2026 Tax Changes: What They Mean for Your Retirement and Tax Planning

There’s a line I think about every January: tax complexity is its own kind of tax. And for 2026, that’s especially true.

A few 2026 tax rule changes are easy to miss, but they can quietly change how much you pay, how much you can save, and which moves actually help. I want to flag the biggest ones and how I’m thinking about them.

2026 Tax Changes That Matter for Planning

1) The tax brackets moved again (inflation), so your “bracket” might not be what you think

The IRS adjusts bracket thresholds each year. That sounds boring, but it matters because it affects how much of your income lands in each rate and how planning decisions ripple through the rest of your return.

2) Catch-up contributions: for many high earners, the tax deduction is going away

Starting in 2026, if you’re age 50+ and your prior-year wages are high enough, catch-up contributions in employer plans must be Roth. In other words: you still get to save more, but you may lose the immediate tax break.

For years, catch-up contributions were a simple way to save more and lower taxable income today. Now, for affected earners, that catch-up money goes in after-tax, even if you prefer pre-tax savings.

A simple way to think about it: if you used catch-up contributions partly to reduce today’s taxes, that lever may not be available in 2026.

And also worth noting: this applies to employer plans like 401(k), 403(b), and many 457(b) plans, not IRAs.

3) SALT is back (for now): the cap is much higher, which changes the itemize vs standard decision

The SALT deduction cap jumped meaningfully:

• 2025: $40,000 (from $10,000)

• 2026: $40,400 (and then rises 1% annually through 2029)

This is a big deal for households in higher-tax states, and for anyone whose deductions were hovering near the standard deduction line.

Why? Because the SALT cap was one of the main reasons many people stopped itemizing after 2017. With a higher cap, itemizing becomes relevant again for more households, especially when combined with mortgage interest and charitable giving.

There is an important caveat. The higher SALT cap phases out for higher-income households. Once income exceeds roughly $500,000, the benefit begins to shrink, and by around $600,000 of income, the SALT cap effectively drops back to $10,000. So this change helps many households, but not everyone equally.

Here’s a simplified example. A married couple with $35,000 in state and local taxes, $12,000 of mortgage interest, and $8,000 of charitable giving would have only been able to deduct $10,000 of those taxes under the old rules. Their total itemized deductions would have been $30,000, which is less than the 2026 standard deduction of $32,200.

Under the new rules, they can deduct the full $35,000 of state and local taxes. That brings their total itemized deductions to $55,000, reducing taxable income by an additional $22,800 compared to taking the standard deduction.

One important planning angle to keep in mind: this higher SALT cap is temporary and currently scheduled to revert in 2030. That creates a limited window where itemizing and the timing of deductions may matter more than they have in years.

4) If you’re 65+, there’s a new “senior” deduction, but income can phase it out

For 2025–2028, there’s an additional deduction for age 65+ taxpayers:

• $6,000 per eligible individual

• $12,000 for a married couple if both qualify

It phases out as income rises. This creates a new tradeoff: moves that increase AGI (even “good” moves) can reduce or eliminate this benefit.

5) The sneaky part: these changes don’t happen in isolation

This is where tax planning gets real. Most tax changes look harmless on their own. The issue is what happens when they stack.

A payroll change, a retirement contribution change, or a deduction you thought you’d get can shift your adjusted gross income just enough to trigger a ripple effect. That ripple can show up in places people do not expect, like:

• whether itemizing actually beats the standard deduction this year

• whether the higher SALT cap helps you or not

• whether more of your retirement income ends up being taxed than you planned

And for retirees, there’s an extra layer: Social Security taxation.

The income thresholds that determine how much of your Social Security is taxable have not kept up with inflation. So even a modest increase in income (from IRA withdrawals, interest, capital gains, or a one-time event) can cause a larger portion of Social Security to become taxable. That’s why small increases in income can sometimes create a bigger-than-expected tax jump.

It’s the same story with deductions that phase out with income, including the new senior deduction. The combined effect is what matters.

What I’d pay attention to early in the year

A few practical items that are worth checking in January:

• If you’re 50+: confirm how your plan is handling catch-up contributions for 2026 (especially whether it supports Roth catch-up).

• If you live in a high-tax state: re-run the “standard vs itemized” math under the higher SALT cap, because the answer may change this year.

• If you’re 65+: make sure the new senior deduction is on your radar and understand how income affects it.

• If you give to charity: this may be one of those years where timing matters more than usual, since the itemizing decision is back in play for more households.

Bottom line: the planning opportunity in 2026 isn’t just “know the new rules.” It’s understanding how your income, deductions, and retirement benefits interact, because the combined effect is what determines your tax bill.

If you found this perspective helpful, feel free to share it with someone who may be asking the same questions.

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