Though the year-end fast approaches, it is never too late to review strategic planning opportunities and preview what lies ahead in 2026. With the signing of the One Big Beautiful Bill Act (OBBBA) into law on July 4, 2025, there are some significant changes ahead that augment the tax and estate planning landscape. We encourage you to speak with your Sand Hill Wealth Manager in the coming months to ensure your longer-term plans are still on track and make any tactical adjustments in the near term where needed.

Retirement Planning

• In 2026, retirement plan contributions for 401(k)s, 403(b)s, and most 457 plans will increase to $24,500 with an additional catch-up contribution limit of $8,000 for participants aged 50 and older. Additionally, the SECURE Act 2.0 included a higher catch-up contribution limit for employees aged 60-63 that replaces the $8,000 catch up limit stated above. For these participants, the catch-up contribution limit in 2025 and 2026 is $11,250.
• IRA contribution limits will increase in 2026 to $7,500 (up from $7,000 in 2025). The SECURE Act 2.0 also amended the annual IRA catch-up contribution limit for individuals aged 50 and over to incorporate a cost-of-living adjustment. Therefore, in 2026 the catch-up limit will increase to $1,100 for individuals aged 50 and older.
• The Social Security Administration confirmed 2026 benefits will increase by 2.8%. Additionally, Social Security payroll tax will apply to earnings up to $184,500, up from $176,100 in 2025.
• Required Minimum Distributions (RMDs) from retirement accounts must be completed by year end (or the later 4/1/2026 if you reached age 73 in 2025).  
• As a reminder, the SECURE Act 1.0 and 2.0 significantly changed how RMDs from 2020 and later Inherited IRAs would be treated. For clarity on how this may impact you, see our article on the IRS’s final regulations issued in July 2024.
• Consider establishing a Roth IRA for children or grandchildren who have earned income. Gifting cash to help them fund a Roth IRA can be a powerful wealth-transfer planning tool, especially in years when children are subject to low-income tax rates.

Charitable and Personal Gifting Considerations

• In 2026, the Federal lifetime exclusion amount was made permanent at $15 million per person by OBBBA.  This amount will be indexed for inflation starting in 2027.
• The Federal annual gift tax exclusion will remain at $19,000 per person in 2026.
• If you are at least age 70 ½, you can donate directly from your IRA to qualified 501(c)(3) charities via Qualified Charitable Distributions (QCD). This amount was set at $108,000 in 2025, indexed for inflation annually, and will increase to $111,000 in 2026.
• Starting in 2026, OBBBA introduced new rules impacting charitable gift deductibility. Itemizers will be able to deduct charitable contributions above an AGI floor of 0.5% and they will be able to deduct no more than 35% of income per year. This was previously set at 30% of income for appreciated securities.  

Tax Updates

• For Federal income tax brackets in 2026, the top marginal tax rate of 37% was made permanent by OBBBA and will apply to single filers above $640,600 and couples that are married filing jointly (MFJ) with income above $768,600.
• The standard deduction will increase in 2026 to $32,200 for MFJ and $16,100 for single taxpayers.
• SALT Deduction: OBBBA increased the previous $10,000 cap on the deductibility of state and local taxes to $40,000 effective in 2025, subject to an income phase-out. The cap increases 1% per year 2026-2029 and a phase-out applies for modified AGI between $500,000 and $600,000 if MFJ, reducing the deduction back to $10,000. The increased cap is temporary, reverting back to $10,000 in 2030.
• 2017’s Tax Cuts & Jobs Act (TCJA) introduced higher Alternative Minimum Tax (AMT) exemptions. For 2026, OBBBA adjusted the exemption amounts to $137,000 for MFJ and $88,100 for single filers. Additionally, the 2018 phaseout thresholds of $1 million MFJ and $500,000 for single filers now apply.
• OBBBA also made changes to Qualified Small Business Stock (QSBS) benefits. The prior requirement of owning QSBS stock for at least 5 years has been reduced to allow for some qualification of tax-free gain in earlier years. For the full details on how QSBS has changed, contact your Wealth Manager.

Annual Planning Review

• Is your estate plan up to date, including a will, revocable living trust, health care directive and financial power of attorney?
• Are your beneficiary designations on all retirement accounts, insurance policies, deferred compensation plans, and transfer on death (TOD) designations accurate? Do they reflect any changes that took place this year, such as the birth of children or grandchildren?
• Have there been any changes to your portfolio preferences, risk tolerance or investment objectives? If so, update your Sand Hill Wealth Manager as appropriate.

If you have not completed an estate plan review in the past few years, it may be time to revisit your documents. The best plans are created with the best intentions; however, if time passes and your personal preferences have changed since the drafting of your documents, then your original plan may be in need of a refresh. From a tax and retirement income perspective, there have been some significant legislative changes in recent years resulting from the SECURE Act 1.0, 2.0 and OBBBA. It’s important to understand how these laws affect you personally and how to navigate the ever-changing tax and estate landscape waiting for us in 2026.

Sources: Internal Revenue Service, Social Security Administration, H.R.1 – One Big Beautiful Bill Act (congress.gov)