Tax Changes Starting in 2026: What You Need to Know Now
As we head into 2026, several important tax law changes are set to take effect. Some of these updates create new opportunities for taxpayers, while others introduce limitations that may impact deductions, credits, and planning strategies. Below is a practical overview of the most notable tax changes beginning in 2026 and how they may affect individuals, families, and businesses.
Charitable Contribution Changes
New Deduction for Non-Itemizers
Beginning in 2026, taxpayers who take the standard deduction will be allowed to deduct charitable cash contributions:
- Up to $1,000 for single filers
- Up to $2,000 for married filing jointly
This change provides a long-awaited benefit to taxpayers who do not itemize deductions but still give to qualified charitable organizations.
New Floor for Itemizers and C Corporations
For those who itemize deductions, as well as for C corporations, a new charitable contribution floor will apply. Charitable donations must now exceed 0.5% of adjusted gross income (AGI) before any portion becomes deductible.
For example:
- If your AGI is $100,000, your 0.5% threshold is $500
- Donations up to $500 are not deductible
- Once contributions exceed $500, only the amount above that threshold becomes deductible
This change may significantly affect tax planning for higher-income donors and businesses.
Child Care Credit Increase
The child care credit will see a modest increase in 2026. While not a major overhaul, this adjustment may provide incremental tax relief for families with qualifying child care expenses.
Gambling Loss Deduction Limitations
Starting in 2026, gambling losses will be further restricted:
- Only 90% of gambling losses may be used to offset gambling winnings
- Taxpayers must still itemize to claim these losses
As a result, even with losses, a portion of gambling winnings may remain taxable, which could increase overall tax liability for frequent gamblers.
Clean Energy Credit Expirations
Many clean energy tax credits either expired on September 30, 2025, or on December 31st, 2025. A limited number of credits remain available through June 30, 2026, but these primarily apply to businesses rather than individual taxpayers.
Taxpayers considering energy-efficient upgrades should review eligibility carefully before assuming credits will apply.
1099-NEC Filing Threshold Increase
For the first time in roughly 30 years, the 1099-NEC filing threshold is increasing:
- The threshold rises from $600 to $2,000 beginning in 2026
This means businesses will only need to issue a 1099-NEC if a contractor is paid $2,000 or more during the year. These forms will be issued in 2027 for 2026 payments, reducing compliance burdens for businesses that work with lower-paid contractors.
Capital Gains 0% Tax Bracket Expansion
The income thresholds for the 0% capital gains tax rate are increasing in 2026:
- Married filing jointly: up to $98,900
- Single filers: up to $49,450
Taxpayers whose taxable income falls below these thresholds may be able to realize long-term capital gains without paying federal capital gains tax.
Standard Deduction and Retirement Contribution Increases
Standard Deduction
The standard deduction will increase again in 2026, providing additional tax relief for most taxpayers.
Retirement Accounts
Several retirement contribution limits are increasing:
- 401(k) contribution limit: $24,500
- Enhanced catch-up contribution rules for individuals aged 60–63
- IRA and Roth IRA contribution limit: $7,500
- Additional $1,100 catch-up contribution for individuals age 50 and older
These increases create additional opportunities for tax-deferred and tax-free retirement savings.
New 401(k) Early Withdrawal Exception
A new exception to the 10% early withdrawal penalty is being introduced:
- Taxpayers may withdraw up to $2,600 from a 401(k)
- Funds must be used to pay long-term care insurance premiums
Regular income taxes may still apply.
Educator Expense Deduction Increase
Teachers will be allowed a higher deduction for unreimbursed classroom expenses:
- $350 per eligible teacher
- $700 total for married couples if both spouses are teachers
Estate and Gift Tax Updates
- Lifetime estate tax exemption: increasing to $15 million
- Annual gift tax exclusion: remains at $19,000
These changes continue to favor proactive estate and wealth transfer planning.
Mileage Rate Increase
The business mileage rate is increasing to $0.725 per mile driven for business purposes beginning in 2026.
New 1% Excise Tax on Certain Foreign Transfers
Effective in 2026, a 1% excise tax will apply to certain payments sent by U.S. individuals to foreign individuals overseas. This rule may impact individuals who regularly send funds abroad and should be reviewed carefully for compliance.
Final Thoughts
The tax changes starting in 2026 introduce a mix of benefits, limitations, and planning considerations. From charitable giving strategies to retirement contributions and reporting requirements, proactive tax planning will be more important than ever.
As always, taxpayers should consult with a qualified tax professional to understand how these changes apply to their specific situation and to adjust strategies accordingly.