Tax laws continue to evolve, and several important changes taking effect in 2026 and 2027 may impact your retirement savings strategy and overall tax picture. Below are a few planning opportunities to keep on your radar.
Higher 401(k) and IRA Contribution Limits for 2026
Beginning in 2026, retirement plan contribution limits increase meaningfully. The elective deferral limit for 401(k), 403(b), most 457 plans, and the Thrift Savings Plan rises to $24,500. For individuals age 50 and older, the catch-up contribution increases to $8,000, allowing a total contribution of $32,500.
Additionally, individuals ages 60 to 63 may be eligible for a “super catch-up” contribution of up to $11,250, if their employer plan allows it. That creates a potential total contribution of $35,750 during those years. For those in their peak earning years, this can be a powerful opportunity to accelerate retirement savings before required distributions begin later in life.
Roth Requirement for Certain Catch-Up Contributions
Starting in 2026, high-income participants above specified wage thresholds will be required to make catch-up contributions on a Roth basis rather than pre-tax. In practical terms, that means paying taxes now in exchange for tax-free growth and withdrawals later.
While implementation technically begins in 2026, plan sponsors are provided a “good faith” administrative transition period through 2027. If you are a higher earner age 50 or older, reviewing your payroll elections and long-term tax strategy will be important before these rules take effect.
Additional Senior Deduction (2025–2028)
For tax years 2026 and 2027, taxpayers age 65 and older may claim an additional $6,000 deduction per person. Married couples filing jointly could potentially claim $12,000 in additional deductions. This applies whether you take the standard deduction or itemize.
The deduction phases out once modified adjusted gross income exceeds certain thresholds, so income planning becomes key. Coordinating IRA withdrawals, Roth conversions, and capital gains may help preserve the benefit.
Increased SALT Deduction Cap Through 2029
The State and Local Tax (SALT) deduction cap has been temporarily increased to $40,000 through 2029. For taxpayers who itemize in 2026 and 2027, this may make itemizing more attractive than in prior years.
However, higher-income taxpayers should be mindful of potential phaseouts that reduce the benefit as income rises. A multi-year projection can help determine whether bunching deductions or accelerating payments makes sense.
Charitable Deduction for Non-Itemizers Starting 2026
Beginning in 2026, taxpayers who do not itemize may claim a limited above-the-line deduction for cash charitable gifts. The deduction is capped at $1,000 for single filers and $2,000 for married couples filing jointly. Contributions to donor-advised funds are excluded.
For charitably inclined households who typically take the standard deduction, this provides a modest but meaningful incentive to continue giving.
As always, thoughtful planning across multiple tax years can make a meaningful difference. Reviewing contribution strategies, deduction eligibility, and income timing before 2026 may help position you to take full advantage of these changes.
Charitable Deduction for Non-Itemizers Starting 2026
Beginning January 1, 2026, the basic exclusion amount increases to $15 million per individual (or $30 million for a married couple), up from $13.99 million in 2025. This higher exemption amount will be indexed for inflation starting in 2027, giving taxpayers greater flexibility to transfer wealth during life and at death without incurring federal estate or gift tax.
In addition, the annual federal gift tax exclusion remains at $19,000 per recipient for 2026 (or $38,000 per recipient for married couples electing gift-splitting), allowing substantial tax-free transfers each year without tapping the lifetime exemption.
Key Takeaways
Retirement contribution limits increase significantly in 2026.
High earners must shift catch-up contributions to Roth accounts.
New deductions benefit both seniors and non-itemizers.
SALT cap expansion may make itemizing more valuable.
Estate tax exemptions increase, allowing greater wealth transfer flexibility.
If you found this helpful, please share it with friends, family, or colleagues who may also benefit from understanding these upcoming tax changes.
PAST PERFORMANCE IS NOT A GUARANTEE OF CURRENT OR FUTURE RESULTS. Examples of historical information included in this presentation do not, nor are they intended to, constitute a promise of similar future results. Specific client portfolio allocations, risks and returns can and may deviate from these examples depending on accounts and types of investments available through each account. Future market views by WJ Interests, LLC may vary significantly from the historical examples presented herein and no one receiving this summary should assume that WJ Interests, LLC will be able to replicate successful views in the future.