What the 2025–2026 Tax Law Changes Actually Mean for Your Financial Plan

Executive Summary: The OBBBA, passed in 2025, solidifies most of the TCJA tax structure, but introduces targeted changes to deductions, credits, and planning thresholds. For high-income earners and business owners, this creates stability, but also urgency to optimize income, estate, and retirement strategies in 2026 and beyond.

Now that the One Big Beautiful Bill Act (OBBBA) has taken effect, a lot of the anxiety around the sunset of the Tax Cuts and Jobs Act (TCJA) has settled. But just because we avoided a worst-case tax hike doesn’t mean you can ignore the changes. If you’re a high-income earner, business owner, or closing in on retirement, 2026 is still a planning year that deserves your attention.

While many of the TCJA provisions have been extended or made permanent under the OBBBA, several targeted updates mean your tax picture might still shift, especially if you’re focused on income planning, legacy transfers, or maximizing tax-advantaged savings. Here’s what’s staying, what’s changing, and how to prepare.

What Stayed the Same (And Why That Matters)

The big news: most of the individual income tax bracket structure from the TCJA was made permanent. That means:

  • Lower brackets like 10%, 12%, 22%, 24%, and 32% are sticking around.
  • The top rate remains at 37% rather than reverting to 39.6%.
  • The doubled standard deduction continues, indexed for inflation (over $30,000 for married couples in 2026).

This preserves the planning opportunities created by the TCJA like Roth conversions, tax bracket smoothing, and income acceleration, especially valuable for pre-retirees.

What Changed in 2026 Under the OBBBA

While the worst-case sunset scenario didn’t happen, OBBBA still introduced some updates worth planning for:

  • SALT Deduction Cap Temporarily Increased: The $10,000 cap is now $40,000 through 2029 for married filers, but there’s an income phaseout starting around $500,000 AGI.
  • Child Tax Credit Adjustments: The expanded $2,000 credit remains, but phaseouts now begin earlier for higher earners.
  • Estate and Gift Tax Exemption: The exemption is indexed and extended at higher levels—now over $14 million per individual—but some clawback rules could apply to ultra-high-net-worth households.
  • Small Business Deduction (QBI): Extended and slightly refined, the 20% deduction for qualified business income is still available, but income thresholds and definition rules have tightened for service-based firms.
  • AMT Relief Made Permanent: The higher exemption and phaseout thresholds are now baked in, reducing surprise liability for many high earners.
Key Strategies for 2026 and Beyond

With more certainty in place, the next step is adjusting your strategy to take advantage of this stability.

  1. Revisit Roth Conversions

Low brackets are sticking around, which means there’s still runway to do strategic Roth conversions over multiple years. This is especially effective in your gap years after retirement, before RMDs or Social Security kick in.

  1. Optimize SALT Strategy While It’s Available

The higher SALT deduction limit won’t last forever. If you itemize, this is a great time to re-evaluate bunching strategies, property tax timing, and charitable contributions to get the most benefit.

  1. Use the Estate Planning Window Wisely

The higher lifetime exemption is a gift, but it won’t last unless future legislation preserves it. Use this time to revisit gifting strategies, SLATs, GRATs, or business succession plans that let you lock in today’s exemption levels.

  1. Evaluate QBI and Entity Structure

If you’re a business owner, especially in a service-based field (consulting, medical, financial services), now’s the time to ensure your compensation and business structure still qualify for the 20% QBI deduction. Fine-tuning how income is allocated could save five figures annually.

  1. Keep Tax Coordination Front and Center

Now that we have more clarity on the tax code, aligning your investment, income, and withdrawal strategies is critical. Don’t let opportunities slip through the cracks by treating taxes like a year-end cleanup. Make it part of your quarterly review process.

Real Planning Wins in Stable Conditions

With much of the 2017 tax reform structure preserved under the OBBBA, you have an opening to make smarter long-term decisions. That’s especially true if you’re managing income above $300,000, running a business, or planning to retire in the next 10 years.

At Worth Advisors, we help clients use the tax code as a tool, not a surprise. Let’s build a strategy that takes advantage of today’s law, prepares for what’s next, and gives you back more of what you earn.

FAQs

Q: Did the tax brackets go up in 2026?

A: No. The OBBBA made most TCJA tax brackets permanent, so marginal tax rates remain at 10%–37%.

Q: What happened to the estate tax exemption?

A: It was extended and indexed for inflation—over $14 million per person in 2026—but planning opportunities could still shrink in future legislation.

Q: Is the SALT cap still $10,000?

A: No. It has been raised to $40,000 through 2029, with income phaseouts starting around $500,000 AGI.

Q: Can I still deduct QBI as a business owner?

A: Yes, but rules for service-based businesses tightened. Make sure your income and entity structure support full eligibility.

Q: Are Roth conversions still a good idea?

A: Yes. With low brackets locked in, Roth conversions remain a strong multi-year planning tool, especially for pre-retirees.

Q: Should I adjust my gifting strategy?

A: Absolutely. The current estate/gift exemption is generous but could change. Locking in tax-free transfers now protects your long-term legacy.