Key Tax Considerations for 2026 Tax Planning
The tax law signed on July 4, 2025 made current tax rates permanent, so your tax rates did not increase in 2026. The law also created new deductions and ended several credits. Below are the items most likely to affect you this year.
Standard deduction: For 2026, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.
New for 2026
Business Meals: Meals with clients or customers remain 50% deductible, and entertainment remains nondeductible. What's new: starting January 1, 2026, businesses can no longer deduct meals, snacks, or coffee provided to employees at the workplace, such as catered lunches during busy season or a stocked break room. However, employee meals while traveling are deductible at 50%. Businesses that sell food to customers, such as restaurants, are generally exempt. Holiday parties and picnics for all employees are still deductible.
Charitable Gifts: If you take the standard deduction, you can now deduct up to $1,000 ($2,000 for married couples) of cash gifts to charity. If you itemize, only the portion of your giving above 0.5% of your income is deductible. Because of these changes, the timing of your gifts may matter more this year, so let's talk before you give.
Retirement Catch-Up Contributions: If you are 50 or older and earned more than $150,000 in wages from your employer in 2025, your workplace catch-up contributions must now be made as Roth (after-tax) contributions.
1099 Reporting: Businesses now need to issue Forms 1099-NEC and 1099-MISC only for payments of $2,000 or more made in 2026 (previously $600). This applies to forms filed in early 2027.
Trump Accounts: Children born 2025–2028 who are U.S. citizens can receive a one-time $1,000 government deposit into a new savings account. Families can contribute up to $5,000 per year, and contributions opened July 4, 2026. You can open an account by filing Form 4547 with your tax return or at trumpaccounts.gov.
Recent Changes That Continue in 2026
Tips & Overtime: Eligible workers can deduct up to $25,000 in tips and up to $12,500 in overtime pay ($25,000 for married couples); income limits apply. Starting this year, qualifying tips and overtime will be shown on your W-2.
Car Loan Interest: You can deduct up to $10,000 per year of interest on a loan for a new, U.S.-assembled vehicle bought for personal use with a loan taken out after 2024. Income limits apply.
Deduction for Seniors: If you are 65 or older, you may deduct an additional $6,000 ($12,000 for a married couple who are both 65+). This is on top of the regular extra standard deduction for seniors and is reduced for incomes above $75,000 ($150,000 for married couples).
State and Local Tax Deduction: The limit on deducting state and local income and property taxes is $40,400 for 2026 (reduced for incomes over $505,000). Because of this, more clients may benefit from itemizing.
Required Minimum Distributions (RMDs): You must begin taking minimum withdrawals from traditional IRAs and most retirement plans at age 73. If you are 70½ or older, you can give up to $111,000 directly from your IRA to charity. The gift counts toward your RMD and isn't taxed.
Bonus Depreciation: Businesses can now permanently deduct 100% of the cost of qualifying equipment in the year it is placed in service. Kentucky and Ohio do not fully follow this rule, so your state deduction may differ.
Credits That Have Ended
Electric Vehicle Credits: ended for vehicles acquired after September 30, 2025.
Energy-Efficient Home Improvement and Solar Credits: ended for improvements installed after December 31, 2025.
A Note on State Taxes: Many states, including Kentucky and Ohio, do not allow the new tips, overtime, or car loan interest deductions, so these federal savings may not carry over to your state return.
State Tax Obligations Related to Working from Home
Working from home, or in a different location than your employer, can affect which state and local taxes you owe. This is especially true in our area with Ohio city taxes and Kentucky local occupational taxes. Let us know if your work arrangement has changed.
Fraudulent Activity Remains a Significant Threat
Our firm takes data security seriously and we think you should as well. Beware if you:
Receive a notice or letter from the IRS regarding a tax return, tax bill, or income that doesn't apply to you
Get a text or email saying your refund is "on hold" or asking you to click a link. The IRS does not do this.
Receive an unsolicited request for your bank account or personal information, or a robocall demanding payment
We recommend setting up an IRS Online Account and an Identity Protection PIN at IRS.gov. Also, the IRS has phased out paper refund checks in most cases. Refunds are now issued by direct deposit, so please make sure we have your current bank information.
Virtual Currency/Cryptocurrency
Selling, trading, or buying things with cryptocurrency generally has tax impacts. Crypto platforms now issue Form 1099-DA, and starting with 2026 sales, the form will also show what you paid for crypto bought in 2026 or later. Please send us any 1099-DA you receive.
Additional Tax and Retirement Planning Considerations
We recommend reviewing your retirement and tax situation at least annually. Here are a few more items to discuss with us:
Major life changes, such as marriages or divorces, births or deaths in the family, job changes, starting a business, or significant purchases
Using investment losses to offset gains, and timing gains to fall in the lowest tax brackets
Estate and gift planning: for 2026, you can give up to $19,000 per person ($38,000 for married couples) without filing a gift tax return, and the lifetime estate exemption is now $15 million per person
529 education plans, which now allow up to $20,000 per year for K-12 tuition
Updates to insurance policies or beneficiary designations
Converting traditional IRAs to Roth IRAs
Reviewing withholding and estimated tax payments. The final 2026 estimated payment is due January 15, 2027.
Year-End Planning Equals Fewer Surprises
There is still time before December 31, 2026 to use strategies such as timing income and expenses, grouping charitable gifts, and maximizing retirement and HSA contributions. Whether you are working toward retirement or getting answers to your tax planning questions, we are here for you.