subsidies that expanded ACA eligibility from 2021 to 2025 expired on December 31, 2025. Premiums on the healthcare marketplace are higher for many people in 2026, and fewer individuals qualify for subsidies.
Congress may revisit this, but until legislation passes, the enhanced credits are gone.
Health Savings Accounts (HSAs)
Coverage Type | 2026 Limit |
Self-only | $4,400 |
Family | $8,750 |
Age 55+ catch-up | $1,000 (unchanged) |
New in 2026: Bronze-level and catastrophic health plans now qualify as HSA-eligible plans, opening HSAs to more people.
Health FSA
The flexible spending account (FSA) contribution limit rises to $3,400.
Standard Deductions
Filing Status | 2026 Standard Deduction |
Married filing jointly | $32,200 (+$1,650 per spouse age 65+) |
Single | $16,100 (+$2,050 if age 65+) |
Head of household | $24,150 (+$2,050 if age 65+) |
Blind filers | Additional $1,650 ($2,050 if unmarried) |
Itemized Deductions: High-Income Cap
New for 2026: Taxpayers in the top brackets will see their total itemized deductions capped at a value equivalent to the 35% tax rate — even if their marginal rate is 37%. In practical terms, certain deductions are worth slightly less than they used to be for the highest earners.
Business Tax Updates
Section 179 Expensing
Deduct up to $2,560,000 of qualifying business assets in the year placed in service
Phases out dollar-for-dollar once total assets placed in service exceed $4,090,000
100% Bonus Depreciation
Still available and permanent — you can immediately deduct the full cost of qualifying business assets.
Qualified Business Income (QBI) Deduction — 20% Threshold
Limitations on the 20% QBI deduction begin at:
$403,500 for joint filers
$201,750 for all other filers
Standard Mileage Rates
Purpose | 2026 Rate |
Business | 72.5 cents/mile |
Medical or military | 20.5 cents/mile |
Charitable | 14 cents/mile (set by law) |
New 1% Remittance Tax
The One Big Beautiful Bill (OBBB) created a 1% excise tax on international money transfers made after 2025 by noncitizens.
Who pays: The sender (collected by the transfer provider).
Who is exempt:
U.S. citizens
Lawful permanent residents
Cash transfers sent from most U.S. bank accounts or debit cards
This tax primarily affects noncitizens sending money to family in other countries.
Estate & Gift Tax
Lifetime exemption: Rises to $15 million (up from $13.99 million)
Annual gift exclusion: Stays at $19,000 per recipient
You can give up to $19,000 to any individual in 2026 — a child, grandchild, friend, or anyone else — with no gift tax consequences.
Other Key Numbers for 2026
Item | 2026 Amount |
Foreign earned income exclusion | $132,900 |
Social Security wage base | $184,500 |
AMT exemption (joint filers) | $140,200 |
AMT exemption (single) | $90,100 |
Adoption credit (max) | $17,670 |
Adoption credit (refundable portion) | $5,120 |
Adoption credit phase-out | $265,080–$305,080 MAGI |
2026 Tax Planning Action Items
Here's what to review with your financial advisor this year:
Check your withholding: New brackets may affect your paycheck withholding.
Maximize retirement contributions: Limits are higher; take advantage.
Review your charitable giving strategy: The new floor for itemizers changes the math on deductions.
Reassess healthcare coverage: Subsidy changes may make different plan options more cost-effective.
Consider a Trump Account for eligible children after July 4.
If you have student loans in forgiveness programs, model out the tax impact for this year and beyond.
High earners age 50+: Confirm your 401(k) catch-up is going to a Roth account if required.
Winners and Losers at a Glance
Who benefits most in 2026:
Working parents (larger childcare credits and FSA)
Retirees (higher contribution and QCD limits)
Non-itemizing charitable givers (new above-the-line deduction)
Small business owners (higher expensing limits)
Investors with income in the 0% capital gains bracket
Who faces new challenges in 2026:
Itemizers (charitable deduction now has a floor)
Gamblers (loss deduction reduced to 90%)
Anyone who planned to use EV or solar credits (expired)
Healthcare marketplace enrollees (enhanced subsidies gone)
Future student loan forgiveness recipients (taxable income again)
High earners (forced Roth catch-ups, itemization cap)
Noncitizens sending international remittances (new 1% tax)
Frequently Asked Questions About 2026 Tax Changes
1. Are the 2026 tax brackets different from 2025?
Yes. Brackets expanded slightly to adjust for inflation, meaning more of your income is taxed at lower rates compared to 2025.
2. Did the standard deduction increase in 2026?
Yes. The standard deduction is $32,200 for married filing jointly and $16,100 for single filers — both modest increases from 2025.
3. Are electric vehicle tax credits still available in 2026?
No. The federal EV tax credit expired on September 30, 2025. Solar and home energy improvement credits also expired on December 31, 2025.
4. What is the 401(k) contribution limit for 2026?
The regular limit is $24,500. Those age 50 and older can contribute an additional $8,000 in catch-up contributions, and those aged 60–63 have a higher "super catch-up" limit of $11,250.
5. Is student loan forgiveness taxable in 2026?
Yes. The temporary exclusion from income that applied from 2021 to 2025 has expired. Any student loans forgiven in 2026 or later will be treated as taxable income.
6. What is the HSA contribution limit for 2026?
For 2026, the HSA contribution limit is $4,400 for self-only coverage and $8,750 for family coverage. Those age 55 and older can contribute an additional $1,000 catch-up amount. Bronze-level and catastrophic health plans now also qualify as HSA-eligible.
7. What is the lifetime estate and gift tax exemption for 2026?
The lifetime estate and gift tax exemption rises to $15 million per individual in 2026, up from $13.99 million in 2025. The annual gift tax exclusion remains $19,000 per recipient.
8. Can I still deduct charitable donations if I don't itemize?
Yes, and this is new for 2026. Taxpayers who take the standard deduction can now deduct cash charitable contributions of up to $1,000 ($2,000 for married couples filing jointly) in addition to their standard deduction.
9. How much can I deduct for gambling losses in 2026?
Starting in 2026, you can only deduct 90% of your gambling losses, down from 100% in prior years. If you have $10,000 in winnings and $10,000 in losses, you can deduct $9,000, leaving $1,000 of taxable income.
10. What is the capital gains tax rate for 2026?
The rates themselves (0%, 15%, and 20%) didn't change, but the income thresholds increased. Married couples filing jointly pay 0% on long-term capital gains up to $98,900 of taxable income, 15% up to $613,701, and 20% above that.
11. Are the ACA health insurance subsidies still available in 2026?
The enhanced premium tax credits that expanded eligibility and lowered costs from 2021 to 2025 expired on December 31, 2025. Fewer people qualify for subsidies in 2026, and many marketplace enrollees will see higher premiums unless Congress passes new legislation.
12. What is the 1099 reporting threshold for 2026?
The threshold for Form 1099-MISC and 1099-NEC rises from $600 to $2,000, effective for payments made in 2026 (forms issued in early 2027). This significantly reduces the number of 1099s businesses need to issue for small payments to contractors and vendors.
13. What is a Trump Account and when can I open one?
Trump Accounts are new tax-advantaged savings accounts for children, available starting July 4, 2026. Parents can contribute up to $5,000 per year, and the federal government adds $1,000 for children born between 2025 and 2028. The accounts function similarly to a hybrid of a 529 plan and a Roth IRA.
This article is for informational purposes only and does not constitute tax or legal advice. For guidance specific to your situation, consult a qualified tax professional. Tax laws are complex and subject to change.
Questions about how 2026 tax changes affect your financial plan?Contact our office to schedule a conversation.