Tax Updates and Strategies

SALT Cap Increased to $40,400 — The One Big Beautiful Bill Act raised the state and local tax deduction cap from $10,000 to $40,000 (adjusted for inflation) for taxpayers with AGI under $500,000. This is temporary — reverts to $10,000 after 5 years. Plan accordingly.

New Charitable Deduction for Non-Itemizers — $1,000 ($2,000 MFJ) above-the-line deduction for direct charitable contributions. Donor-advised fund contributions do NOT qualify. For itemizers, charitable deductions now only allowed above 0.5% of AGI.

Estate & Gift Exemption Now Permanent at $15M — $30M for married couples, inflation-adjusted. Many existing estate plans need review.

Child Tax Credit Increased — Permanent $200 increase per qualifying child.

Tip & Overtime Income — New tax exemptions for tip income and overtime pay under OBBBA.

IRS Direct File Eliminated — The free filing program has been discontinued.

Trump Accounts — New tax-deferred savings accounts for children born 2025–2028.

Maximize Retirement Contributions — 2026 limits: 401(k) $24,000 ($31,500 if 50+); IRA $7,500 ($8,500 if 50+); HSA $4,400 individual / $8,750 family

Roth Conversion Opportunities — Consider converting traditional IRA to Roth in lower-income years. Pay tax now at lower rates to enjoy tax-free growth.

Bunch Charitable Contributions — With the new 0.5% AGI floor for itemizers, consider “bunching” contributions into one year to exceed the threshold.

Review Your Withholding — Major life changes (marriage, new job, new baby) require W-4 updates. Don’t wait until filing season.

Business Owners: Entity Structure Review — S-Corp election can save self-employment tax. QBI deduction (Section 199A) still available.

Real Estate Investors — Cost segregation studies can accelerate depreciation. 1031 exchanges still available for like-kind property swaps.

Cryptocurrency Reporting — New Form 1099-DA requirements. All crypto transactions must be reported.

Middle-Class Tax Cut — 0.1% rate reduction on lower brackets effective 2026. High-income surcharge extended through 2032.

NY Inflation Refund Credit — One-time credit for full-year NY residents: up to $400 (joint), $200 (single).