Now That You’re Done With Your Taxes, Here’s What To Know For 2026

Now that tax season is behind you, it’s time to start planning for 2026.

While the 2025 filing year has wrapped up for most people, recent tax law changes—some introduced last summer and others already in effect—are still shaping how you should approach the year ahead.

Here are the key moves to consider:

Standard Deduction vs. Itemizing

Start by deciding whether you’ll take the standard deduction or itemize, since that choice affects many other strategies. Recent tax changes have made itemizing more attractive again, largely due to the expanded state and local tax (SALT) deduction.

For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly. Those 65 and older get an extra amount—$2,050 for singles and $1,650 per qualifying spouse. There’s also a separate $6,000 senior deduction available through 2028, regardless of whether you itemize.

If you itemize, you can deduct expenses like mortgage interest, charitable donations, medical costs, and SALT (now capped at $40,400 for 2026). If you go this route, it’s worth planning ahead to maximize those deductions—especially charitable giving.

Adjust Your Withholding Or Estimated Taxes

If your 2025 refund was unexpectedly large—or if you anticipate higher income in 2026—it’s a good idea to revisit your tax withholding or quarterly payments. This helps you avoid either overpaying or facing penalties.

To avoid interest charges (currently around 6%), you’ll generally need to pay at least 90% of your 2026 tax liability during the year, or 110% of your 2025 taxes. Quarterly payments usually need to be made evenly. Using the IRS withholding estimator can help, though it requires detailed information similar to completing a full tax return.

New Charitable Deduction Rules

There are significant updates here. Starting in 2026, taxpayers who don’t itemize can still deduct charitable donations—up to $1,000 for singles and $2,000 for married couples. These must be cash donations to qualified charities (not donor-advised funds or donated goods).

For those who itemize, deductions are slightly reduced: you must subtract 0.5% of your adjusted gross income before claiming charitable contributions. High-income filers will also see reduced tax benefits, with deductions capped at a 35% rate instead of 37%. One thing that hasn’t changed: qualified charitable distributions (QCDs) from IRAs remain a highly tax-efficient option for those age 70½ and older.

New “Trump Accounts” For Children

A new savings program launches in July 2026. Children born between 2025 and 2028 will receive a $1,000 government contribution to a special account. Additional contributions—from family members or employers—are allowed, up to $5,000 annually (excluding government or charitable contributions).

These accounts grow tax-deferred and can be withdrawn tax-free in retirement. They can also be rolled into a Roth IRA at age 18, though taxes will apply at that point. Some details are still unclear, including fees and potential gift-tax implications, so it’s worth keeping an eye on further guidance.

Expanded Uses For 529 Plans

Starting in 2026, 529 plan holders can withdraw up to $20,000 per year tax-free for K–12 education expenses, doubling the previous limit. Eligible expenses now include tutoring, test prep, books, special-needs services, and dual enrollment. Funds can also be used for trade schools, licensing programs, and ongoing professional education. However, not all states follow federal rules, so check your state’s policies before making withdrawals to avoid penalties.

 

Source: The Wall Street Journal