How to Use the New 2026 Tax Rules to Lower Your 2027 Tax Bill
Don’t wait until tax season to plan. Several provisions from the One Big Beautiful Bill Act (OBBBA) now affect 2026 income, giving taxpayers new ways to manage their tax liability before year-end.
Here are the new tax rules to review now and the planning steps that may help you lower next year's tax bill.
1. Take Advantage of New Deductions
The OBBBA introduces new deductions for qualified tips, overtime, certain auto-loan interest, and taxpayers age 65 and older. Eligibility rules apply, so review these deductions now to plan income, withholding, and estimated payments more effectively.
If you qualify, keep accurate records throughout the year and understand the applicable income limitations.
2. Review the Standard and SALT Deduction
The standard deduction has increased for 2026. Compare it with your itemized deductions before year-end. If you itemize, the expanded state and local tax (SALT) deduction will create additional savings, especially for higher-income taxpayers and homeowners.
Evaluate whether itemizing or taking the standard deduction provides the greater benefit.
3. Reevaluate Charitable Donations
Review charitable donations you have already made and contributions you still plan to make. Beginning in 2026, eligible taxpayers who do not itemize can deduct up to $1,000 in qualifying cash contributions, or $2,000 for married couples filing jointly. Itemizers must account for the new 0.5% of AGI floor.
4. Maximize Retirement Contributions
Review retirement contributions and other year-end strategies. Increase eligible 401(k) contributions where appropriate, assess investment gains and losses, and time income and deductible expenses strategically to help lower taxable income.
5. Look at your QBI
Business owners should review Qualified Business Income (QBI) planning before December 31. Evaluate business income, deductions, compensation, and entity structure while the QBI deduction remains available.
6. Consider Estate and Wealth-Transfer Planning
High-net-worth individuals and families should revisit estate and gift planning now. With the federal estate and gift tax exemption at $15 million per individual for 2026, proactive planning may help preserve more wealth for future generations.
This year’s tax changes have created planning opportunities, but taxpayers should take action before year-end. A year-end tax review can uncover deductions, adjust withholding and estimated payments, and support smarter decisions about retirement, charitable giving, investments, and business strategy.
Tax laws are complex, and eligibility depends on your circumstances. Consult your CPA before making significant financial decisions.
