It’s spring in the desert, and the scents of various blooming trees and plants, citrus blossoms and the earthy, spicy aroma of the desert is in the air. The 2025 income tax season may or may not be over, depending if you are on extension or not.
If you haven’t already started, it’s not too early to start planning for 2026.
What are some things you should be looking for?
Withholding – Did you receive a large refund or end up owing the IRS more than you like, even to the point of owing penalties and interest, take a look at what you are having withheld from your wages, retirement, social security, or maybe even your gambling winnings!
Quarterly estimates – If you have significant interest, dividend or capital gains income, you may have a requirement to make timely quarterly estimates or be subject to penalties and interest.
Also, if you have earnings from a sole proprietorship, single-member LLC, multi-member LLC or S-corporation, you may also have quarterly estimate requirements.
These quarterly estimated payments for 2026 are due April 15, June 15, September 15 and January 15, 2027.
To avoid IRS underpayment penalties, you can use the safe harbor rule by paying at least 90% of your current year’s tax liability or 100% of the prior year’s tax (110% if AGI exceeds $150,000) through quarterly payments. The annualized income installment method allows taxpayers with uneven income (e.g., seasonal work, large capital gains) to calculate quarterly tax payments based on actual earnings to date, rather than dividing the total annual tax into four equal payments.
When figuring out withholding or quarterly estimates, here are some 2026 tax changes to take into account:
- Standard Deduction: Increases to $32,200 for married couples filing jointly, $16,100 for singles/married filing separately, and $24,150 for heads of households.
- Retirement Contributions: The 401(k) contribution limit rises to $24,500 (up from $23,500 in 2025). Individuals aged 50 and over can make a $8,000 catch-up contribution. IRA limits increase to $7,500.
- Continuation of deductions in place in 2025: Deductions for 2026 include up to $25,000 for qualified tips, up to $12,500 ($25,000 joint) for overtime pay, and up to $10,000 for personal vehicle loan interest, additional deduction of $6,000 for senior aged 65 and older.
- Starting in the 2026 tax year, non-itemizers can claim an “above-the-line” deduction for cash donations to qualified charities, allowing a deduction of up to $1,000 for single filers and $2,000 for married couples filing jointly. This deduction is taken in addition to the standard deduction.
For taxpayers itemizing deduction, charitable contributions are limited to amounts exceeding 0.5% of adjusted gross income.
Another change coming in 2026 are 530A IRAs, referred to as Trump Accounts. These are new tax-advantaged investment accounts launching on July 4, 2026. They feature a $1,000 federal seed contribution for children born between January 1, 2025, and December 31, 2028, with annual non-tax-deductible contributions from parents, guardians, grandparents, family members, friends, and employers up to $5,000 total per child under the age of 18. These accounts are tax-deferred similar to traditional IRAs.
Additionally, billionaires Michael and Susan Dell have pledged $6.25 billion, aimed at certain eligible children under 10, an additional $250 incentive that is in addition to the $1,000 federal contribution and the $5,000 annual limit.
And finally, a recent court decision has determined that penalties and interest charged between January 20, 2020, and July 10, 2023, may have been improper. The National Taxpayer Advocate is advising tens of millions of taxpayers to file protective claims by JULY 10, 2026, to receive refunds or abatements for penalties and interest assessed during the pandemic.
While the IRS has already provided some automatic penalty relief, the new ruling requires proactive steps to secure refunds for both penalties and interest. If this applies to you, you need to file Form 843 requesting a refund based on the “COVID-19 pandemic disaster relief period” and cite the “Kwong v. United States” decision regarding the 7508A(d) postponement of deadlines.
The IRS is contesting the ruling, any the filing for Form 843 is necessary to keep the tax years open during potential litigation.
If you think this may apply to you, consider seeking help from a tax professional.
I’m Tom Friezen, here to take the numb out of numbers.
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