Temporary return of the SALT Deduction — A Real Window, With an Expiration Date

If you live in a high-tax state like New York, New Jersey, or California, this can be significant. Until 2025, the state and local tax (SALT) deduction had been capped at $10,000 since 2018.  It has been raised to $40,400 for the 2026 tax year, increasing roughly 1% annually through 2029. However, there are a few important caveats:

• You must Itemize Deductions
• The full deduction phases out based on income (it disappears completely for MAGI above $605,000 for both single and married filers).
• After 2029 the SALT cap reverts back to $10,000

Retirement Contribution Step-Ups

The IRS increased contribution limits across the board for 2026, continuing a trend of inflation-adjusted increases. For 401(k), 403(b), and most governmental 457 plans, the employee deferral limit rises to $24,500, up from $23,500 in 2025. On the IRA side, the annual contribution limit increases to $7,500, up from $7,000, which applies to both traditional and Roth IRAs.

Contributions to employer accounts have changed for higher earners. Beginning January 1, 2026, if your FICA wages from your employer exceeded $150,000 in 2025, your catch-up contributions (those that are 50 and over) to employer-sponsored plans must be designated as Roth. This means after-tax dollars. However, your base $24,500 deferral is unaffected and can still go in pre-tax. If your plan does not currently offer a Roth option, that is worth confirming with HR now as the absence of a Roth option means you may be unable to make catch-up contributions at all.

Changes to Retirement Account Catch-Up Contributions

SECURE Act 2.0 introduced a more nuanced catch-up contribution structure that is now fully in effect. There are three distinct tiers in 2026, and which one applies to you has a meaningful impact on how much you can set aside. Remember, catch up contributions via Employer Sponsored Accounts (401ks, 403bs, etc) apply to those that are 50 and over, and for those in that category should note.

• Ages 50 to 59: The standard catch-up contribution increases to $8,000
• Ages 60 to 63: The super catch-up – this age band gets the most favorable treatment under SECURE 2.0. The catch-up limit is $11,250.
• 64 and older: Once you turn 64, you step back down to the standard $8,000.

For IRAs and Roth IRAs, the catch-up (age 50 and older) rises to $1,100, up from $1,000. This allows for a $8,600 in 2026 total contribution, which includes standard plus catch-up.

Charitable Giving — An Above-the-Line Deduction

Starting this year, 2026, a provision allows taxpayers who take the standard deduction the ability to deduct cash charitable contributions. This deduction is up to $1,000 for single filers and up to $2,000 for married couples filing jointly. This can be a meaningful addition because it rewards giving without requiring any change in filing strategy.

Bonus Material – Tax Changes Also Worth Knowing

The following changes are now in effect and may be relevant depending on your situation. We have kept them brief here, but any of them could warrant deeper attention depending on your income level, age, or family circumstances.

• New Senior Deduction (age 65+): A temporary $6,000 above-the-line deduction available through 2028, regardless of whether you itemize. This is income-based and phases out completely for singles with MAGI above $175,000 and married couples with MAGI above $250,000
• Estate tax exemption: The estate tax exemption was “permanently” raised to $15 million per individual ($30 million per couple) and will be indexed for inflation going forward.
• Itemized deduction cap for the 37% bracket: Taxpayers in the top bracket receive only 35-cents of benefit per dollar of itemized deductions starting in 2026.
• 529 plan expansion: The annual limit for tax-free 529 distributions covering K–12 expenses doubles from $10,000 to $20,000 per beneficiary.  (Always check state rules as well as not all states allow for for K-12 use of 529 funds).
• Trump Accounts: A new investment account created to help minors called the Trump Account is being rolled out. More details about that can be found here https://envestam.com/trump-accounts-children-savings/.

Bonus Material – Business Owners and the QBI Deduction

New Qualified Business Income (QBI) rules have been updated. For owners of pass-through businesses (think LLC’s, S-Corps, and Sole Props), this can be very significant. The Section 199A QBI deduction was set to expire at the end of 2025. The OBBBA made it “permanent” and increased the deduction rate from 20% to 23%. Under these rules, this may shield a meaningful portion of income from federal taxation.

The Bottom Line

2026 is not a year to set and forget. We provide some details about a few of these changes, but they come with a catch – layered with income cliffs, phase-outs, and provisions. Be better positioned by planning ahead. If you have not yet mapped your 2026 tax picture, now is the time. And remember to talk to your tax advisor or feel free to reach out to your Envest advisor and we can connect you to more detailed explanations