Tax law changes taking effect in 2026 may affect individual taxpayers, business owners, investors, retirees and families. Some provisions arise from the One Big Beautiful Bill Act, or OBBBA, while others reflect annual inflation adjustments and previously scheduled reporting changes.
This checklist highlights selected federal and New York developments to consider during 2026. It is not an exhaustive summary, and the effect of each provision depends on the taxpayer’s particular circumstances. Readers researching 2025 figures for comparison or late filings can also review our 2025 Tax Checklist.
Key 2026 Tax Changes for Individuals
Higher Standard Deduction
For the 2026 tax year, the standard deduction increases to:
- $32,200 for married couples filing jointly
- $16,100 for single taxpayers and married individuals filing separately
- $24,150 for heads of household
Taxpayers should compare the standard deduction with their available itemized deductions, particularly state and local taxes, mortgage interest, and charitable contributions. The IRS published the updated amounts for 2026.
Expanded State and Local Tax Deduction
The state and local tax (SALT) deduction limit increases to $40,400 for 2026 or $20,200 for married taxpayers filing separately.
The higher limit begins to phase down when modified adjusted gross income exceeds:
- $505,000 for most filers
- $252,500 for married taxpayers filing separately
The deduction generally cannot fall below $10,000 or $5,000 for married filing separately, because of the income-based phase-down.
This provision may be particularly relevant to taxpayers in New York and New Jersey, but only taxpayers who itemize can generally benefit from the personal SALT deduction. Income timing, property tax payments, estimated state taxes, alternative minimum tax exposure and pass-through entity tax elections should be evaluated together.
Net Investment Income Tax and Additional Medicare Tax
The 3.8% Net Investment Income Tax applies to investment income, including interest, dividends, capital gains and passive income, once modified adjusted gross income exceeds $200,000 for single and head of household filers, $250,000 for married couples filing jointly or $125,000 for married taxpayers filing separately.
The 0.9% Additional Medicare Tax applies to wages and self-employment income above the same thresholds. Taxpayers with equity compensation, investment portfolios or a mix of wage and passive income should evaluate exposure to both taxes as part of year-end planning.
Qualified Tip Income Deduction
Eligible workers may deduct up to $25,000 of qualified tip income. The deduction begins to phase out when modified adjusted gross income exceeds $150,000, or $300,000 for married couples filing jointly.
The provision does not make all tips tax-free. Qualification depends on the worker’s occupation, the nature of the tips, applicable reporting requirements and other statutory limitations.
Qualified Overtime Compensation Deduction
Eligible taxpayers may deduct up to:
- $12,500 of qualified overtime compensation
- $25,000 for married couples filing jointly
The deduction generally applies only to the portion of overtime compensation exceeding the employee’s regular rate, such as the additional “half” in time-and-a-half compensation, not the employee’s entire overtime wage.
The deduction phases out above $150,000 of modified adjusted gross income, or $300,000 for joint filers. The IRS provides separate guidance for the tip and overtime deductions.
Deduction for Qualified Vehicle-Loan Interest
Individuals may deduct up to $10,000 of interest paid on a loan used to purchase a qualifying personal-use passenger vehicle.
The vehicle and financing must meet several requirements, including domestic final assembly. The deduction begins to phase out above $100,000 of modified adjusted gross income for single filers and $200,000 for joint filers.
Vehicle leases do not qualify. Taxpayers should retain the purchase agreement, financing records, VIN and evidence of interest paid.
Additional Deduction for Seniors
Eligible individuals age 65 or older may claim an additional $6,000 deduction through 2028. For a married couple in which both spouses qualify, the potential combined deduction is $12,000.
The deduction phases out when modified adjusted gross income exceeds $75,000 for single filers or $150,000 for joint filers. This is separate from the existing additional standard deduction available based on age.
Child Tax Credit and Family Provisions
Families should review Child Tax Credit eligibility, dependent-care expenses, adoption-related costs and education savings contributions as part of their 2026 tax planning. Changes in income, filing status or dependent eligibility can affect available credits, withholding and estimated-tax requirements.
Charitable Contribution Changes
Deduction for Taxpayers Who Do Not Itemize
Beginning in 2026, taxpayers who claim the standard deduction may deduct qualifying cash contributions of up to:
- $1,000 for most filers
- $2,000 for married couples filing jointly
The contribution must satisfy applicable eligibility and substantiation requirements.
New Floor for Itemized Charitable Deductions
Taxpayers who itemize may generally deduct charitable contributions only to the extent that the contributions exceed 0.5% of adjusted gross income.
For example, a taxpayer with $300,000 of adjusted gross income would be subject to a $1,500 floor. Charitable-giving strategies may therefore require closer coordination, including the possible bunching of donations or the use of appreciated securities and donor-advised funds.
Learn more about the 2026 charitable contribution changes in the IRS Publication 505.
2026 Retirement and HSA Contribution Limits
Retirement Plans
The employee contribution limit for 401(k), 403(b) and most governmental 457 plans increases to $24,500 for 2026.
The general catch-up contribution limit for participants age 50 or older increases to $8,000. Participants ages 60 through 63 may qualify for a higher catch-up limit of $11,250, depending on the plan.
The IRA contribution limit increases to $7,500, with an additional $1,100 catch-up contribution for eligible individuals age 50 or older. See the IRS 2026 retirement-plan limits.
Health Savings Accounts
The 2026 HSA contribution limits are:
- $4,400 for self-only coverage
- $8,750 for family coverage
- An additional $1,000 for eligible individuals age 55 or older
Eligibility depends on coverage under a qualifying high-deductible health plan and the absence of disqualifying coverage. IRS Notice 2026-5 confirms the 2026 HSA limits.
Estate and Gift Tax Planning
The federal estate and gift tax basic exclusion amount increases to $15 million per individual for 2026.
Although many taxpayers will remain below the federal exemption, estate planning may still be appropriate for families with closely held businesses, substantial real estate, concentrated equity positions, cross-border assets, or potential state estate-tax exposure.
New York maintains a separate estate-tax regime with substantially different rules and a much lower exclusion than the federal amount. Taxpayers with foreign accounts or investments should also review FBAR and FATCA reporting requirements and PFIC exposure.
New York Estate Tax Cliff
New York’s estate tax exclusion contains a significant “cliff.” The available credit is gradually reduced when the New York taxable estate exceeds the basic exclusion amount and is eliminated entirely once the estate exceeds 105% of that amount. At that point, New York estate tax is calculated on the entire taxable estate and not merely the amount exceeding the exclusion.
For individuals dying in 2026, the New York basic exclusion amount is $7.35 million, making the 105% threshold $7,717,500. This creates a narrow but consequential planning range in which a modest reduction in the taxable estate may produce tax savings greater than the amount transferred or otherwise removed from the estate. New York State Department of Taxation and Finance
Key 2026 Changes for Businesses and Business Owners
Qualified Business Income Deduction
The Section 199A qualified business income deduction is now a continuing part of the federal tax system. Eligible owners of sole proprietorships, partnerships, S corporations, and certain trusts and estates may continue to deduct up to 20% of qualified business income.
Beginning in 2026, the law also introduces a minimum deduction of $400 for taxpayers with at least $1,000 of qualified business income, subject to the applicable requirements.
For 2026, the principal limitation phase-in thresholds begin at:
- $403,500 for married couples filing jointly
- $201,750 for most other filers
- $201,775 for married taxpayers filing separately
Business type, taxable income, wages, qualified property, and specified service trade or business (SSTB) status can materially affect the calculation. Read the IRS Overview of the QBI deduction to learn more.
For a detailed comparison of entity structures and when an S-corporation election becomes beneficial, see our guides on S-Corp vs. LLC in New York and S-Corp vs. LLC at different profit levels.
Qualified Small Business Stock (QSBS) Exclusion Changes
The OBBBA expanded the Qualified Small Business Stock exclusion under Section 1202 for qualifying stock acquired after July 4, 2025. Eligible gain may now be excluded on a phased basis, 50% after a three-year holding period, 75% after four years and 100% after five years. The law also increased the per-issuer exclusion cap from $10 million to $15 million and raised the corporation’s gross-asset threshold from $50 million to $75 million for qualifying stock issued after July 4, 2025.
QSBS treatment can shelter a significant portion of gain from the sale of eligible C-corporation stock, but qualification depends on the corporation’s gross assets, business activities, use of assets, stock issuance and the shareholder’s acquisition method and holding period. Founders, early employees and investors should evaluate and document potential QSBS status before a sale or liquidity event because transaction structure and missing qualification records may be difficult or impossible to correct after closing.
Permanent 100% Bonus Depreciation
Eligible property acquired and placed in service after January 19, 2025, may qualify for 100% additional first-year depreciation.
Business owners should not treat immediate expensing as automatic. The election can affect taxable income, basis, state conformity, future deductions, financing covenants and the timing of losses.
Increased Section 179 Limit
For tax years beginning in 2026, the maximum Section 179 deduction increases to $2.56 million. The deduction begins to phase out when qualifying property placed in service exceeds $4.09 million.
The maximum Section 179 deduction for certain sport utility vehicles is $32,000 for 2026. IRS Publication 946 summarizes these limits. For a full overview of our tax planning and compliance services, visit our Tax Services page.
Domestic Research and Experimental Expenditures
Qualifying domestic research and experimental expenditures may generally be deducted immediately under the OBBBA changes. Different treatment continues to apply to certain foreign research expenditures.
Businesses should classify costs carefully and review whether accounting method changes, elections, amended returns or catch-up deductions may be available.
Form 1099-K Reporting Threshold
Third-party settlement organizations generally must issue Form 1099-K when both of the following are met:
- Payments exceed $20,000
- The number of transactions exceeds 200
A platform may nevertheless issue a form below these thresholds. The reporting threshold does not determine whether income is taxable; taxable business or gig-economy income must still be reported even when no form is received. The IRS explains the restored Form 1099-K threshold.
Digital Asset Reporting
Brokers began reporting gross proceeds from certain digital-asset transactions for 2025. For qualifying transactions occurring on or after January 1, 2026, broker basis reporting also begins for certain covered digital assets.
Taxpayers should not assume that every Form 1099-DA contains complete or correct basis information. Records should include acquisition dates, purchase prices, transfers between wallets, fees, staking income and other transactions. Read more via the IRS guidance on the digital asset broker reporting rules.
New York Tax Considerations for 2026
New York revised its 2026 personal income tax and withholding schedules to reflect enacted rate reductions for certain income ranges. Employees and business owners should review withholding and estimated payments rather than assume that prior-year amounts remain appropriate.
New York taxpayers should also consider:
- New York and New York City estimated tax exposure
- Pass-through entity tax elections and deadlines
- Residency and statutory residency rules
- Allocation of business and equity compensation income
- New York estate tax exposure
- Differences between federal and New York depreciation treatment
Learn more in the New York Department of Taxation and Finance publication on the 2026 withholding changes. Founders and early employees with restricted stock or vesting schedules should also review our guide to Section 83(b) elections in New York.
New Jersey Tax Considerations for 2026
New Jersey does not conform to several federal provisions in the same manner as New York, and taxpayers with ties to both states should not assume identical treatment. New Jersey generally does not allow the federal Section 199A qualified business income deduction and has historically decoupled from federal bonus depreciation. Accordingly, deductions available on the federal return may not carry over to the New Jersey return. New Jersey taxpayers should also review:
- New Jersey estimated tax exposure and withholding adjustments
- Pass-through entity tax (BAIT) elections and deadlines
- Residency and part-year residency allocation for taxpayers splitting time between New York and New Jersey
- New Jersey’s separate treatment of retirement income exclusions
Taxpayers relocating between the two states during 2026 should coordinate residency timing carefully, since New York and New Jersey apply different tests for establishing and abandoning domicile.
2026 Filing and Payment Calendar
| Deadline | Requirement |
|---|---|
| January 15, 2026 | Q4 2025 estimated tax payment due |
| March 16, 2026 | 2025 partnership and S-corporation returns due (or extension request) |
| April 15, 2026 | 2025 individual and C-corporation returns due (or extension request); Q1 2026 estimated tax due |
| June 15, 2026 | Q2 2026 estimated tax due |
| September 15, 2026 | Q3 2026 estimated tax due; extended partnership and S-corporation returns due |
| October 15, 2026 | Extended individual and C-corporation returns due |
| January 15, 2027 | Q4 2026 estimated tax due |
New York and New Jersey generally follow the federal estimated tax schedule, but confirm state-specific due dates and pass-through entity tax election deadlines separately, as these do not always align with the federal calendar.
Practical 2026 Tax Planning Checklist
Before year-end, consider whether you need to:
- Review federal, New York, New Jersey, and New York City withholding
- Recalculate quarterly estimated tax payments
- Compare itemized deductions with the 2026 standard deduction
- Evaluate SALT deduction and pass-through entity tax planning
- Coordinate charitable contributions around the new 0.5% floor
- Maximize eligible retirement plan and HSA contributions
- Review S-corporation reasonable compensation
- Evaluate equipment purchases and depreciation elections
- Reconcile digital-asset basis and transaction records
- Review multistate residency, allocation, and remote-work exposure
- Assess equity-compensation exercises, vesting events, and planned sales
- Review estate, gift, and beneficiary planning
Tax planning is most effective when completed before a transaction or deadline rather than after the tax year has closed.
Frequently Asked Questions
Do all of these changes apply to me?
No. Eligibility for each provision depends on filing status, income level, and specific circumstances. This checklist highlights selected developments; it does not determine which provisions apply to your situation.
I live in New Jersey but work in New York. Which changes affect me?
Likely both. You may be subject to New York’s withholding and allocation rules on New York-source income while also managing New Jersey residency-based filing obligations. Review our New York and New Jersey Considerations sections above, and see our New York and New Jersey service pages for details specific to your situation.
Does the higher standard deduction mean I no longer need to itemize?
Not necessarily. Whether itemizing still benefits you depends on your total itemized deductions, including the expanded SALT cap and mortgage interest, compared against the new standard deduction amount for your filing status.
How do I know if my QSBS qualifies for the exclusion?
Qualification depends on the issuing corporation’s activities, gross assets, stock issuance, your acquisition method and your holding period. Potential QSBS status should be evaluated and documented before a sale because transaction structure and missing qualification records may be difficult or impossible to correct after closing.
What is the difference between the Net Investment Income Tax and the Additional Medicare Tax?
NIIT applies to investment income such as interest, dividends and capital gains, while the Additional Medicare Tax applies to wages and self-employment income. Both use similar income thresholds but apply to different income types. A taxpayer with mixed income sources may owe both.
When should I start 2026 tax planning?
Most of the provisions above are more effective when addressed before a transaction, sale, or year-end deadline rather than after the tax year has closed. Equity compensation exercises, entity elections, and estimated tax adjustments in particular benefit from earlier planning.
Important Notice
This article is for informational purposes only and does not constitute tax, legal, investment, or accounting advice. It is not an exhaustive description of the OBBBA or other federal and state tax requirements. Tax consequences depend on the taxpayer’s particular facts and circumstances.
Need Help With Tax Planning?
For guidance concerning your 2026 tax projection and tax planning, contact Baccus Consulting at contact@baccusconsult.com or schedule a consultation.
Related Insights
- Alternative Minimum Tax: What Triggers It and How to Plan
- Equity-Based Compensation: Key Tax and Wealth Planning Considerations
- Section 83(b) Elections in New York: Stock Options, Restricted Stock and Residency Rules
- S-Corp vs. LLC: 2026 New York Tax Comparison
- S-Corp vs. LLC Case Study: At What Profit Level Does an S-Corporation Election Become Beneficial?
- CPA Tax & Advisory Services in New York
- CPA Tax & Advisory Services in New Jersey
- CPA Tax Services for Individuals and Growing Businesses
- U.S. Expat Tax Services