Personal Income Tax Planning has morphed since 2017, when the Tax Cuts and Jobs Act of 2017 (TCJA) was signed into law. One of TCJA’s intended functions was to reduce the number of taxpayers who itemize deductions on their 1040 Personal Income Tax Forms. Primarily, that goal was implemented through a large increase in the Standard Deduction, coupled with a new $10,000 limit imposed on State and Local Tax (SALT) deductions.

Initially, TCJA’s changes seemed to make Tax Planning less important, as only about 10% of taxpayers now itemize tax deductions. As TCJA became more transparent, and as other legislation was passed by Congress, it became clear that Tax Planning was not an endangered species. Far from it.

Tax Return preparation may be done by the individual taxpayer, but many Americans relinquish their annual obligation to tax professionals. We (as CFPsâ) are not qualified to prepare tax returns, but as part of Comprehensive Personal Financial Planning, we do involve our clients in Tax Planning. The primary goal of Tax Planning has not changed. Everyone wants to pay the least tax legally owed, and we are frequently asked for assistance.

Charitable Giving under current law is a complex subject. We know that Americans are the most generous people on Earth, and particularly so during the Holiday Season. For decades, many Americans believed that most charitable giving was largely predicated on tax savings. The Reagan years disproved that theory, as giving went up after tax rates were reduced. The goal of giving does not seem to be tax savings, but the true generosity of people.

In recent years, several innovative tax provisions have been worked into the Tax Code. Our favorites are those that save tax money for people over and above the Standard Deduction. Congress addressed this situation by allowing some contributions to avoid being counted in Total Income. Qualified Charitable Distributions (QCDs) for taxpayers over age 70-1/2 did precisely that by remitting contributions directly from an IRA to the qualified charity.

A similar process is about to be available to taxpayers of any age. Beginning in 2026, any taxpayer may make charitable contributions from brokerage accounts, without those funds being included in Total Income. Although limited to $1,000 per individual ($2.000 for Married Filing Jointly), tax savings are in excess of the Standard Deduction. Charities must be qualified by the IRS for taxpayers to be afforded the savings.

Next week, we will discuss Donor Advised Funds (DOF), their role in Personal Tax Planning, and the likely upcoming passage of a tax-saving technique for many Americans using the DOF.