The Tax Code Changed. Did Your Strategy?
Every year, the tax code adjusts for inflation and new legislation. Most people don't notice until they owe more (or get less back) than expected. Here are the key 2026 tax changes and what to do about them before April.
Key Changes
Tax brackets adjusted for inflation: Standard deduction increased to $15,000 (single) and $30,000 (married filing jointly). This means slightly less taxable income for everyone. But if you haven't updated your W-4, you might be under-withholding.
Capital gains: Long-term capital gains brackets also adjusted. The 0% bracket now applies to taxable income up to ~$48,000 (single). If your income is near this threshold, strategic Roth conversions or capital gain harvesting can be tax-free.
EV tax credits: The $7,500 federal EV credit continues but with stricter battery sourcing requirements. Fewer vehicles qualify in 2026. Check IRS.gov/ev before assuming your EV purchase qualifies.
Retirement contributions: 401(k) limit: $23,500. IRA limit: $7,000 ($8,000 if 50+). HSA limit: $4,300 (individual), $8,550 (family). Max these out — they're the single best tax reduction tool available.
Strategies to Implement Now
1. Max retirement accounts. Every dollar in a 401(k) reduces your taxable income dollar-for-dollar. If you're in the 24% bracket, a $23,500 contribution saves $5,640 in taxes.
2. Tax-loss harvest. If you have losing positions, sell them before year-end to offset gains. Up to $3,000 in net losses can offset ordinary income.
3. Bunch deductions. If you're near the standard deduction threshold, consider bunching charitable donations and medical expenses into one year to exceed it.
4. HSA triple tax benefit. Contributions are tax-deductible, growth is tax-free, withdrawals for medical expenses are tax-free. It's the most tax-advantaged account in the entire tax code.
