Now that we’ve all had a breather over the Holidays and are returning to our homes, schools, and jobs (local traffic proves my observation), it is not time to mentally disconnect from planning our 2026 finances. Aside from beginning to organize necessary paperwork for preparation of last year’s 2025 Individual Income Tax Returns, we also need to prepare for changes affecting new 2026 financial rules and opportunities.
Increased contribution limits for Retirement Accounts, additional Itemized Deduction opportunities, and escalating costs of health insurance premiums are just a few items requiring our attention if we expect to minimize our tax burdens for 2026. It is never too soon to begin making changes.
For taxpayers ages 65 and up, there is a new tax deduction of $6,000 per individual. While it is independent of filing status, it does phase out at higher income levels. Plan carefully to preserve this deduction if possible.
Fundamentally important to many American jobholders and self-employed workers is their preparation for retirement income. Maximizing retirement account contributions is a giant step toward optimizing retirement income. When the U.S. Tax Code increases allowable annual limits, taxpayers should act immediately to adjust their voluntary contributions.
Also, more of your dollars, contributed earlier in the year, and appropriately invested, lead to higher retirement income. In 2026, annual IRA contribution limits rose to $7,500 from $7,000. Eligible IRA account owners ages 50 or higher may now contribute a total of $1,100 in “Catch-up Contributions. 401(k) participants received an increased contribution limit of $1,000, to $24,500, as well as a $500 bump to “Catch-up Contribution” limits.
Personal income tax rates were frozen at relatively low 2025 limits, but for 2026, tax brackets were expanded for inflation. This means more dollars will be taxed in each bracket before shifting up to the next marginal tax rate. Also, tax withholding tables have been revised to reflect new rates and bracket sizes. This will result in larger net paychecks as withholding is reduced.
2026 also ushers in a new tax saving opportunity for charitably minded taxpayers. Each individual is allowed to donate up to $1,000 from non-retirement accounts to Qualified Charities. These gifts will be subtracted from Gross Income. This direct tax saving feature is called an above-the-line deduction. These deductions do not require itemizing on your tax return.
Due to these several tax cuts, many taxpayers are receiving the ability to increase contributions to Retirement Accounts. This creates a win/win situation for those savvy enough to make adjustments. Knowing the rules and taking action will benefit your retirement income.
America’s housing market is not broken, but it does need some help. Supplies of available homes are increasing, but remain historically low, and the FED is lowering interest rates at a snail’s pace. Potential first-time home buyers are waiting on the sidelines, not yet qualified, hoping for relief.
Concerned Trump Administration officials are brainstorming for solutions. Presidential housing advisor Bill Pulte convinced the President to consider authorizing 50-year mortgages. Immediately, media “experts” in every aspect of real estate, finance, and plain-old politics reacted, apparently with hair on fire. I strongly disagree with the naysayers, and here’s why.
Mortgage lenders are tightly constrained by government regulations. They must adhere to the playbook, or risk losing their livelihoods. Creativity has no standing in this hyper-controlled market. No Lone Wolves need apply. Potential buyers are excluded from becoming mortgage-holding homeowners if their income is not 100% up to federal standards. No exceptions.
For the market to improve, something must change, and the 50-year mortgage deserves its day in court. Why so many “experts” have been so quick to declare this concept blasphemy is their dearth of creativity. If $200 in monthly payment reductions would facilitate a first-time home buyer, and if the 50-year mortgage would produce that payment, do the deal!
Someone please tell me where it is written that in the event a 50-year mortgage become available to those who may choose it, everyone in the country must use one. That appears to be the implication espoused by many of today’s “talking heads.” America is about choices, and most intelligent people would prefer to keep it that way. The 50-year fixed mortgage option would constitute an added choice; one that could make the difference to some potential buyers.
Entirely too many potential first-time buyers are being excluded from both the American Dream of ownership, as well as the equity buildup afforded to homeowners. We should let them stop paying rent and buy their first homes.
Professional whiners point out that 50-year mortgage holders will pay much more for their residence over the payment period. National statistics have revealed for decades that most mortgages are either paid off or refinanced within 7 to 10 years. What’s all the fuss? Get people involved in American equity. If that requires some creativity, so be it.
No equity buildup can be realized while renting, though some “rent-to-buy” arrangements do exist, but those are scarce. Equity buildup is generally much faster than mortgage principal paydown. It is the watch, rather than the wallet, that creates wealth. Let young Americans get started.
Every 2 years I review my past Congressional Financial Wish List, both to see what happened since last time, as well as to see what could be improved. Starting with my 2023 list, I’ll update 2025 highlights. 2023 originals are summarized in plain text, and new 2025 comments are in italics.
- 2023 original: Wish #1. The Federal Reserve (FED) should pause rate hikes. Excessive government spending, consequent inflation, and FED interest rate hikes crippled our economy. 2025 update: Fast forward, and the FED has slowly reduced So slowly that most Americans, along with the President, would prefer faster cuts. Grade = “B”
- 2023 original: Wish #2. Get a grip on spending in Ukraine. American dollars are being ripped off in Ukraine, and weapons are falling into the wrong hands. Restraint is needed, and oversight is a must. 2025 update: With the new Administration, the financial drain has abated, but progress toward settlement is painfully slow and uncertain. Grade “B“
- 2023 original: Wish #3. Build that wall. We need to finish what we started under Trump 45. Instead, we sell existing wall sections for pennies on the dollar. 2025 update: Trump has resumed construction, and the Wall is part of the greatest cessation of illegal immigration ever witnessed. Grade “A”
- 2023 original: Wish #4. Return to a Constitutional budgeting process to slow spending growth. We are on track for another $2 Trillion (12 zeros) deficit in FY 2023, 100% of which gets added to the National Debt. 2025 update: House Speaker Mike Johnson has implemented the new (old?) budgeting system, but the liberal Democrats’ resistance movement has left the process not even half done. Grade “C+”
- 2023 original: Wish #5. Address the Social Security and Medicare impending insolvencies. The clock is ticking on Social Programs, and too many Americans depend on the programs’ continuation. 2025 update: No change. Grade “F”
Updating the List for 2025/26 is not a pleasant task. But one area stands alone in deserving praise. Taxes. For those of us who firmly believe in lower taxes and reduced regulation, 2025 was a barn burner. With the 2017 “Trump Tax Cuts” now made permanent (they were slated to expire on 1/1/2026), America was changed in a manner, and to a degree, that many Americans under-appreciate. Grade “A+” on taxes.
As New Year’s Day, 2026, approaches, the IRS is presenting a range of new opportunities for taxpayers, savers, and investors. Congress has passed several provisions that take effect with the New Year. Increased deposits to Retirement Accounts, codification of today’s relatively low Tax Rates, and now increasingly flexible opportunities for charitable giving, all will positively guide generous taxpayers looking to increase savings and reduce taxes.
Throughout the year, we discuss opportunities for tax savings tied to Charitable Gifting. For decades, Americans have been able to itemize tax deductions for gifts to qualified charities. While the ability to do so has remained constant, Tax Code changes have dramatically reduced the percentage of Americans who itemize deductions on their annual Form 1040.
Perhaps the most innovative tax provision for some people is the Qualified Charitable Donation (QCD), which allows donors ages 70-1/2 and up to direct contributions from their IRA Retirement Accounts directly to the charity. This method requires only a notation on a tax form, and applies to the IRA owner’s Required Minimum Distribution (RMD) where applicable.
Beginning January 1, 2026, annual Qualified Charitable Contributions up to $1,000 per individual ($2,000 for Married Filing Jointly) may be used to reduce total income up to those limits. Essentially an “above-the-line” deduction, it allows taxpayers to choose the Standard Deduction and still receive tax benefits from their contributions. There is no age limit. This provision is similar in effect to the QCD explained above.
Charitable Gifts are deductible in the year the funds actually change hands. For many taxpayers, this means that gifts get aggregated around the Holidays. Many generous taxpayers desire a greater degree of control over the timing of gifts. One common example is found among people who give to their church and prefer to use monthly payments, rather than a year-end lump sum.
Control of gift timing can be enhanced using Donor-Advised Funds, or DAFs. Gifts applied to a DAF are permanent and deductible by the giver in the year of the donation. The donor has the right to “suggest” to the DAF preferred charities for DAF’s donations. While not mandatory, in practice, most DAFs will honor the donors’ suggestions. Perhaps the best news is that a full tax deduction is granted in the year the deposit is made, but individual gifts from the fund can be spread throughout subsequent tax years.
Innovative lawmakers are allowing taxpayers more flexibility, and hopefully increasing their propensity to make charitable contributions. Next week, we may take this flexibility to a new level, assuming the Bill gets introduced into Congress and eventually passed.
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.
July 4, 2025, saw the signing of OBBBA (One Big Beautiful Bill Act) into law, and with that signature, Trump Accounts were born. Every baby born to American citizens between January 1, 2025, and December 31, 2028, is eligible for these novel “head start” investment accounts. President Trump believes that our newest generation should receive a “nudge” to stimulate an interest in investing for the future. I applaud his efforts, and especially so when coupled with the (so far) 30 states which have implemented financial literacy into their school curriculums. Special thanks to Florida Governor Ron DeSantis for getting that ball rolling.
While no newborn baby can actually receive his/her $1,000 “seed” deposit into a Trump Account until July 4, 2026, every parent should be aware of the opportunity to give their infant a financial head start. Terms of these accounts are being finalized as we write, but the rules will be strict. Investments are in mandated equity funds, access in limited, and outcomes are not guaranteed. Parents will be able to add to the child’s Trump Account. The technical name of these accounts is Invest America Accounts.
As with any Federal program that is novel and unprecedented, reactions among the public are mixed. Many people believe that a small child receiving “free” money from the government establishes a pattern of expectation that can last a lifetime. Others suggest that a financial “head start” will stimulate interest in finance and investing, resulting in a nation of savers. I suspect there will be a range of individual reactions.
Michael and Susan Dell, billionaire founders of Dell Technologies, recently pledged another layer of Trump Account funds for many American children. This portion of the program is for children as old as 10, and targets 25 million children residing in low-income ZIP Codes. Dells’ program begins with a $6.25 Billion (9 zeroes) donation from their vast wealth to the U.S. Treasury, which will administer the program.
Timing of the program is integrated with Trump Account development. Administration of the program will be guided by the original Invest America portion of OBBBA. Naturally, the Dells will receive a tax deduction for their generous donation. This will likely disturb a group of Americans, but my advice to them is simple, “Get over it.” The program is, in my estimation, worthy of at least a test cycle.
From what we know at this point, Trump Account funds cannot be accessed until the child owner reaches age 18. At that point, there will be options for utilizing balances, which will be rolled into Traditional IRA accounts. Once there, IRA rules will apply, including an opportunity to convert any or all of the funds to Roth IRAs, which provide various opportunities as young Americans begin adulthood.
As the Trump Account program is refined and eventually implemented (including the Dells’ portion), I will be watching for other billionaire donors to jump into the process. The are several Americans with sufficient wealth to consider donations of this nature, and the publicity may be desirable for some of them. This could get big. Fast.
Predictions of the success or failure of Invest America are difficult at best, but I believe there is ample opportunity to improve the financial lives of America’s future adult residents. On July 4, 2026, we will be able to witness the rollout of the program.
IRS is creating a new Tax Form for account management. It will be called Form 4547. Figure it out.
Hazarding a guess, I would expect only a tiny percentage of Americans remember the Taxpayer Relief Act of 1997 (TRA), a tax-friendly package we were handed under then-President Bill Clinton. In fact, throughout decades as a Certified Financial Planner® and talk radio host, I have suggested that most members of Congress (and likely Clinton himself) didn’t bother to read the details, or they would not have voted it into law. It’s that good. For us.
Two main TRA provisions have captured my attention; a capital gains tax exclusion on sale of primary residences (up to $250k per person and $500k for married couples filing jointly), and creation of the Roth IRA. Though modified over the years, the fundamentals of TRA remain largely intact. A year after inception of the Roth IRA, taxpayers acquired limited ability to perform Roth IRA Conversions from Traditional IRAs.
Controversy has surrounded Roth IRAs and Roth Conversions ever since 1997. Most original analyses concluded that under a stable tax system, there was no real difference in outcome, meaning that after-tax retirement income from the IRA would be equal. We understand the folly of assuming a stable future tax rate, so we must be realistic when considering Roth Conversion options.
Fervent Roth Conversion proponents presume that future income tax rates will have to be higher, as the burgeoning National Debt must be serviced. Meanwhile, I have spent 2+ decades arguing against that assumption. Not because it was illogical (it wasn’t), but because for decades I paid attention to every tax proposal in Congress having chance of becoming law. In Washington, D.C., there has been much more interest in lowering individual tax rates, while offering fewer tax deductions. This flew in the face of the “common wisdom.”
So far, I have been proven correct.
Last week, a new taxing concept was introduced by President Trump. He has shown a remarkable ability to shepherd concepts through Congress, so it bears consideration. His proposal is based on his own controversial tariff system, which is currently awaiting Supreme Court legal affirmation.
President Trump’s plan is to phase out income taxes altogether, replacing government revenue through tariff income. This was our system from the nation’s founding up to 1913, when a very small income tax was passed. Times change.
Suppose for a moment that President Trump’s proposal gets implemented, and income taxes began to get phased out. Converted Roth IRA funds would have been penalized by taxing them in the year of the conversion. I see no potential for claw back of our tax payments, so Roth Conversion taxes paid would be gone forever.
New and changing concepts add to already complex financial concepts.
As 2025 nears an end, taxpayers, savers, and investors are beginning to receive data for the 2026 Tax Year. We have recently been explaining changes to contribution limits that will take effect on January 1, 2026. Today’s topic is Individual Retirement Accounts, or IRAs. Since their inception in 1974, IRAs have become ubiquitous in American Society, and now represent a substantial national asset, estimated to include at least $18 trillion (12 zeroes).
Popular tenets of IRAs include current tax deductibility for the Traditional IRA and lifetime tax-free growth for Roth IRAs. Many people split their annual contributions between both, leading to more flexible retirement income. Limits are per Individual (the reason for the “I” in IRA.)
For decades, we have complained about low annual contribution limits to IRAs, which are a fraction of limits for contributions to company-sponsored Retirement Plans, such as 401(k)s. Our complaining has never produced results at the national level, but at a minimum, we appreciate any and all raised limits as they happen. We encourage our clients, listeners, readers, and friends to increase their planned contributions for 2026, maxing out if possible.
For Traditional (tax-deductible) 2026 IRA contributions, as well as non-deductible Roth contributions, an increase of $500 is granted, making the maximum $7,500. Contributions may be split between Traditional and Roth, but the annual limit applies in the aggregate. IRA owners who will be age 50 or over on December 31, 2026, have “catch-up” contributions available as well. These are being increased by $100 to $1,100 annually.
Eligibility to contribute to any IRA is limited to the amount of earned income the account owner reports during the tax year. Married couples are allowed to use the income earned by a spouse. There are very strict income limitations for direct contributions to a Roth IRA, but no such limits apply to a Traditional IRA. Instead, there is a limitation as to what proportion of IRA contributions may be deducted on the Individual’s Form 1040 Individual Income Tax Return.
When saving taxes and strengthening retirement savings, take advantage of all the good news you can find. Maxing out contributions is a good start, but one largely ignored benefit comes from making contributions early in the year for which they are designated. Early contributions receive up to an extra year for tax-deferred (or tax-free) growth.
During this time of updating and implementing Retirement Plan changes, review your Beneficiary Designations for accuracy and changes in your family status. Both Primary and Contingent (Secondary) beneficiaries should be specified in writing in your documentation.
As suggested in last week’s Blog, the 2025 government shutdown has ended after a record 43-day inconvenience. During the associated information blackout, pertinent essential tax planning data went unreported, delaying our ability to assist clients and listeners in decision-making aimed at minimizing taxes, both for this year and next.
With the re-opening, we are seeing some data that can now be discussed with greater certainty. Today’s analysis centers on 2026 Company-Sponsored Retirement Plan Contributions, as higher limits were finally released. Depending on the nature of the Employer, these Plans span a range of what we call the “4” Accounts. The 401(k) is most common and well known, so for purposes of this Blog, just know that what applies to the 401(k) also applies to 403(b), 457, and similar Plans.
Contribution limits for Participants in 401(k) Plans have been increased to $24,500 for 2026, up $1,000. This represents an increase of 4.26% for all account-owner participants. Employees who will reach age 50 or more by year-end 2026 are also allowed to make “catch-up” contributions of up to $8,000, an increase of 6.67% from 2025. Special provisions are made for Participants ages 60 through 63 at year-end. This group is able to contribute up to an unchanged $11,250 as their catch-up contributions.
We should note that employees earning more than $145,000 annually from their Sponsoring Employer will be required to make all catch-up contributions Roth-style, meaning these amounts must be contributed using after-tax funds. This is not an optimum method of contributing for long-term tax-free growth, and those funds might be better placed in a Roth IRA.
Employee contributions to 401(k) Plans must be made through salary deferrals and must be made in the year intended. Taxpayers should implement payroll changes for January 1, 2026, as soon as possible to max out contributions. We generally recommend spreading Plan deferrals throughout the year, so begin planning now for maximizing personal benefits.
Employer contributions to 401(k) Plans are optional and vary among employers. There are no special arrangements for individuals to make, except for Participants who are unable to max out their own contributions. For these people, we suggest they contribute enough through their salary deferrals to realize the entirety of any Employer matching funds.
Self-employed savers who utilize a Personal 401(k) Plan have the same limits for Employee Deferrals.
Complexity abounds in Retirement Account planning. We can help.
Finalization of the One Big Beautiful Bill Act (OBBBA) on Independence Day (2025) created a rare opportunity for Tax Planning, as next year’s rules were laid out in advance. Generally, Congress delays several important decisions until late December, leaving financial planners and tax professionals scrambling to assist clients with their optimal path to reducing taxes. Score one for taxpayers everywhere, for now anyway.
Then some other stuff happened. Excessively fractious politics in Washington, D.C. resulted in a partial government shutdown. While that is nothing new, the duration of this conflict has already surpassed the old 35-day record. As of this writing, there is finally a glimmer of hope for a solution, as the Senate broke the filibuster during a long weekend session. That should pave the way for final votes in both the Senate and the House. President Trump has indicated that he would be willing to sign this Bill if passed.
Failure of elected officials to reach a budgetary compromise has left the country with decision paralysis. Data releases, which generally drive action in Congress, have been deferred, resulting in long postponements to necessary planning announcements. While we do have definitive items such as the (paltry 2.8%) January 1 Social Security COLA, as well as 2026 Income Tax Brackets, we have yet to be informed about many pertinent details. As financial advisors, our apparent “head start” on 2025/26 tax planning has been suspended.
The irony is not lost on us.
Glaring omissions from relevant information include 2026 contribution limits to company-sponsored Retirement Accounts, encompassing 401(k), 403(b), 457, and others. Most Plan participants would like to adjust their salary deferral contributions beginning January 1, and new rules for highly compensated employees will affect tax deductibility due to changes in the “catch-up contribution.”
IRA owners are also awaiting 2026 contribution limits, but have more flexibility, due to contribution dates that extend through tax filing day of the following year. Even so, we’d like to know in advance what those limits will be, so that we can plan for tax withholding and/or Quarterly Tax Deposits (Forms 1040-ES).
Significant announcements will be available shortly after the shutdown ends, which will hopefully be soon. As 2026 provisions are announced, we will report them in this Blog.
From the data released so far, 2026 does not appear to be shaping up to be an unusually taxpayer-friendly year. OBBBA prevented the expiration of the Tax Cuts and Jobs Act of 2017 (TCJA), and for that, we can all breathe easier. However, as the old expression goes, The Devil is in the details.” As we learn more details, you’ll be the next to know.