As the calendar flips over to 2026, there are certain pieces of legislation that, although signed into law in July 2025 through the One Big Beautiful Bill Act (OBBBA), are just now becoming effective. Below, we highlight 6 key OBBBA changes, among several others, that take effect here in 2026.
Charitable deduction for non-itemizers
A maximum deduction of $1,000 for single filers and $2,000 for joint filers will be available for charitable donations made by cash or check even if the household takes the standard deduction. Previously, taxpayers had to itemize deductions on their taxes in order to receive any tax benefit for charitable contributions.
529 K-12 educational expenses
Up to $20,000 / year can be withdrawn from a 529 plan tax and penalty free for qualified K-12 educational expenses. Previously, the annual limit for these types of distributions was only $10,000 / year.
Trump accounts
These brand new accounts, meant to help families get a headstart on their child’s retirement savings, can officially receive contributions beginning July 2026. Some key features are that the child is not required to have earned income in order for contributions to be made, no distributions can occur until the child turns 18, contributions are made on an after-tax basis and growth in the account is tax-deferred, and the account contains many similar rules as a Traditional IRA once the child turns 18. In addition, the U.S. government will contribute $1,000 into a Trump account for any U.S. citizen born in 2025-2028.
Charitable contributions floor
There is now a floor of 0.5% of adjusted gross income (AGI) for charitable contributions, meaning that only donation amounts greater than 0.5% of a taxpayer’s AGI will result in a tax deduction. This floor, which previously did not exist, is only relevant for those taxpayers that itemize their deductions and therefore has no overlap with the change discussed in #1 above.
37% tax bracket itemized deduction limitations
For households that are in the 37% federal tax bracket AND itemize their deductions, their total itemized deductions are now reduced by 2/37 of the smaller of total itemized deductions or the amount by which the combination of their taxable income and total itemized deductions exceeds the ceiling of the 37% tax bracket. In effect, these taxpayers will only receive a 35% tax savings for deductions against income that would have otherwise been taxed at 37%.
Repayment Assistance Plan (RAP) begins
For new student loans dated July 1, 2026 or later, the RAP plan will be the only income-driven repayment (IDR) plan available, which is relevant for those pursuing public service loan forgiveness (PSLF). Many who have borrowed prior to this date may also find themselves in the RAP plan at some point as their current IDR plans gradually expire over the next several years. Key features of the RAP plan are that payments are calculated as a percentage of adjusted gross income (capped at 10% of AGI) and loan balances will not grow even if interest costs exceed the calculated minimum payment.
As it does every year, the IRS has made several updates to the annual financial planning limits. Though the list below does not include ALL updates, we again want to highlight 6 key changes for your 2026 financial planning.
Roth IRAs and Traditional IRAs
Contribution limits to Roth IRA and Traditional IRA accounts have increased to $7,500 for those under the age of 50. For those aged 50 and over, an additional $1,100 catch-up contribution can be made, for a total contribution of $8,600. Phaseouts for contributions to Roth IRAs now begin at Modified Adjusted Gross Income (MAGI) levels of $153,000 (single filers) and $242,000 (married filing jointly), which are both slightly elevated from 2025 levels.
401(k) / 403(b) / 457(b)
Contribution limits to these retirement plans have increased to $24,500 for those under the age of 50. For those aged 50 and over, an additional $8,000 catch-up contribution can be made, for a total contribution of $32,500. For employees aged 60-63, there is a higher catch-up contribution limit of $11,250. Total contribution limits across employee deferral, employee voluntary after-tax, and employer contributions is capped at $72,000 in 2026 for those under the age of 50, with the limit increasing for those aged 50 and older based on their access to the aforementioned catch-up contributions. Notably, for workers who earned more than $150,000 in FICA wages in 2025, all catch-up contributions have to be made on a Roth (after-tax) basis.
Health Savings Accounts (HSA)
Contributions limits have increased to $4,400 (self-only coverage) and $8,750 (family coverage). For individuals aged 55 and older, there is an additional $1,000 catch-up provision.
Standard Deduction
The standard deduction increases to $16,100 (single filers) and $32,200 (married filing jointly). For individuals aged 65 or older, there is an additional deduction of $2,050 (single filers) and $1,650 per qualifying spouse (married filing jointly). In addition, individuals aged 65 or older also have access to a bonus deduction of $6,000 per qualifying person, subject to income limitations.
Social Security Wage Base
The Social Security wage base has increased to $184,500, meaning that taxpayers will experience the 6.2% Social Security tax on earnings up to this new, higher threshold amount.
Social Security Cost of Living Adjustment (COLA)
Social Security provided a cost-of-living adjustment of 2.8% from 2025 to 2026, which will affect both current collection amounts for existing retirees, as well as projected future benefits for those who have not begun collecting.
If you are interested in learning more about the financial planning limits mentioned above, or about others that are not discussed here, you can utilize this link to access the IRS website: 2026 Financial Planning Limits.
As always, we are more than willing to answer any of your questions surrounding these changes.