For many individuals and families, 2026 tax planning is less about reacting to a major change in tax rates and more about understanding which opportunities are worth acting on while they are available.
Several of the most visible new deductions are temporary. At the same time, other parts of the tax law have become more predictable. That makes this a good year to separate short-term opportunities from the rules you can reasonably incorporate into longer-term planning.
There is another practical consideration. Qualifying for a deduction is only part of the equation. Payroll records, loan documents, changes in income, and the timing of other financial decisions can determine whether you can use it.
Here are several areas worth reviewing before year-end.
New Deductions for Tips and Overtime
Workers in occupations the IRS identifies as customarily and regularly receiving tips may be able to deduct up to $25,000 of qualified voluntary tips. The deduction begins to phase out at higher income levels, and reporting requirements apply.
The word “voluntary” matters. Mandatory service charges generally do not qualify, even if they ultimately make their way to an employee.
There is also a deduction for qualified overtime compensation of up to $12,500, or $25,000 for married couples filing jointly.
One detail is easy to miss. The overtime deduction does not apply to all extra pay. Generally, it applies only to the premium portion required under the federal Fair Labor Standards Act. Extra compensation paid solely because of a state law, union agreement, or employer policy may not qualify.
Employers and other payors generally begin separately reporting qualified overtime compensation for 2026, which should make the information easier to identify when preparing a return.
Both deductions are currently scheduled to end after 2028.
An Additional Deduction for Taxpayers Age 65 and Older
An individual age 65 or older may qualify for an additional deduction of up to $6,000; a qualifying married couple may deduct up to $12,000 if both spouses are age 65 or older. Income limitations apply, and married taxpayers must file jointly to claim the deduction.
For retirees, it is worth looking beyond the deduction itself.
Retirement account withdrawals, investment income and other sources of income can affect eligibility. If you are already deciding how much to withdraw from retirement accounts or whether to recognize investment income, those decisions may be worth looking at together.
This deduction is also currently scheduled to end after 2028.
A Deduction for Certain Car Loan Interest
Some taxpayers may deduct up to $10,000 of interest on a qualifying loan originated after 2024 and secured by a first lien on a new personal-use vehicle whose final assembly occurred in the United States.
Eligibility depends on the loan, the vehicle, and the taxpayer’s income, among other requirements. A vehicle identification number is also required when claiming the deduction.
If you purchased a vehicle that may qualify, keep your loan documents and vehicle information. Refinanced loans can qualify in some circumstances, but the interest generally needs to be traced back to the original eligible loan.
The deduction is currently scheduled to end after 2028.
The SALT Deduction Is Higher, but Not Permanently
The state and local tax deduction, commonly called the SALT deduction, has received a significant temporary increase.
For 2026, the cap is $40,400 ($20,200 for married taxpayers filing separately), with the cap beginning to phase down at higher income levels but not below $10,000 ($5,000 for married taxpayers filing separately).
For individuals and families paying substantial state income or property taxes, the higher limit could make itemizing more valuable than it has been in recent years.
Even if you have historically taken the standard deduction, continue keeping records of state income taxes, real estate taxes and other potentially deductible state and local taxes.
The higher SALT cap continues through 2029 under current law. Starting in 2030, it is scheduled to return to $10,000.
Charitable Giving May Require a Different Approach
Charitable giving rules also changed in 2026.
Taxpayers who do not itemize may deduct up to $1,000 of qualifying cash contributions, or $2,000 for married couples filing jointly. Certain limitations apply, including restrictions on contributions to donor-advised funds.
For taxpayers who itemize, a new floor generally allows a charitable deduction only to the extent total contributions exceed 0.5% of the taxpayer’s contribution base.
For people who give regularly, particularly those making larger gifts, this may be a reason to revisit the timing of contributions.
That does not mean allowing taxes to dictate your charitable goals. It does mean strategies such as bunching contributions into certain years may be worth considering alongside the rest of your tax and financial plan.
Health and Family Changes Are Worth a Look Too
Not all the changes affecting individuals come in the form of a new deduction.
Health Savings Account eligibility has expanded. Beginning in 2026, qualifying Bronze and Catastrophic plans can be HSA-compatible whether or not they are purchased through an Exchange, and certain direct primary care arrangements can work with an HSA. The pre-deductible telehealth safe harbor has also been made permanent.
Several family-related benefits have changed as well. The dependent care FSA limit increased to $7,500, up to $5,120 of the 2026 adoption credit may be refundable, eligible uses of 529 plans have expanded, and more individuals may qualify for ABLE accounts.
These changes may not affect everyone, but they are worth reviewing when making benefit elections or planning education, caregiving, and other family expenses.
Marketplace Coverage Deserves More Attention When Income Changes
There is another change that could catch some households by surprise.
The temporary enhanced Premium Tax Credit rules that allowed some households above 400% of the federal poverty level to qualify ended after 2025. In addition, the caps that limited repayment of excess advance Premium Tax Credit payments were removed for tax years after 2025.
For someone receiving advance payments of the Premium Tax Credit through the Health Insurance Marketplace, that makes income estimates more important.
A new job, bonus, retirement distribution or significant investment income can change the amount of credit you qualify for. Updating your Marketplace income estimate during the year may help avoid unexpected repayment when your return is filed.
How Do Trump Accounts Fit into Tax Planning?
Families with eligible children also have a new savings option.
Trump Accounts are now operational, although some of the rules surrounding contributions and investments are still developing.
Eligible U.S. citizen children born from 2025 through 2028 may qualify for a one-time $1,000 federal contribution. Contributions from individuals and employers are generally subject to an aggregate $5,000 annual limit; employer contributions may not exceed $2,500 and count toward that limit. Certain qualifying government and charitable contributions are outside that limit.
The useful question for families is not simply whether you can open one. It is how the account fits with the other ways you are already saving for your child, including education savings, family gifting and other long-term goals.
What Should You Review Before the End of 2026?
The distinction between temporary and longer-term provisions matters when making financial decisions.
The deductions for qualified tips, overtime, taxpayers age 65 and older, and qualifying car loan interest are all currently scheduled to end after 2028. The higher SALT cap lasts through 2029.
A temporary tax benefit that helps today should not automatically become an assumption in a long-term retirement or cash flow plan.
Before year-end, consider whether any of the new deductions apply to you, whether you have the documentation needed to claim them, and whether changes in income could affect your eligibility for other benefits.
The goal is not to change your financial life to capture every available tax break. It is to recognize when a tax change affects a decision you are already making.
Have questions about how these changes fit into your 2026 tax planning? Contact your YHB advisor. We can help you look at the changes in the context of your broader financial picture and determine what deserves attention before year-end.