6 Tax Changes That Could Affect Your 2026 Return

There’s always something new to consider when planning for taxes, and 2026 is no different. As we did last year, let’s look at the highlights.

1. Inflation-Adjusted Changes

This year, inflation adjustments provide us with several benefits.

First, for those who claim the standard deduction, you’ll get a larger write-off. The 2026 standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.

Second, retirement contribution maximums have increased. The 401(k) limit is now $24,500. Catch-up contributions allow an additional $8,000 if you are age 50 through 59 or over age 63 and $11,500 for those age 60 through 63. (Note that high earners must make catch-up contributions to a Roth.) The IRA max is now $7,500, with a catch-up for those 50 or older of $1,100.

Third, the child tax credit is bumped by $200 to $2,200 per qualifying child.

Lastly, the state and local tax deduction maxes out at $40,400.

2. Contribution Deduction for Nonitemizers

For those claiming the standard deduction, 2026 brings a new deduction for charitable contributions. For cash contributions (including checks or those charged on credit cards), nonitemizers can claim up to $1,000 for singles or $2,000 for married couples in addition to the standard deduction.

3. Contributions Haircut for Itemizers

While those claiming the standard deduction get a boost on charitable contributions, itemizers get a cut. Now itemizers must reduce charitable deductions by 0.5% of adjusted gross income. For example, let’s say your AGI is $200,000. The first $1,000 of charitable contributions will no longer be deductible.

4. Itemized Deductions Haircut for High-Income Taxpayers

If you are in the top tax bracket of 37%, your itemized deductions will only offset up to the 35% tax bracket. Of course, the IRS has a complex set of calculations to make this happen. Essentially, to the extent your income is above the 35% bracket, 5.4% of your itemized deductions will be disallowed. How did they get 5.4%? (37.0% minus 35.0%) divided by 37% is 5.4%.

5. Minimum Qualified Business Income Deduction

The qualified business income deduction is typically a complicated maze of calculations to allow a maximum deduction of up to 20% of your business income. Now, if you have at least $1,000 of QBI, you’ll automatically be entitled to a $400 deduction.

6. Gambler’s Haircut on Losses

Gamblers have always had it rough when it comes to taxes. Winnings are 100% taxable, and losses were only allowed as itemized deductions, and only to the extent of documented losses up to 100% of winnings. Starting in 2026, the deduction is limited to 90% of your winnings.

Most of you will find that at least one of these changes will affect you. Be sure to consider these when doing year-end tax planning.