2026 Tax Update: What the Big New Bill Means For You

With the new year comes an opportunity to reset and stay informed on the latest tax and retirement savings changes. Inflation has pushed many key contribution limits higher for 2026, giving individuals and families more room to save across IRAs, employer retirement plans, HSA’s, and education accounts.  

Below you will find the updated tax and contribution limits for this year: 

Contribution updates: 

         Increased $500: IRA and Roth IRA: $7,500 ($8,600 with age 50 catch-up) 

         Increased $500: Simple IRA: $17,000 ($21,000 with age 50 catch-up)  

         Increased $500: 401(k) and 403(b): $24,500 ($32,500 with age 50 catch-up, $35,750 with ages 60-63 super catch-up)  

         Increased $130: Wisconsin 529 deduction: $5,130 (excess contributions can be carried forward)  

         Increased $100 Individual, $200 Family: HSA Deduction: $4,400 Individual, $8,750 Family. *Requires a qualifying high-deductible health plan.  

In addition, some phase out and contribution limits for higher earning clients: 

         Increased $10,000: Annual compensation limit for defined contribution plans increased to $360,000  

         Increased $2,000: Total defined contribution limit is now $72,000  

         Increased $4,000/$6,000: The beginning of the Roth IRA phase out is now $153,000 (single) and $242,000 (married filing jointly)  

         Increased $4,000/$3,000: The beginning of the Traditional IRA phase out when already covered by a retirement plan at work is $81,000 (individual) and $129,000 (married filing jointly) 

Other changes taking place this year is the One Big Beautiful Bill Act (OBBBA) that was signed into law in July 2025. These provisions are worth paying close attention to, as they introduce many shifts to federal taxes, credits and deductions. While many of the updates are now in effect, the full impact will continue to unfold throughout this year, shaping how individuals and families may save, plan, and allocate in the future.  

The OBBBA remains in effect through 2028. Here are some key changes: 

         No Tax on Tips: $25,000 maximum annual deduction on qualified tips from IRS approved occupations. 

         No Tax on Overtime: $12,500 (single) and $25,000 (married filing jointly) maximum annual deduction on qualified overtime compensation that exceeds regular rate of pay stated by the Fair Labor Standards Act. 

         No Tax on Car Loan Interest: $10,000 maximum annual deduction on qualified vehicles undergone final assembly in the US and taxpayer are the first owners of the vehicle. 

         Charitable Donations: $1,000 deduction (single) and $2,000 (married filing jointly) without itemizing for charitable donations. 

         Deduction for Seniors: Seniors (65 years and older) can claim additional deduction of $6,000 per eligible individual or $12,000 for qualified married couples  

      Trump Accounts: Children born in 2025-2028 will receive an account with $1,000 federal seed money, with additional contributions allowed up to $5,000 annually until child reaches 18 years. Earnings will be tax-free, but distributions are taxed.  

      Bonus Depreciation for Companies: 100% bonus depreciation for qualified property available in certain circumstances. 

Also taking effect in 2026 is the SECURE 2.0 Act, impacting those who are 50 years and older and made over $150,000 in the previous year. These individuals will be required to make catch-up contributions as Roth.  

The information given herein is taken from source that IFP Advisors, LLC, dba Independent Financial Partners (IFP), IFP Securities, LLC, dba Independent Financial Partners (IFP), and its advisors believe to be reliable, but is not guaranteed by us as to accuracy or completeness. This is for information purposes only and in no event should be construed as an offer to sell or solicitation or an offer to buy any securities or products. Please consult your tax and/or legal advisor before implementing any tax and/or legal related strategies mentioned in this publication as IFP does not provide tax and/or legal advice. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors. This report may not be reproduced, distributed, or published by any person for any purpose without IFP's express prior written consent.