2026 Tax Planning: What’s Changed and Why It Matters
Tax strategy in 2026 is not what it was even a year ago. New federal legislation has introduced notable adjustments that influence deductions, credits, retirement income strategies, and overall financial planning decisions.
During a recent Inner Circle session, leadership from Fiat Wealth Management and Fiat Tax reviewed how these legislative updates could affect working professionals, retirees, and business owners alike. Below is a breakdown of the most significant changes — and why proactive planning is more important than ever.
Updates to the SALT Deduction
One of the most talked-about revisions involves the State and Local Tax (SALT) deduction.
The cap has been temporarily raised from $10,000 to $40,000. However, this expanded limit comes with income-based phaseouts and is scheduled to expire in four years.
For taxpayers residing in high-tax states, the higher cap may increase the value of itemizing deductions. That said, income thresholds still play a critical role. As adjusted gross income rises, the allowable benefit can gradually decrease, potentially reverting to prior limitations.
Because this provision is temporary, annual tax projections and forward-looking analysis are essential to maximize its impact.
Income Thresholds and Strategic Positioning
A wide range of deductions and credits are tied to income eligibility requirements. As earnings increase, certain tax advantages may be reduced or eliminated entirely.
These can include education-related credits, student loan interest deductions, Medicare premium adjustments, select clean energy and vehicle incentives, and updated charitable deduction calculations beginning in 2026.
Projecting income before year-end can meaningfully influence decisions involving Roth conversions, capital gains realization, retirement withdrawals, and business revenue timing. Effective tax planning extends far beyond accurate filing — it involves actively managing taxable income throughout the year.