2026 Tax Changes with Zach Luneau
2026 Tax Changes:
What you need to know
- Contribution limits increased
The IRS typically increases contribution amounts on an annual basis. This means the new year rings in opportunities to save even more on a tax-advantaged basis for retirement and health care.
| Contribution type | 2025 contribution limit | 2026 contribution limit |
| IRA contributions | · Below age 50: $7,000
· Age 50 or older: $8,000 |
· Below age 50: $7,500
· Age 50 or older: $8,600 |
| Elective deferral to 401(k), 403(b), 457(b) | · Below age 50: $23,500
· Age 50 or older: $31,000 · Ages 60–63: $34,750 |
· Below age 50: $24,500
· Age 50 or older: $32,500 · Ages 60–63: $35,750 |
| Elective deferral to SIMPLE plans | · Below age 50: $16,500
· Age 50 or older: $20,000 · Ages 60–63: $21,750 |
· Below age 50: $17,000
· Age 50 or older: $21,000 · Ages 60–63: $22,250 |
| SEP employer contributions | · Lesser of 25% of compensation or $70,000 | · Lesser of 25% of compensation or $72,000 |
| Health savings accounts (HSAs) | · Individual coverage: $4,300
· Family coverage: $8,550 · Age 55 or older (catch-up): $1,000 |
· Individual coverage: $4,400
· Family coverage: $8,750 · Age 55 or older (catch-up): $1,000 |
- New catch-up contribution rule for high earners
If you’re age 50 or older and your wages exceeded $150,000 last year, you’ll only be able to make Roth catch-up contributions in your workplace retirement plan this year. This includes 401(k), 403(b) and 457(b) plans.
Actions to consider: While you may not get a tax benefit from your plan catch-up contributions this year, you should generally still make them if you originally planned to.
- Higher 529 account distribution limits for K-12 expenses
The annual federal limit on 529 plan distributions for qualifying K-12 expenses doubles in 2026 to $20,000 per student.
Actions to consider: If you want to use your 529 to cover K-12 expenses, consider making additional contributions. Factor in the annual gifting exclusion when deciding on the amount you’re comfortable contributing. Some states may also allow tax benefits for withdrawals or contributions. If you have an overfunded 529 plan, the higher limit and expanded definition for K-12 expenses increase the flexibility for excess funds.
- Trump accounts available through the Treasury
Starting in July, you can open and fund Trump accounts through the Treasury. Trump accounts are “starter” IRAs for children with special rules until age 18. Children born between 2025 and 2028 receive a one-time contribution of $1,000 from the federal government, which doesn’t count toward the annual contribution limit.
Actions to consider: If your child was born in 2025 or 2026, be sure to open a new Trump account for them to receive the one-time free $1,000 contribution. For any child under age 18, consider contributing to an account if you’re on track for your own retirement, helping fund your child’s or grandchild’s retirement is one of your goals, and the child doesn’t have taxable compensation or is already maxing out their IRA
- A charitable contribution deduction for nonitemizers and a new floor for itemizers
For those who take the standard deduction, you’re now allowed a deduction for cash charitable contributions of up to $1,000 ($2,000 if filing jointly). These donations must be made to a qualified charitable organization, which excludes donor-advised funds (DAFs). For those who itemize their deductions, only your charitable contributions that exceed 0.5% of your adjusted gross income (AGI) are now deductible.
Actions to consider: If you take the standard deduction, you can now receive a tax benefit for your contributions. If you itemize deductions, you’re 70½ or older and you’re taking required minimum distributions (RMDs), consider making your donations directly from your IRA through a qualified charitable distribution (QCD).
- New limit on total itemized deductions for those in the 37% bracket
If you’re in the 37% federal marginal tax bracket, the tax benefit of your itemized deductions will be limited to 35% starting this year. This limitation applies after any applicable deduction-specific limits.
Actions to consider: If the new rule affects you, explore strategies that reduce your AGI and align with your goals to help offset the impact of disallowed itemized deductions.
Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.
