Tax law continues to evolve, and 2026 brings a significant set of changes that will shape how individuals and businesses plan, invest, and give. Many updates stem from the One Big Beautiful Bill Act (OBBBA), signed into law July 4, 2025, while others were already scheduled under SECURE 2.0. All provisions below are now in effect for the 2026 tax year unless otherwise noted.
This summary outlines the key developments to be aware of for both individual taxpayers and business owners.
Jump to Updates for Business Owners
Updates Affecting Individual Taxpayers
Charitable deduction for non‑itemizers returns
Beginning in 2026, taxpayers taking the standard deduction may again deduct certain cash contributions to qualified charities — up to $1,000 for single filers and $2,000 for joint filers. Qualifying “cash” gifts include checks, cards, electronic transfers, online platforms, and payroll deductions. Documentation is required.
New 0.5% agi floor for itemized charitable deductions
For 2026 and beyond, itemizers may deduct charitable gifts only to the extent those gifts exceed 0.5% of adjusted gross income (AGI). This reduces the benefit of smaller annual gifts and may make “bunching” strategies more valuable.
Taxpayers who won’t itemize in off‑years may still use the non‑itemizer cash deduction.
Itemized deduction benefit limited for high earners
Taxpayers in the 37% bracket in 2026 will have the tax benefit of itemized deductions capped as if they were in the 35% bracket.
The 37% bracket begins at:
- $640,600 – Single/Head of Household
- $768,700 – Married Filing Jointly
- $384,350 – Married Filing Separately
This cap does not reduce the deduction amount, but it does reduce its tax value.
Amt exemptions decrease and phaseouts accelerate
Beginning in 2026, AMT exemption thresholds revert to lower levels set under OBBBA. Exemptions are:
- $90,100 – Single
- $140,200 – Married Filing Jointly
Phase‑outs begin at $500,000 (single) and $1,000,000 (joint) — significantly lower than in 2025.
More taxpayers may find themselves in AMT territory, particularly those with large state tax deductions, incentive stock option exercises, or high capital gains.
“trump accounts” begin july 4, 2026
A new tax‑deferred savings account for minors begins mid‑2026 under OBBBA. Children under 18 may receive up to $5,000 per year in contributions; the account converts to a traditional IRA at age 18.
Children born 2025–2028 and enrolled in a federal pilot program may also receive a one‑time $1,000 government contribution.
529 plan enhancements for k–12 education
Effective January 1, 2026, the annual federal limit on tax‑free 529 withdrawals for K–12 expenses doubles from $10,000 to $20,000 per beneficiary. Eligible expenses now include books, instructional materials, certain tutoring costs, AP/standardized testing fees, and other curricular needs beginning July 5, 2025.
Families should review state conformity rules, as many states do not automatically adopt federal expansions.
Roth catch‑up contributions for higher earners
Under SECURE 2.0 final IRS regulations, catch‑up contributions for employees with prior‑year wages over $145,000 (indexed) must be made as Roth contributions. This rule applies to taxable years beginning after December 31, 2026 (i.e., generally the 2027 plan year).
Expiration of home energy tax credits
Under OBBBA, the following credits end early:
- Energy Efficient Home Improvement Credit (25C) — not allowed for property placed in service after 12/31/2025
- Residential Clean Energy Credit (25D) — not allowed for expenditures made after 12/31/2025
- Alternative Fuel Refueling Property Credit (30C) — not allowed for property placed in service after 6/30/2026
These provisions were confirmed in IRS guidance and OBBBA‑related fact sheets.
Updates Affecting Businesses and Business Owners
Section 199A (QBI) Deduction Made Permanent
OBBBA makes the Qualified Business Income deduction permanent and expands the income phase‑in range from:
- $50,000 → $75,000 for single filers
- $100,000 → $150,000 for joint filers
This broader window allows more owners to retain a partial deduction before limitations fully apply.
2026 thresholds and inflation adjustments are detailed in Rev. Proc. 2025‑32.
Excess Business Loss Limitation Becomes More Restrictive
For 2026, the §461(l) limitation applies once losses exceed:
- $256,000 (single)
- $512,000 (joint)
These thresholds are a statutory reset under OBBBA and are outlined in Rev. Proc. 2025‑32 tables.
Losses above the threshold convert to NOLs and carry forward.
Permanent PFML Employer Credit with New Insurance‑Premium Option
Beginning with tax years starting after 12/31/2025, employers can claim the Paid Family and Medical Leave (PFML) credit on either:
- Wages paid to employees during qualifying leave, or
- Premiums paid for qualifying leave insurance policies.
The credit — now permanent — provides 12.5%–25% of qualifying wages or premiums, depending on wage‑replacement rates. Additional eligibility refinements apply, including coverage for employees working 20+ hours per week.
Commercial Energy Tax Incentives Face Mid‑2026 Deadlines
Two key business‑focused incentives now have cut‑off dates:
- §179D (commercial building energy‑efficient property): unavailable for projects beginning construction after June 30, 2026
- §30C (EV charging/alternative refueling property): unavailable for property placed in service after June 30, 2026
Businesses considering these investments should ensure construction and in‑service timelines fall within eligible windows.
How to Prepare for the 2026 Tax Landscape
The 2026 tax environment creates new planning considerations for individuals, families, and businesses. Boulay’s advisors can help you:
- Evaluate AMT exposure under the lower 2026 thresholds
- Optimize charitable giving under the new floor and benefit cap
- Navigate 2027 Roth catch‑up requirements
- Model 199A outcomes with the new permanent rules
- Plan around energy‑credit sunset dates and construction timing
- Integrate PFML insurance‑premium credit options
- Analyze business loss timing under the reduced §461(l) limits
If you’d like to understand how these changes affect your specific situation, connect with us today. We can help you build a tax strategy that aligns with the new rules and supports your long‑term goals.