6 Tax Law Updates That May Influence Your 2026 Filing

Recent tax changes could mean larger deductions for some filers, tighter limits for others, and new year-end planning angles.

Tax planning always seems to bring fresh considerations, and 2026 is no exception. Here are the main points to know.

1. Inflation-Driven Adjustments

Inflation indexing delivers several changes this year.

For starters, taxpayers who use the standard deduction will see a bigger one. The 2026 standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.

Retirement contribution caps have also risen. The 401(k) limit is now $24,500. Catch-up contributions add another $8,000 for people ages 50 through 59 or older than 63, and $11,500 for those ages 60 through 63. High earners, however, must make catch-up contributions to a Roth. The IRA limit is now $7,500, with an additional $1,100 catch-up amount for people age 50 or older.

The child tax credit has increased by $200 to $2,200 per qualifying child.

In addition, the state and local tax deduction is capped at $40,400.

2. Charitable Giving Deduction for Nonitemizers

Taxpayers who take the standard deduction get a new charitable contribution break. For cash gifts, including checks and credit card donations, nonitemizers can claim up to $1,000 if single or $2,000 if married, on top of the standard deduction.

3. Charitable Deduction Reduction for Itemizers

While standard deduction filers gain a new benefit, itemizers face a new reduction. Charitable deductions must now be lowered by 0.5% of adjusted gross income. For instance, if your AGI is $200,000, the first $1,000 of charitable giving is no longer deductible.

4. Itemized Deduction Reduction for Higher-Income Taxpayers

Taxpayers in the top 37% bracket will find that itemized deductions only offset income taxed at the 35% bracket. The IRS applies a complicated formula to accomplish this. In practical terms, income above the 35% bracket causes 5.4% of itemized deductions to be disallowed. That figure comes from (37.0% minus 35.0%) divided by 37%, which equals 5.4%.

5. Minimum Qualified Business Income Deduction

The qualified business income deduction is already known for its complexity and can generally reach 20% of business income. Now, if you have at least $1,000 of QBI, you will automatically qualify for a $400 deduction.

6. Limits on Gambling Loss Deductions

Gamblers have long faced strict tax rules. Winnings remain fully taxable, and losses have historically been allowed only as itemized deductions, limited to documented losses up to the amount of winnings. Starting in 2026, that deduction is capped at 90% of winnings.

At least one of these changes is likely to matter to most taxpayers. It is worth factoring them into year-end tax planning.

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