Every year, I meet individuals, families, and business owners who tell me the same thing:
“I wish I’d started preparing earlier.”
If you’ve ever felt that way around tax season, I understand. The U.S. tax system can be overwhelming even in a “normal” year. But 2026 is shaping up to be anything but normal. As a CPA who’s been through several major tax overhauls—including the 2017 Tax Cuts and Jobs Act (TCJA)—I can say with certainty that 2026 will bring some of the most dramatic tax changes we’ve seen in over a decade. And they’re already set in motion.
The TCJA brought sweeping temporary tax reforms when it was passed in late 2017. While most corporate tax changes were permanent, many individual and small business provisions were only meant to last until the end of 2025. That means unless Congress intervenes with new legislation, those TCJA provisions will automatically expire on January 1, 2026.
That’s why I’m writing this now—not just to prepare you, but to empower you.
Whether you’re a W-2 employee, a small business owner, a retiree, or a family trying to make the most of your credits and deductions, these changes will affect you. The question isn’t if the tax landscape will shift. It’s how prepared you’ll be when it does.
So let’s take a deep dive, starting with the big picture.
Section 1: Why 2026 Is a Turning Point for Taxpayers
Let me be very clear—2026 is not just “another tax year.” It marks the automatic expiration of more than two dozen major tax provisions that currently benefit individuals, families, and pass-through business owners. These changes are not speculative—they’re already written into the law. Unless Congress acts to extend or replace them, these provisions will sunset.
Let’s unpack what that means, who it affects, and why planning in 2024 and 2025 is absolutely critical.
1.1 The Expiration of the TCJA Individual Tax Cuts
When the TCJA was passed in 2017, it reduced individual income tax rates across the board. It also nearly doubled the standard deduction, eliminated personal exemptions, capped deductions like SALT (state and local taxes), and increased the child tax credit.
However, those benefits were always designed to be temporary for individuals. Here’s what we’re facing:
| Tax Rate Changes (Current vs. Post-TCJA) |
| 10% → 10% (unchanged) |
| 12% → 15% |
| 22% → 25% |
| 24% → 28% |
| 32% → 33% |
| 35% → 35% (unchanged) |
| 37% → 39.6% |
This means that most middle-income earners will pay more in taxes starting in 2026, unless they take steps now to manage their income levels, deductions, and credits.
1.2 The Standard Deduction Will Shrink
Currently (in 2024), the standard deduction is:
- $14,600 for single filers
- $29,200 for married filing jointly
- $21,900 for heads of household
These were increased substantially under the TCJA. But in 2026, we revert to pre-2017 levels, adjusted for inflation, which means the standard deduction will drop by nearly 50%.
At the same time, personal exemptions will return, offering ~$4,700 (estimated for inflation) per person, which can benefit larger families. But if you’re single or child-free, the change will likely raise your taxable income.
1.3 Credits and Deductions Will Be Harder to Qualify For
The Child Tax Credit, currently $2,000 per qualifying child (with a $400 nonrefundable portion), is scheduled to drop to $1,000 per child, and the Other Dependent Credit of $500 will disappear entirely.
Meanwhile, the SALT deduction cap of $10,000 goes away in 2026, which is good news for people in high-tax states—but only if they itemize. The mortgage interest deduction cap will rise back to $1 million in acquisition debt, but again, only matters if you itemize.
These overlapping shifts mean that your entire tax strategy—from withholdings to investments to charitable giving—may need to be reworked. It’s not just about one change. It’s the interplay between them.
1.4 For Small Business Owners: Major Deductions Will Disappear
If you’re a pass-through business (sole proprietor, S-Corp, LLC), you’re likely enjoying the 20% Qualified Business Income deduction (Section 199A). That deduction is also set to expire in 2026, potentially leading to a significant jump in your effective tax rate.
Plus, bonus depreciation will phase down to just 20% by 2026, with full write-offs disappearing. If your business depends on new equipment, vehicles, or real estate improvements, these changes are a big deal.
1.5 Estate and Gift Taxes Are About to Change Drastically
Right now, the federal estate and gift tax exemption is around $13.6 million per person. That’s the amount you can pass on to heirs tax-free. In 2026, it drops by half—to about $7.15 million per person.
For high-net-worth individuals, that could mean millions in potential estate taxes unless planning is done in advance through gifting, trusts, or charitable foundations.
Tax Bracket Shifts and What They Mean for You
As a CPA, one of the first things I look at when working with individuals and families is where they fall in the federal income tax brackets—not just for this year, but two or three years out. Why? Because anticipating where your income will land in 2026 can literally save you thousands in taxes.
And here’s where things start to shift fast.
2.1 What’s Changing with the Tax Brackets in 2026?
When the Tax Cuts and Jobs Act (TCJA) was passed in 2017, it lowered tax rates across nearly every income bracket for individual filers. But those cuts expire after December 31, 2025. That means the lower TCJA tax rates will “snap back” to pre-2018 levels starting in 2026—unless Congress acts to extend or modify them.
Let’s break it down with real numbers.
Here’s what we’re currently working with in 2024 (TCJA rates):
- 10%: Up to $11,600 (single) / $23,200 (married filing jointly)
- 12%: $11,601–$47,150 / $23,201–$94,300
- 22%: $47,151–$100,525 / $94,301–$201,050
- 24%: $100,526–$191,950 / $201,051–$383,900
- 32%: $191,951–$243,725 / $383,901–$487,450
- 35%: $243,726–$609,350 / $487,451–$731,200
- 37%: Over $609,351 / $731,201
Here’s what’s expected in 2026 (Pre-TCJA rates returning, adjusted for inflation):
- 10%: Similar range (remains unchanged)
- 15%: Replaces the 12% bracket
- 25%: Replaces the 22% bracket
- 28%: Replaces the 24% bracket
- 33%: Replaces the 32% bracket
- 35%: Stays
- 39.6%: Replaces 37% bracket
What this means is simple but powerful: many Americans will see a bump in their marginal tax rate of 3% to 7%, even if their income remains the same.
2.2 Why This Matters Even If You Don’t Make “A Lot”
I often hear people say, “I’m not a high-income earner. Why should I care about bracket changes?” My answer is always the same—taxes are about percentages, not just dollar amounts.
If you’re making $70,000 as a single filer, you’re currently in the 12% bracket. In 2026, that jumps to 15%, a 25% increase in your marginal tax rate. For someone making $160,000, you’re moving from a 24% bracket to 28%. That’s a 16.7% increase on every dollar you earn above the lower limit of that bracket.
This means the way you:
- Time your income
- Harvest investment gains
- Make Roth vs. traditional IRA contributions
- Use employer benefits
—could either protect you from rising taxes or expose you to a higher bill.
2.3 Planning Opportunities Before Rates Rise
Now here’s the good news: because we know this is coming, we can start planning now to soften the blow. Here are some of the most effective strategies I’m recommending to my clients between now and the end of 2025:
✅ Roth IRA and Roth 401(k) Conversions
If you believe you’ll be in a higher tax bracket in 2026, converting traditional retirement funds into Roth accounts now lets you pay taxes at today’s lower rates, and then enjoy tax-free growth going forward. Even if you’re already retired, this can be a smart play—especially during lower-income years.
✅ Accelerating Income Into 2024 and 2025
For business owners and self-employed individuals, pulling income forward into the lower-rate years can be an efficient move. That may mean issuing invoices early, accepting project-based work sooner, or deferring deductions to later years when you’ll need them more.
✅ Delaying Deductions
I know this sounds counterintuitive, but trust me—it works. By deferring deductible expenses (like charitable donations or medical payments) into 2026 and beyond, you’ll get a bigger tax benefit when rates are higher. This works especially well if you plan to itemize in 2026 and are currently taking the standard deduction.
✅ Filing Status Optimization
This is particularly relevant for married couples filing jointly. The TCJA temporarily “marriage-penalty proofed” the brackets by doubling most thresholds. But in 2026, that changes. The higher brackets may start to penalize dual-income households again, meaning married couples could find themselves taxed more heavily than two single filers would be.
Planning early for how you’ll file, how income is split, and how deductions are claimed is crucial if you want to avoid a surprise tax bill.
2.4 Bracket Awareness Means Smarter Financial Decisions
Everything from capital gains harvesting, to Social Security benefit timing, to business income strategies, depends on knowing your bracket trajectory. In my own practice, I model out multiple “what-if” scenarios for clients so we’re not just reacting to changes, but actually preparing for them.
Remember—you don’t pay your marginal rate on all your income, but the rate still affects every new dollar you earn or deduct. So when rates jump, the impact can cascade through your entire return.
Personal Exemptions Return & Why You May Need to Start Itemizing Again
If you’ve gotten used to the ease of claiming the standard deduction over the last few years, I want you to pay close attention here—because things are about to change in a big way.
One of the major features of the Tax Cuts and Jobs Act (TCJA) was the elimination of personal exemptions and a nearly doubled standard deduction. For most middle-income households, this simplified filing. You didn’t have to worry about tracking mortgage interest or charitable giving—just take the standard deduction and be done.
But that simplicity came with an expiration date: December 31, 2025.
In 2026, the standard deduction will shrink back to pre-TCJA levels, and personal exemptions will return. On paper, this sounds like a fair trade. In practice? It’s more complicated—and it could mean many of us will need to re-learn the art of itemizing to avoid leaving money on the table.
3.1 What Exactly Is a Personal Exemption and Why Is It Returning?
Before the TCJA, taxpayers could claim a personal exemption for themselves and each dependent. In 2017, that amount was $4,050 per person—so a family of four could reduce their taxable income by over $16,000 just through exemptions.
When TCJA took effect in 2018, it eliminated these exemptions but softened the blow by doubling the standard deduction:
- From ~$6,500 to $13,000 (now indexed up to $14,600 in 2024 for singles)
- From ~$13,000 to $26,000 (now indexed to $29,200 in 2024 for married couples)
In 2026, we’re expecting the standard deduction to drop significantly, while personal exemptions are reintroduced—though the exact exemption amount will be adjusted for inflation (likely in the $5,000–$5,500 range per person).
So, if you’re a single filer, instead of a $14,600 deduction, you may get:
- A standard deduction around $7,000–$8,000
- Plus a $5,000+ exemption for yourself
Total write-off: ~$12,000 to $13,000—less than what you’re currently used to.
For larger families or those with dependents, personal exemptions can be a benefit, but for individuals or couples without children, this change may actually reduce your deductions.
3.2 How This Affects the Way You File
The return of exemptions and reduced standard deductions flips the tax game for many households. Here’s what this could mean for you:
✅ Itemizing May Become More Beneficial Again
In 2024, the standard deduction is so high that 90% of Americans don’t bother to itemize. But in 2026, we’re likely to see that shift. If you have:
- A mortgage (especially with high interest payments)
- Significant charitable donations
- Medical expenses over 7.5% of your AGI
- State and local taxes (up to the SALT cap)
—you may find yourself better off itemizing instead of taking the standard deduction.
That means now is a good time to start tracking these expenses again. In my office, I always remind clients: If you don’t track it, you can’t deduct it.
✅ Families with Children Will See Mixed Outcomes
If you have kids, the return of personal exemptions will help—but don’t assume it’s a windfall. At the same time, the Child Tax Credit will shrink back down (more on that in Section 4). So your overall benefit may be less than what you’ve been used to under the TCJA’s expanded credits.
✅ Retirees and Empty Nesters May Lose Out
One group that could feel the pinch here is retirees and couples with grown children. Without dependents to claim, and without large itemizable expenses like mortgages or business costs, the lower standard deduction could mean a higher tax bill, even if their income hasn’t changed.
3.3 Tax Filing Will Get More Complex—But Also More Personal
When the TCJA passed, it was like putting filing on autopilot. One standard deduction, no exemptions, fewer decisions. That convenience is going away.
Starting in 2026, tax prep will become more nuanced again, and that’s not a bad thing. With more variables back in play, you also have more opportunities to optimize. But only if you know how.
If you haven’t itemized in years, I recommend starting to gather these documents in 2025, so you can compare scenarios before deciding which route saves you more.
And if you’ve relied solely on online filing software, now might be the time to connect with a CPA like myself. Because cookie-cutter tools may miss deductions that a professional can spot—especially as the rules shift.
Shrinking Child and Dependent Credits — What Families Need to Brace For
As a CPA, I’ve seen how the Child Tax Credit (CTC) has been a game-changer for so many families—especially since 2018. It’s not just about a few hundred dollars off your tax bill. For many, it’s made the difference between getting a sizable refund and owing money.
But starting in 2026, this benefit will shrink—and for some, disappear altogether. If you’re raising kids, supporting aging parents, or helping adult dependents, it’s important to understand what’s changing and how to prepare now.
4.1 The Big Shift: From $2,000+ Down to $1,000 per Child
Let’s start with the numbers.
Under the Tax Cuts and Jobs Act (TCJA), the Child Tax Credit was:
- Increased from $1,000 to $2,000 per qualifying child under 17
- Up to $1,400 of it was refundable (meaning you could get money back even if you owed no tax)
- Available to many more families, thanks to the significantly expanded income limits:
- Up to $400,000 for married couples
- Up to $200,000 for single filers
- Up to $400,000 for married couples
But when these TCJA provisions expire on January 1, 2026, the Child Tax Credit is expected to revert to:
- $1,000 per child
- With lower income phase-outs (starting at $75,000 for single filers and $110,000 for married couples)
- And less refundability, if any
That means many middle- and upper-middle-income families will no longer qualify at all—and even those who do will see a smaller credit.
For a family with two kids under 17, that’s a potential drop of $2,000–$2,800 in credits compared to recent years.
4.2 What Happens to Other Dependent Credits?
The TCJA also introduced a $500 non-refundable credit for other dependents—such as:
- Older children (17 and up)
- Elderly parents you support
- Disabled adult dependents
This “Credit for Other Dependents” (ODC) is also expected to disappear in 2026, as it was part of the same temporary tax overhaul.
If you’re caring for anyone outside the typical CTC category, this is one more benefit you may lose.
4.3 Real-Life Impacts for Different Types of Families
Let’s break down how these credit changes might hit different households:
Young Families with Multiple Kids
If you have 2 or more children under 17, you’re likely to lose $2,000 to $4,000 in tax credits under the rollback—especially if your income is above the reduced thresholds.
That could mean:
- A smaller refund (or no refund at all)
- Higher balance due
- Need to increase withholding or pay quarterly estimated taxes
Families Supporting Aging Parents
If you’ve been using the $500 credit for a dependent parent, that’s going away. Add that to the loss of a higher standard deduction and you’re looking at a double hit.
Caregivers of Adult Dependents
Support someone with a disability who doesn’t qualify as a child? You’re not just losing the $500 credit—you may also face tighter limits on medical expense deductions (especially if you don’t itemize). The overall financial strain may increase.
Parents with College-Age Dependents
Kids in college often don’t qualify for the CTC, but families have still benefited from education credits like the American Opportunity Credit. While that credit isn’t going away in 2026, the loss of the $500 ODC and reduced income thresholds may cause some tax bills to rise, even with students still in school.
4.4 How to Prepare for the Credit Cuts
This is not something I want any family to be caught off guard by. Here are a few ways to brace for these changes ahead of time:
✅ Reassess Your Withholding in 2025
If you’ve been counting on a fat refund thanks to the CTC, consider adjusting your W-4 with your employer so your paycheck reflects the new reality before it hits.
✅ Consider Flexible Spending & Dependent Care Accounts
To make up for the lost dependent credits, take advantage of workplace pre-tax benefits like:
- Dependent Care FSA
- Childcare tax deductions
These don’t fully replace the CTC, but they help ease the burden.
✅ Keep Records for Education and Medical Expenses
If you support an adult child in college or an aging parent with healthcare needs, detailed records could help you claim other deductions or credits that remain in place.
✅ Talk to a Professional Early
This is where I strongly recommend you work with a tax professional, especially in 2025. We can run projections, simulate pre- and post-2026 filing scenarios, and help you strategize ahead of time.
The Return of Pease Limitation & Deduction Phase-Outs for High-Income Earners
For many of my high-income clients, one of the lesser-known—but highly beneficial—features of the Tax Cuts and Jobs Act (TCJA) was the temporary repeal of the Pease limitation. It quietly went away in 2018, and most people didn’t notice it was gone—until they saw how much more of their deductions they could actually use.
Now, in 2026, it’s making a comeback. And for those with sizable income or large deductions, this can translate into a significant stealth tax increase.
5.1 What Is the Pease Limitation and Why Does It Matter?
The Pease limitation, named after former Congressman Donald Pease, was designed to reduce the value of itemized deductions for high-income earners. It’s not a direct tax hike, but rather a phase-out mechanism that quietly chips away at the tax-saving power of your deductions.
Here’s how it works:
- If your adjusted gross income (AGI) exceeds a certain threshold (historically around $250,000 for singles and $313,000 for married couples filing jointly—indexed for inflation), your total itemized deductions are reduced by 3% of the amount over that threshold, up to a cap of 80% of deductions.
So for example, if you had $400,000 in AGI and $50,000 in itemized deductions, the Pease limitation could reduce your deductions by thousands—effectively raising your taxable income.
5.2 Deductions That Will Be Affected
Once the Pease limitation returns, it will impact nearly all major itemized deductions, including:
- Charitable contributions
- Mortgage interest
- State and local taxes (SALT) — although capped under current law at $10,000
- Medical expenses (if they exceed the AGI floor)
- Casualty and theft losses (rare, but still relevant for some)
In other words, it will affect nearly every high-income taxpayer who itemizes.
This is particularly critical for professionals like doctors, lawyers, consultants, executives, and entrepreneurs with large AGIs and who strategically plan their deductions to reduce liability.
5.3 Why This Matters More Than Ever
You might think, “Well, if I already lost some deductions under the SALT cap and mortgage interest changes, how bad can this be?”
Here’s the issue:
- The standard deduction will be cut in half in 2026 (from about $27,700 to $13,000 for married couples), pushing more people back into itemizing.
- But then, as your AGI crosses the Pease threshold, your itemized deductions themselves start to shrink.
It’s a double-whammy—you lose the standard deduction advantage, then get your itemized deductions clawed back.
So even if your income doesn’t change, your taxable income could go up sharply, and so could your total tax bill.
5.4 Preparing Ahead: What You Can Do Now
You don’t have to wait until 2026 to start protecting yourself. Here are a few smart strategies I recommend to my clients:
✅ Accelerate Deductions Before 2026
If you’re planning a big charitable gift, major home renovation financed by a mortgage, or even prepaying certain medical expenses—2025 might be the year to do it. Lock in the value of those deductions while they still count fully.
✅ Consider Bunching Deductions
Group charitable donations or medical expenses into one tax year to push your total itemized deductions high enough to outweigh the standard deduction—and reduce the impact of Pease in future years.
✅ Explore Donor-Advised Funds
These are great for making large charitable contributions in a high-income year while distributing the funds over time. It allows you to deduct the full amount in one tax year, which can offset AGI before Pease kicks in.
✅ Talk to a CPA About Timing Income
If you can defer income into a year when you’ll have fewer deductions subject to Pease (or spread large income across multiple years), you can avoid hitting the threshold altogether.
✅ Use Strategic Roth Conversions Carefully
Roth conversions can boost your AGI temporarily, triggering Pease. Make sure to coordinate this with your deduction planning to avoid unintended impacts.
5.5 Hidden Impact: Not Just for the Wealthy
I’ve worked with plenty of two-income professional households in high-cost-of-living areas—New York, California, the D.C. area—where income easily crosses Pease thresholds, even though you may not feel “wealthy.”
If your mortgage, property taxes, and charitable giving are a core part of your tax plan, this is one area where you’ll really feel the difference. And without a plan, your 2026 return could bring an unpleasant surprise.
The Return of Personal Exemptions – What It Means for Families
Back in the pre-TCJA days, taxpayers could claim a personal exemption for themselves, their spouses, and dependents. In 2017, this was worth around $4,050 per person, reducing your taxable income before you even got to deductions.
Then the TCJA came along in 2018 and suspended personal exemptions through 2025, replacing them with a doubled standard deduction and an enhanced Child Tax Credit (CTC). Many families actually saw lower taxes due to the changes, but now that the TCJA provisions are sunsetting, we’re heading back to the older system—with some new context.
So what does that mean for you in 2026?
6.1 What Are Personal Exemptions and How Do They Work?
A personal exemption is a fixed amount you can subtract from your adjusted gross income (AGI) for yourself, your spouse (if filing jointly), and each qualified dependent. It’s different from deductions, which reduce taxable income based on expenses like mortgage interest or medical costs.
Here’s a refresher on how it worked before the TCJA:
- In 2017, you could claim $4,050 per person in your household.
- So a family of four could exclude over $16,000 from their taxable income automatically, before taking the standard or itemized deduction.
- This amount phased out at higher incomes, usually around $261,500 for single filers and $313,800 for married couples (indexed for inflation annually).
In 2026, personal exemptions are expected to return with inflation-adjusted values, likely somewhere in the $5,000 to $6,000 range per person—though we won’t know the exact numbers until the IRS updates the thresholds.
6.2 How This Affects Taxpayers in 2026
If you have dependents, the return of personal exemptions could be very favorable, especially since the standard deduction will be cut in half. Here’s how it plays out:
- A married couple with two children will regain the ability to reduce taxable income by roughly $20,000 to $24,000 (depending on inflation adjustments).
- For some middle-income families, this could offset the loss of the larger standard deduction and help preserve lower tax bills.
- But here’s the catch: the Child Tax Credit will shrink, meaning some families may come out behind unless they plan carefully.
And once again, high-income earners may see this benefit phased out entirely due to AGI limits—another reason why year-round planning is crucial if your household income is rising.
6.3 Personal Exemptions vs. Standard Deduction – How Do They Work Together?
A common question I hear is: “If I’m getting personal exemptions back, do I still get a standard deduction?”
The answer is yes—but with the caveat that the value of both has changed:
| Year | Standard Deduction (Married Filing Jointly) | Personal Exemptions (per person) |
| 2025 | ~$29,200 (with no personal exemptions) | $0 |
| 2026 | ~$13,000 (estimated, cut in half) | ~$5,000–$6,000 per person |
So, in 2026, a couple with two kids could see:
- ~$13,000 standard deduction
- ~$20,000–$24,000 in personal exemptions
= Total of ~$33,000–$37,000 in tax reductions (if not phased out)
- ~$20,000–$24,000 in personal exemptions
This structure will reward larger families and may increase the complexity of deciding whether to itemize or take the standard deduction, especially when combined with the Pease limitation discussed in Section 5.
6.4 Key Planning Considerations
Here are some important steps I recommend to my clients now—before these changes take effect:
✅ Update Your Household Planning
If you’ve had children since 2018 or have aging parents you support, now’s the time to understand who qualifies as a dependent under IRS rules. This directly impacts your eligibility for personal exemptions in 2026.
✅ Reassess Filing Status and Dependent Claims
For newly married couples, those who recently divorced, or anyone with shared custody agreements, these changes could impact who gets to claim dependents—and how much it’s worth. The tax savings could be substantial, so clarity now is key.
✅ Prepare for the CTC Shift
Don’t forget: while personal exemptions are coming back, the Child Tax Credit (CTC) will revert to its pre-TCJA levels—$1,000 per child, with stricter income limits and no monthly advance payments. For many, that means less refundable credit and more emphasis on exemptions.
✅ Plan for Future Income Phase-Outs
If your AGI is rising or hovering near phase-out thresholds, you might want to defer income, accelerate deductions, or shift assets into lower-income household members (such as through 529 plans or family gifting). This can help you stay below exemption or credit cutoffs.
Mortgage Interest and SALT Deduction Limits – What’s Changing in 2026 and What It Means for You
One of the most dramatic changes introduced by the 2017 Tax Cuts and Jobs Act (TCJA) was the capping of the SALT deduction at $10,000 and the limitation on mortgage interest deductions to loans of $750,000 or less. For many of my clients—especially those in New York, California, New Jersey, and Illinois—these caps made a big dent in their ability to deduct sizable state income or property taxes and mortgage interest from their federal returns.
But here’s the good news: those limitations are set to expire after 2025. That means a return to the more generous pre-TCJA rules in 2026—at least as things stand today.
Let’s break down what’s going away, what’s coming back, and what you should start planning for.
7.1 The Mortgage Interest Deduction – Back to $1 Million Limits
Before the TCJA, you could deduct interest on mortgage debt up to $1 million ($500,000 if married filing separately) for your primary residence and a second home. When the TCJA went into effect:
- That cap was reduced to $750,000 ($375,000 MFS) for loans taken out after December 15, 2017.
- Loans taken before that date were grandfathered in at the $1 million limit.
- Interest on home equity loans and lines of credit (HELOCs) became nondeductible unless used to buy, build, or improve your home.
In 2026, these changes are expected to revert, meaning:
✅ The $1 million cap will be reinstated for new mortgages.
✅ Interest on HELOCs and home equity loans may again be deductible, even if the loan wasn’t used for home improvements—though you’ll still need to check on final IRS guidance.
✅ You’ll have more room to deduct interest on second homes or refinanced loans.
If you’ve been delaying a home purchase or refinance, 2026 might open up new deductibility options—especially if rates come down by then. It’s a good idea to review how your current mortgage terms align with upcoming deduction rules, and decide whether restructuring your debt in 2026 might yield better tax results.
7.2 The SALT Deduction Cap – Say Goodbye to the $10,000 Limit
Another significant rollback expected in 2026 is the end of the $10,000 cap on State and Local Tax (SALT) deductions. This cap—applied to the total of state income taxes, local income taxes, property taxes, and sales taxes—hit high earners and homeowners hard in many states.
In 2026, we’re scheduled to go back to the pre-2018 rule, where:
✅ There’s no specific dollar cap on how much you can deduct in SALT payments.
✅ If you itemize your deductions, you’ll be able to deduct the full amount of your state and local income or sales taxes plus property taxes, subject to income-based limitations like the Pease rule (which we discussed earlier in Section 5).
Here’s what this means in real numbers:
- If you pay $20,000 in state income tax and $12,000 in property taxes annually, you’ve only been allowed to deduct $10,000 total since 2018.
- Starting in 2026, you could again deduct all $32,000—if you itemize.
This one change alone could reduce your taxable income by tens of thousands of dollars. But there’s a caveat: you must itemize to benefit from it. If the combination of mortgage interest, charitable donations, and SALT deductions don’t exceed the standard deduction, you won’t see any benefit.
That’s why proactive planning is so critical.
7.3 Planning Ahead – Who Gains and Who Needs to Rethink Their Strategy
For many of you—especially if you’re in a high-tax state—this could be a game changer. But only if you’re positioned correctly. Here’s how I’m advising my clients to prepare:
✅ Reevaluate Itemized vs. Standard Deduction
The standard deduction will drop significantly in 2026. For example, for married couples, it may fall from around $29,000 to ~$13,000. If your mortgage interest, SALT payments, and charitable contributions exceed that, itemizing becomes more favorable.
✅ Time Property Tax Payments Wisely
If you typically prepay property taxes at year-end, it may be better to shift some of those payments into 2026 when they become fully deductible again. Work with your tax advisor on timing strategies that maximize value.
✅ Understand the Pease Limitation
High-income earners need to remember that the Pease limitation (discussed in Section 5) will reduce the value of itemized deductions once AGI crosses certain thresholds—estimated to be around $330,000 to $385,000 for couples in 2026. So even if SALT is fully deductible again, you may not get the full benefit.
✅ Review AMT Exposure
The Alternative Minimum Tax (AMT) is another layer of complexity. Even if SALT deductions return, they’re not deductible under AMT, and more people will fall into the AMT range in 2026. Talk to your CPA to see how likely you are to be affected and whether you should adjust your withholding or estimated payments now.
7.4 Should You Consider a Trust or Entity Restructure?
Some high-income taxpayers and real estate investors have considered restructuring ownership of homes through LLCs, irrevocable trusts, or S-corporations to maximize deductions or shield assets. With the coming tax law changes:
- The benefit of passing through property tax and interest deductions to entities may diminish or increase—depending on income and AMT exposure.
- SALT workaround strategies using pass-through entity taxes (like PTE taxes in California or New York) may also shift in value post-2025.
If this is something you’ve been considering, 2025 is the time to consult with a tax advisor who understands both federal and state implications of entity-based ownership.
Child Tax Credit and Education Credits – What You’ll Lose or Regain in 2026
If you’re a parent, a student, or helping to support someone through college, you’ve probably relied on tax credits at some point to ease your tax burden. Tax credits are different from deductions—they reduce your tax bill dollar-for-dollar, which makes them incredibly valuable. But just like many other provisions in the 2017 Tax Cuts and Jobs Act (TCJA), several key tax credits are scheduled to shrink or revert to their pre-2018 versions starting in 2026.
Let’s take a deep look at what’s expiring, what’s changing, and how you can plan ahead.
8.1 Child Tax Credit – Say Goodbye to the $2,000 Per Child Benefit
The TCJA temporarily expanded the Child Tax Credit (CTC) from $1,000 to $2,000 per child under age 17, with:
- $1,400 of that amount being refundable through the Additional Child Tax Credit (ACTC).
- Much higher income thresholds before the credit began to phase out—$400,000 for married couples filing jointly and $200,000 for individuals.
Here’s what’s expected to happen in 2026:
- The credit will shrink back to $1,000 per child.
- The refundability portion will drop significantly, meaning lower-income families may receive less or none of the credit.
- Income thresholds will fall dramatically—from $400,000 to just $110,000 for married couples, and from $200,000 to $75,000 for single filers.
This could impact millions of middle-income families. If your income is above these lower thresholds in 2026, you might not get any credit at all—even if you’ve claimed it for years.
lanning tip: If you’re expecting to be over the income limit in 2026, consider strategies like increasing pre-tax retirement contributions or health savings account (HSA) contributions to reduce your adjusted gross income (AGI) and possibly still qualify for the credit.
8.2 Education Credits – Hope and Lifetime Learning Stay the Same, But Be Strategic
Fortunately, the TCJA didn’t eliminate or modify the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC). These remain powerful tools for students and parents supporting education costs.
Let’s refresh what these credits offer:
✅ AOTC: Up to $2,500 per student per year for the first four years of post-secondary education. 40% of this is refundable. To qualify:
- Student must be enrolled at least half-time.
- Phaseout begins at $80,000 (single) and $160,000 (joint filers).
✅ LLC: Up to $2,000 per return (not per student), covering tuition and related expenses for any year of post-secondary education, including graduate studies or lifelong learning. It’s non-refundable.
As of now, these credits are not part of the TCJA sunset, so they’re expected to remain the same in 2026. But that doesn’t mean you should ignore them.
Planning tip:
- Make sure you coordinate withdrawals from 529 plans carefully. Using 529 funds and claiming these credits on the same expenses can lead to a double-dipping violation.
- For those nearing the end of their AOTC eligibility (i.e., 3rd or 4th year of undergrad), plan tuition payments to maximize credit value across tax years.
8.3 Other Family and Dependent-Related Benefits at Risk
There are a few more provisions that will revert to older, less generous versions:
❌ Personal Exemptions Return – but Replace Higher Standard Deduction
- Right now, you don’t get a personal exemption per dependent—but you do get a much higher standard deduction.
- In 2026, personal exemptions will return (around $4,050 per dependent), but the standard deduction will shrink by nearly 50%.
- This won’t necessarily benefit large families the same way unless income levels and deductions are carefully optimized.
❌ Credit for Other Dependents (ODC) May Be Reduced
- This nonrefundable credit of up to $500 per dependent (for those not eligible for the CTC, like older children or elderly parents) was introduced by the TCJA.
- It may expire after 2025, depending on whether Congress renews it.
Planning tip: If you’re supporting adult children, elderly parents, or other non-child dependents, plan for possible loss of this credit in 2026 and model its impact on your effective tax rate.
8.4 How to Prepare for These Credit Rollbacks
These tax credit changes could significantly raise your tax bill in 2026—especially if you’re a family with children, supporting a college student, or relying on dependent-based tax relief.
Here’s how I recommend my clients prepare:
✅ Run a tax projection for 2026 using lower credits and exemptions. This will help you estimate what your liability might look like—and avoid any rude surprises.
✅ Take full advantage of credits while they’re still available in 2024 and 2025. This includes optimizing your income and dependent structure now to get the most out of CTC or education credits while they’re still generous.
✅ Consider timing educational expenses—such as paying spring tuition in December or January depending on the year’s strategy—to align with the most credit-friendly rules.
✅ Talk to your CPA or tax advisor early in 2025. Because if the sunset isn’t delayed, 2026 will require a sharp pivot in strategy—especially for families and students.
Smart Year-End Tax Moves to Lock in Before the 2025 Deadline
When it comes to tax planning, timing is everything. And right now, the calendar is your best friend—if you use it wisely. I always tell my clients: “If you wait until tax season to think about taxes, you’ve already missed the best opportunities.”
That’s especially true heading into 2026. This is not just any year-end—it’s your last full chance to benefit from many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) before they expire.
Here’s how to approach 2024 and 2025 like a seasoned strategist, not just a taxpayer.
9.1 Consider Accelerating Income (If It Makes Sense)
This might sound counterintuitive—why would you want to increase your taxable income? But in some cases, it makes perfect sense, especially if:
- You expect to be in a higher tax bracket in 2026.
- You have control over your income timing (think: small business owners, freelancers, consultants, investors, or anyone with capital gains flexibility).
By pulling forward income into 2024 or 2025, you lock it in at today’s lower tax rates before the brackets expand and rates increase in 2026.
Examples:
- Realizing capital gains now instead of waiting.
- Issuing year-end bonuses early.
- Doing Roth conversions in 2025 instead of after.
Planning tip: Work with your CPA to run a “what if” scenario. The upfront tax may be worth the long-term savings, especially when tax brackets go back to pre-TCJA levels.
9.2 Maximize Itemized Deductions While They’re Still Viable
In 2026, the standard deduction will be cut nearly in half, and many people will return to itemizing deductions. But if your current deductions are close to the current standard deduction, you may not be itemizing right now—and that’s a missed opportunity.
Here’s how to plan smartly:
✅ Bunch your deductions: For example, double up on charitable donations or prepay state/local taxes and mortgage interest (if applicable) in one year to get over the standard deduction hurdle.
✅ Make charitable donations before 2025 ends: If you’re planning significant giving, doing it now while the higher thresholds and benefits apply makes sense.
✅ Medical expenses: If you’re near the 7.5% AGI threshold, try to schedule procedures or prepay costs before the end of 2025 to benefit under the current structure.
Watch out: The SALT (State and Local Tax) deduction is currently capped at $10,000—this cap is also expected to expire, but there’s no guarantee Congress will act. Plan assuming it’s still in place.
9.3 Maximize Retirement Contributions Before the Tax Environment Shifts
This is one of the most tax-efficient moves anyone can make. Contributing to pre-tax retirement accounts (like a 401(k) or traditional IRA) reduces your taxable income and helps you save for the future. But in this climate, there’s even more reason to optimize your retirement strategy.
Traditional contributions now = savings at current low rates
Roth conversions now = tax-free withdrawals later, before rates rise
What to consider:
- Max out 401(k) contributions: The 2024 limit is $23,000 if you’re over 50, and $19,500 for others. These may increase in 2025—stay updated.
- Health Savings Accounts (HSA): Contributions are triple tax-advantaged—pre-tax contributions, tax-free growth, and tax-free withdrawals for medical expenses.
Planning tip: Consider a partial Roth conversion in 2024 or 2025. Pay taxes at today’s lower rates, and enjoy tax-free growth forever—even if rates rise in 2026.
9.4 Use Your Gift Tax Exemption Before It Shrinks
If you’re planning to gift assets or transfer wealth, you’ll want to pay close attention here.
Right now, the federal gift and estate tax exemption is historically high—$13.61 million per person in 2024. But it’s scheduled to drop by roughly 50% in 2026, reverting to around $7 million (adjusted for inflation).
That means high-net-worth individuals and families have a once-in-a-generation opportunity to move significant assets out of their estate without gift tax consequences—but only through 2025.
How to act:
- Use irrevocable trusts to shelter gifts.
- Gift assets that are expected to appreciate over time (stocks, property).
- Consider spousal lifetime access trusts (SLATs), dynasty trusts, or grantor retained annuity trusts (GRATs) for tax-savvy giving.
Note: The IRS has confirmed that gifts made before 2026 using the higher exemption will not be “clawed back” when the exemption drops—so use it or lose it.
9.5 Review Entity Structures for Small Businesses
If you’re a business owner, now is the time to reassess your entity structure. For many businesses, forming an S-corp or pass-through entity post-2018 made sense because of the 20% Qualified Business Income (QBI) deduction.
But that QBI deduction will expire in 2025 unless extended.
What to consider:
- Should you accelerate income or delay deductions?
- Are you eligible for the QBI deduction now? If yes, take full advantage while you can.
- Would a C-Corp structure offer better long-term tax benefits in a post-TCJA world?
Planning tip: Business structure optimization is not one-size-fits-all. Book a year-end review with your tax professional to model the impact of the expiring QBI deduction and consider future-proofing your business for 2026 and beyond.
Bottom Line:
The 2026 tax season won’t just be another filing year—it’s the end of an era for many favorable provisions under the 2017 Tax Cuts and Jobs Act. From changing tax brackets to estate and gift rule reversals, the impact could be significant if you don’t plan ahead. Whether you’re an individual, a family, or a business owner, now is the time to act. Let’s not wait for changes to happen—let’s prepare for them, smartly and proactively. If you’re unsure where to begin, I’m here to guide you every step of the way.
Frequently Asked Questions (FAQs):
Ques. 1. What is changing in the 2026 tax season?
Ans. Many provisions from the 2017 Tax Cuts and Jobs Act (TCJA)—like lower tax rates, higher standard deductions, and expanded credits—are set to expire on December 31, 2025, unless extended by Congress.
Ques. 2. How will my individual tax rate change in 2026?
Ans. The tax brackets are scheduled to shift back to pre-TCJA levels, meaning most people will see an increase in their marginal tax rates starting January 1, 2026.
Ques. 3. What should I do in 2024 or 2025 to prepare?
Ans. Start planning early: consider accelerating income, maximizing deductions, reviewing estate plans, and contributing to retirement accounts while current rules are still in place.
Ques. 4. Is the child tax credit going down?
Ans. Yes, if no legislation is passed, the credit will return to $1,000 per child in 2026, down from the current $2,000, with more restrictive phaseouts.
Ques. 5. How can I get personalized advice for my situation?
Ans. Book a consultation with a CPA who understands these changes in depth. I work one-on-one with clients to build a strategy based on their specific financial goals and tax position.