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Planning for 2026 Tax Changes Post-TCJA
Why High-Earners Should Review Their Plan Now
If you earn a high income, the calendar is about to matter again. While recent legislation made the lower TCJA rate percentages permanent, several other TCJA-era provisions are scheduled to change after December 31, 2025, unless Congress acts further.
Key areas to watch include how the standard deduction is applied, the treatment of personal exemptions, and limits on certain deductions (including the state and local tax deduction—often called SALT). The goal isn’t to predict lawmakers’ next move; it’s to recognize that the ruleset is shifting and use the time between now and then to review your plan with your professionals.
What’s Changing — and Why It Matters
The TCJA significantly altered the tax landscape by lowering marginal tax rates, nearly doubling the standard deduction while removing personal exemptions, and capping the state and local tax (SALT) deduction.
Recent Update (enacted mid-2025): Congress passed comprehensive tax legislation (often nicknamed the “One Big Beautiful Bill”). It made the lower TCJA individual income tax rate percentages permanent and adjusted several items, including a temporary increase to SALT deduction limits and updated inflation thresholds for certain provisions.
However, that legislation did not make all TCJA individual provisions permanent. Unless additional changes are passed, several mechanics—such as how the standard deduction compares with itemized deductions, the treatment of personal exemptions, and certain phase-outs and caps—are set to operate differently beginning in 2026. For many households, the calculation may look different from 2025, which is why side-by-side modeling can be useful.
For High-Earners, Timing Is Everything
1) Bracket threshold awareness
Even with permanent rate percentages, changes to deductions and exemptions in 2026 could shift where your income falls relative to bracket thresholds. Reviewing expected income sources—bonuses, stock vesting, or business distributions—helps identify potential impacts. The goal is awareness, not speculation about rate changes.
2) Deductions and itemization
Changes scheduled for 2026 may make itemizing more common for some households—especially where mortgage interest, charitable gifts, or state taxes are significant. Understanding whether you’re more likely to itemize or take the standard deduction under the updated rules helps you prepare.
3) Retirement plan adjustments
Starting in 2026, many employer-sponsored plans will require catch-up contributions for high-income participants to be made as Roth (after-tax) contributions. Confirm with your employer or plan administrator that payroll systems and documents will be ready for this change.
4) Coordination across professionals
This is an ideal time to make sure your advisor and CPA are modeling the same assumptions. Reviewing your 2025 and 2026 income projections side by side can help clarify whether shifting a deduction, contribution, or charitable gift might make sense within your broader plan under changing rules.
Real-World Perspectives on Preparation
Timing awareness in practice
A couple expecting a large bonus late in the year meets with their CPA to compare 2025 and 2026 side by side. The discussion highlights a simple reality: sometimes when income is recognized can influence how it’s taxed under different rules. Seeing the math early helps them decide whether to keep their timeline as-is.
Understanding deductions under different rules
A small-business owner in a high-tax state reviews how temporary SALT limits interact with her charitable giving. Modeling shows she may itemize in some years and take the standard deduction in others. The takeaway isn’t a prescription—it’s clarity on how timing interacts with the rules.
What to Review Before 2026
1) Income timing
Review expected income events—bonuses, investment sales, or business distributions—and note any flexibility in timing.
2) Deduction planning
Understand which deductions may change or expire after 2025 and how those shifts might impact your specific situation (e.g., standard vs. itemized).
3) Retirement contributions
If you’re age 50 or older and make catch-up contributions, confirm your plan will handle the upcoming Roth requirement for high earners.
4) Stay informed
Tax laws often shift late in the year. Staying connected with your financial professional helps interpret updates within your overall plan.
For additional educational resources, visit our firm’s Useful Links page on McKeeFinancialResources.com under “About.”
Final Thought
Tax rules evolve. That’s not a reason to worry—it’s a reason to prepare. The upcoming 2026 changes don’t automatically mean higher taxes for everyone, especially with rate percentages now permanent. However, shifts in deductions and other mechanics still make this a good time to understand how the evolving landscape may affect you. Preparation doesn’t require prediction—it simply requires attention before the window closes.
Disclaimer: This material is for informational and educational purposes only and should not be considered financial, legal, or tax advice. Please consult with a qualified professional for personalized guidance. McKee Financial Resources does not provide tax or legal advice. Any references to tax legislation are based on information available as of the date of publication and may change without notice.
Copyright © 2025 Anthony Owens. All rights reserved.
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