The 2025 tax year is over for most filers, and it’s time to focus on 2026. Some parts of last summer’s Republican tax-and-spending law are new this year, while provisions that took effect last year are still causing ripples. Here are key tax moves for the year ahead.
Standard deduction or itemized?
Determine whether you’ll choose the standard deduction or itemize on Schedule A, because that affects other moves.
Pay attention: Last year’s tax changes reversed a trend that saw filers opting for the standard deduction when lawmakers expanded the itemized deduction for state and local taxes (SALT) to $40,000. About 20 million filers are expected to itemize for 2025, up from 16.3 million for 2024, according to the Tax Foundation.
Filers taking the standard deduction subtract one overall amount from income. For 2026, that’s $16,100 for single filers and $32,200 for married joint filers. Taxpayers ages 65 and older get an additional sum, which this year is $2,050 for singles and $1,650 for each spouse who is 65 or older.
Note: The $6,000 senior deduction enacted last summer is a separate provision, and eligible filers can claim it through tax year 2028 whether or not they itemize.
Filers who itemize can deduct a variety of expenses, including mortgage interest, charitable contributions, medical costs and SALT—which is $40,400 for 2026. If you’re going this route, look for ways to maximize these deductions, especially charitable donations (discussed below).
Check withholding or estimated taxes
Was your 2025 refund larger than expected because of the new SALT deduction? Or do you expect an event that could raise your 2026 taxes?
If so, revisit your withholding or estimated quarterly taxes. This can avoid another interest-free loan to Uncle Sam or interest charges on underpayments that are currently 6%, says Eric Bronnenkant, head of tax at Edelman Financial Engines. Filers must pay at least 90% of 2026 taxes by year’s end (for withholding) or Jan. 15 (for estimated taxes) to escape interest payments. Or you can pay up to 110% of 2025 taxes, although quarterly taxpayers often must make the payments evenly.
Checking withholding for paychecks and pensions is a real pain. It requires most of the information and calculations used to complete a tax return, plus a current paycheck (if any), to see where you stand.
Probably the best tool is the Internal Revenue Service’s online withholding estimator, as it includes more variables and now reflects last year’s tax changes. The agency says it takes about 25 minutes, but it took me nearly 35. It does prepare a new Form W-4 or W-4P, however.
Know the new charitable-deduction rules
Big changes here: Starting this year, givers who don’t itemize can deduct up to $1,000 (single filers) or $2,000 (married joint filers) for donations to qualified charities.
Unlike donations by itemizers, these gifts can’t be to donor-advised funds (DAFs). And they must be of cash, not stock or property such as used clothes or furniture.
Also new this year is a limit on charitable deductions by itemizers, who lose an amount equal to 0.5% of their adjusted gross income. So if a couple has $250,000 of AGI, they can deduct only the amount above $1,250, whether their total donations are $1,500 or $15,000.
For the highest-income filers, the tax benefit of charitable deductions is capped at 35% rather than the top rate of 37%. That reduces their value by 5.4%, according to San Francisco CPA Richard Pon.
Senior donors, take note: None of the megabill’s changes apply to qualified charitable distributions, or QCDs. For donors ages 70½ and older with traditional IRAs, QCDs are often the most tax-efficient way to donate.
Get ready for Trump accounts
U.S. citizens born from 2025 through 2028 are eligible for a $1,000 contribution to a Trump savings account by the government, and some children under age 18 could qualify for gifts from billionaires and others to such accounts. Employers and individuals like grandparents also can contribute to them, but the total allowed annually (beyond government and charitable contributions) is $5,000 a year.
The funds will grow tax-deferred and be penalty-free of federal taxes at withdrawal when the children are eligible for retirement at age 59½. They can also be converted to Roth IRAs when the child turns 18, although tax will be owed on the conversion.
In addition, the cost basis of after-tax contributions must be tracked to avoid overpaying tax on conversions or withdrawals, says Tim Steffen, a CPA who is director of advanced planning at Baird.
Trump accounts go live in July, and key points remain unclear. While they must be invested in U.S. stock funds with annual investment fees of 0.10% or less, account-maintenance and advisory fees that could severely dent small accounts aren’t known. People making contributions might also have to file gift-tax returns and subtract that amount from their gift- and estate-tax exemption. (This will likely be fixed.)
Suggestion: Sign up eligible children now, and look for government guidance.
Do more with 529 plan funds
Beginning in 2026, savers with 529 education-savings accounts can use tax-free withdrawals of up to $20,000 for K-12 expenses, which is double the prior limit of $10,000.
This is part of an expansion of permitted 529-account withdrawals, most of which took effect with last year’s tax changes. Since July, these have included K-12 expenses for testing and test prep (such as SAT fees), tutoring, special-needs support, books, and dual enrollment.
Note: Savers who want to take withdrawals for such expenses should check what their state allows. Some states don’t conform to federal law and penalize those who take these withdrawals, says college-savings specialist Mark Kantrowitz.
Last year’s law also permits withdrawals for education and licensing in trades such as welding, electrical work and HVAC. It includes licensing costs such as bar and CPA exams as well, plus continuing education to maintain those licenses.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
This Wall Street Journal article was legally licensed by AdvisorStream.
Dow Jones & Company, Inc.