Top Tax Planning Strategies for 2026: What's Changed and What to Do Now

2026: A Pivotal Year for Tax Planning

2026 marks a significant turning point in the tax landscape. Many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire, potentially resulting in higher tax rates across the board. Whether Congress acts to extend, modify, or let these provisions sunset, proactive planning now is essential.

Key Changes to Watch

Individual Tax Rates

The TCJA reduced individual tax brackets. Without extension:

• The top rate returns from 37% to 39.6%
• The 24% bracket reverts to 28%
• The 32% bracket reverts to 33%
• Standard deduction roughly halves

Estate and Gift Tax Exemption

The current exemption of approximately $13.6 million per person is set to drop to roughly $7 million. For married couples, this means approximately $13 million less can be transferred tax-free.

Qualified Business Income (QBI) Deduction

The 20% deduction for pass-through business income (Section 199A) is scheduled to expire entirely. This could increase effective tax rates for business owners by up to 20%.

State and Local Tax (SALT) Deduction

The $10,000 SALT cap may be lifted, benefiting taxpayers in high-tax states like California, New York, and New Jersey.

Action Items for 2026

1. Accelerate Income (If Rates Are Going Up)

If you expect to be in a higher bracket next year, consider:

• Accelerating business income into 2026
• Converting traditional IRA to Roth while rates are lower
• Exercising stock options before rates increase

2. Maximize the QBI Deduction

While it still exists, ensure you're capturing the full 20% deduction:

• Review your business structure for QBI optimization
• Consider specified service business limitations
• Evaluate W-2 wage and property basis thresholds

3. Estate Planning Urgency

With the exemption potentially dropping by $6+ million:

• Use the current exemption before it sunsets
• Consider irrevocable trusts for wealth transfer
• Review existing estate plans for optimization

4. Entity Structure Review

Changes in tax rates may shift the optimal entity structure:

• S-Corp vs. C-Corp analysis under new rates
• Partnership structures for real estate
• Holding company optimization

5. Retirement Account Strategies

• Maximize contributions to all available accounts
• Consider Roth conversions at current rates
• Evaluate defined benefit plan opportunities
• Review catch-up contribution eligibility

Planning for Uncertainty

The political landscape makes predicting exact outcomes difficult. The best approach is to:

1. Model multiple scenarios — Plan for both extension and expiration
2. Maintain flexibility — Structure decisions that work under either outcome
3. Act on certainties — Some strategies are beneficial regardless of legislative changes
4. Review quarterly — Adjust as new information becomes available

The Bottom Line

2026 is not a year to wait and see. The potential tax increases are significant enough that proactive planning now can save substantial amounts. Whether the TCJA provisions are extended or not, having a comprehensive tax strategy in place ensures you're positioned for the best possible outcome.