Here’s a sampling of some significant tax law changes going into effect this year:
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- New charitable contribution deduction for non-itemizers for cash contributions up to $1,000 ($2,000 for married couples filing jointly)
- New 0.5% of adjusted gross income floor on charitable deduction for itemizers
- New 35% benefit limit on itemized deductions for taxpayers in the 37% tax bracket
- Reduced income thresholds at which the alternative minimum tax exemption begins to phase out (and a phaseout rate that’s twice as fast as 2025’s)
- New tax-advantaged Trump accounts to benefit children under age 18
- Increase in tax-free 529 plan withdrawal limit for qualified elementary and secondary school expenses to $20,000 (from $10,000 for 2025)
- New requirement that higher-income taxpayers’ catch-up contributions to employer-sponsored retirement plans must be treated as post-tax Roth contributions
- Elimination of certain energy-efficiency credits for homeowners
- Wider income ranges over which the Section 199A qualified business income (QBI) deduction limitations phase in, potentially allowing larger deductions for some pass-through entity owners
- New minimum QBI deduction of $400 for taxpayers who materially participate in an active trade or business if they have at least $1,000 of QBI from it
Contact the office to discuss how these or other changes might affect you.
