2026 Tax Changes for Individuals: What to Start Planning for Now

Learn some of the most important 2026 tax law changes for individuals, including updates to deductions, charitable giving rules, 529 plans, AMT, and estate tax exemptions. Understand what these changes mean for your 2026 tax planning.

By Kendall Maccagnan, CPA, CFP® and Financial Advisor in Tampa, Florida

Key Takeaways

1. Several 2026 tax law changes may impact how individuals plan for deductions, education savings, and estate transfers

2. The law expands certain tax benefits (like charitable deductions and 529 plans) while introducing new limitations for higher income taxpayers

3. Charitable giving rules change significantly, with new deductions for standard filers and stricter thresholds for itemizers

4. Estate and gift tax exemptions increase, which may create additional planning opportunities

Introduction

The 2026 tax law changes under the One Big Beautiful Bill Act (Public Law 119-21) introduce several updates that may impact how individuals approach tax planning. These changes build on prior legislation by extending certain provisions while modifying others, particularly around deductions, education savings, and estate planning.

These changes adjust how certain deductions and thresholds are applied, which may shift the overall tax outcome for different types of taxpayers. Evaluating how these provisions interact can be an important part of planning going into 2026.

A Summary of Important Tax Changes for Individuals

Brief Background

While the One Big Beautiful Bill or OBBBA (Public Law 119–21 ) made headlines for its immediate 2025 changes, some of its most significant provisions for individual taxpayers don't take effect until 2026 including new savings accounts for children, expanded 529 plan rules, estate tax changes, and modifications to the Alternative Minimum Tax.

This article focuses on the federal tax changes taking effect in the 2026 tax year specifically. If you haven't already reviewed changes effective for 2025, see our companion article: 2025 Tax Changes for Individuals.

2026 Tax Changes for Individuals: What to Know Under One Big Beautiful Bill and What these Changes Mean for Your 2026 Tax Planning

New for 2026: Savings and Investment Accounts:

New “Trump Accounts” in 2026: Tax-Advantaged Savings for Children

The new legislation introduces a new type of tax advantaged account designed to help families begin building long term savings for children early. Contributions to these accounts cannot be made before July 4, 2026. The new accounts are referred to as 'Trump Accounts' and are available for children who are age 17 or younger for the entire calendar year. Children who turn 18 at any point during the year are not eligible to receive contributions for that year. The maximum annual allowable contributions are up to $5k and are not dependent on earned income.

Unlike traditional retirement accounts, contributions made directly by parents are not tax-deductible, but certain contributions from employers, governments, or charitable organizations may be excluded from the child’s income. Employer contributions up to $2.5k count toward the $5k annual limit. Investments are generally limited to low cost index funds, though additional IRS guidance may provide further details. Once the beneficiary reaches age 18, the account is treated similarly to a traditional IRA, with withdrawals typically subject to standard retirement account rules.

The law also includes a pilot program where eligible children born between January 1, 2025 and December 31, 2028 may receive a $1k government funded contribution to help jumpstart savings. No contributions to these new accounts, including the pilot program contributions, may be made before July 4, 2026. Additional IRS guidance is expected to clarify how the pilot program will be implemented, including eligibility and administrative requirements.

2026 Updates to Deductions and Credits:

Itemized Deduction Limitations in 2026: What High Income Taxpayers Should Know

OBBBA reintroduces a limitation on the tax benefit of itemized deductions for higher income taxpayers. Under this new rule, itemized deductions may be reduced based on income above the threshold where the top 37% bracket begins. For 2026, the 37% bracket starts when taxable income exceeds $640,600 for singles and $768,700 for married couples filing jointly. In essence, this limits the overall value of certain deductions like mortgage interest, state and local taxes, and charitable contributions for taxpayers in high income ranges. This provision does not impact the calculation of the qualified business income (QBI ) deduction.

2026 Charitable Deduction Changes: New Rules for Standard and Itemized Filers

Under the 2026 tax law changes for taxpayers who take the standard deduction, new legislation allows a charitable deduction of up to $1k for single filers and $2k for married filing jointly. This represents an increase from the prior $300/$600 limits and may provide an additional incentive for charitable giving among those who utilize the standard deduction.

However, the rules become more restrictive for taxpayers who itemize. The law introduces a 0.5% floor on charitable deductions for individuals, meaning contributions are only deductible to the extent they exceed 0.5% of adjusted gross income (AGI). For example, a taxpayer with $500k of AGI may not receive a tax benefit until charitable contributions exceed $2.5k.

Mortgage Interest Deduction Changes in 2026

The $750k cap on mortgage interest deductibility ($375k for married filing separately taxpayers), originally introduced under the Tax Cuts and Jobs Act (TCJA), has been extended by OBBBA. As a result, taxpayers who itemize deductions may continue to deduct interest only on the first $750k of mortgage debt secured by a primary or secondary residence. Mortgages entered into prior to December 15, 2017 remain grandfathered under the previous $1 million limit ($500k for married filing separately taxpayers), which may allow for a larger interest deduction depending on the loan structure.

Beginning in 2026, mortgage insurance premiums (PMI/MIP) may also be treated as deductible interest. This change may provide a modest offset to the lower mortgage debt cap, depending on income and eligibility.

2026 SALT Deduction

Beginning in 2026, the SALT deduction cap increases to $40.4k, up from $40k in 2025 as the cap adjusts upward for inflation by 1% annually through 2029. For taxpayers in high tax states who itemize deductions, this expanded limit may provide meaningful tax relief. However, higher income taxpayers should be aware that the benefit begins to phase down for those with modified adjusted gross income above $505k in 2026, and is fully reduced to the $10k floor at approximately $600k MAGI ($5k floor for married taxpayers filing separately). Beginning in 2030, the cap is scheduled to revert to $10k unless additional legislation is enacted. For a full breakdown of how the SALT expansion was first introduced, see our companion article: 2025 Tax Changes for Individuals.

2026 Education Planning Updates:

529 Plan Changes in 2026: Expanded Education Benefits

The use of 529 plans has been expanded under OBBBA. Previously, up to $10k per year could be used for K–12 tuition under the TCJA. Beginning in 2026, this limit increases to $20k per year, and the list of qualified expenses has been broadened to include additional education-related costs.

Eligible expenses may now include curriculum materials, textbooks, online learning resources, qualified tutoring, standardized testing fees (including AP and college entrance exams), dual enrollment program costs, and certain educational therapies for students with disabilities. Additionally, a new provision will now allow funds to be used for postsecondary credentialing programs like trade schools, professional certifications, licenses, and apprenticeships.

2026 Updates for Higher Income Taxpayers:

Alternative Minimum Tax (AMT) Changes in 2026

Under the TCJA the Alternative Minimum Tax exemption thresholds were significantly increased which reduced the number of households subject to the Alternative Minimum Tax (AMT). Like many other provisions, these thresholds were scheduled to revert back to their pre TCJA amounts starting in 2026.

OBBBA modifies the AMT exemption by resetting the phaseout thresholds (the income levels at which the exemption begins to phase out) to $500k for single filers and $1 million for married filing jointly taxpayers, beginning in 2026. In addition, the law increases the phaseout rate from 25% to 50%, meaning the exemption is reduced by $0.50 for every $1 of income above the threshold.

As a result, the AMT exemption may phase out more quickly for higher income taxpayers, which can increase the likelihood of AMT exposure depending on overall income and deductions.

Estate and Wealth Transfer Planning in 2026:

Estate and Gift Tax Changes in 2026

One of the more significant provisions in the new legislation is the extension and enhancement of the estate and gift tax exemption, which was previously scheduled to sunset and revert to the lower base amount which would have reverted to a significantly lower base amount under prior law.

Beginning in 2026, the exemption increases to $15 million per individual (indexed for inflation), which may allow for a higher amount of wealth to be transferred without triggering federal estate or gift tax under current law. The annual gift tax exclusion, which currently allows gifts up to $19k per recipient, remains unchanged under the new legislation. This base no longer has an automatic sunset or expiration date but could still be changed by a future Congress.

What This Means for 2026 Tax Filers

• Expanded tax benefits, such as higher 529 limits and new child savings accounts, may create additional planning opportunities

• New limitations on itemized deductions and charitable contributions may reduce tax benefits for higher income taxpayers

• Changes to AMT thresholds and phaseout rules may increase exposure for certain income ranges

• Higher estate and gift tax exemptions may allow for more efficient wealth transfer under current law

Tax provisions under Public Law 119-21 are subject to ongoing IRS guidance and regulatory updates. Readers should verify current IRS guidance before making tax decisions.

This article focuses on changes taking effect in 2026. For a full breakdown of what's already in play this year, see our companion article: 2025 Tax Changes for Individuals.

This content is provided for educational and informational purposes only and should not be construed as investment, tax, or legal advice. It is not intended as a solicitation or offer to provide advisory services in any jurisdiction where Off The Bay Wealth, LLC is not properly registered or otherwise permitted to operate. Information presented is based on sources believed to be reliable; however, accuracy and completeness are not guaranteed. This material is not intended to be a comprehensive analysis of all topics discussed. Tax provisions are subject to ongoing IRS guidance and regulatory updates. Any financial decisions should be made in consideration of your individual circumstances, including your goals, risk tolerance, and time horizon. Investing involves risk, including the potential loss of principal.