The One Big Beautiful Bill Act (OBBBA) continues to shape tax planning as federal provisions take effect over multiple years. While many changes will impact 2025 returns, additional provisions beginning in 2026 can meaningfully change after tax outcomes, particularly for itemizers and high-income taxpayers. Understanding these phased-in rules is essential for effective individual tax planning in 2026. 

Reduced Value of Itemized Deductions for High Income Taxpayers 

For individuals, estates and trusts in the highest tax bracket, the overall tax benefit of itemized deductions is limited. Beginning in 2026, itemized deductions reduce tax at a maximum rate of 35% rather than 37%, meaning taxpayers in the top bracket receive the same deduction benefit as those in the 35% bracket. For 2026, this applies to taxpayers with taxable income exceeding $640,600 (single or head of household), $768,700 (married filing jointly) and $384,350 (married filing separately). 

Planning considerations: 

• Itemized deductions still matter, but their marginal value is lower, which may affect decisions around timing deductions. 
• Taxpayers near bracket thresholds may benefit from income deferral or acceleration strategies to manage exposure to the top bracket. 
• Modeling projected deductions against the standard deduction for future years is increasingly important. 

Charitable Contribution Deduction Changes 

A new rule requires charitable contributions to exceed 0.5% of adjusted gross income (AGI) before becoming deductible, which may reduce or delay the tax benefit of charitable giving for taxpayers who itemize — particularly those who make smaller or consistent annual donations.  

At the same time, the OBBBA reinstates a charitable contribution deduction for taxpayers who claim the standard deduction. Beginning in 2026, eligible nonitemizers may deduct cash contributions to qualified charities up to $1,000 annually ($2,000 for married couples filing jointly).  

Planning considerations: 

• Itemizing taxpayers may benefit from “bunching” charitable contributions into a single year to exceed the 0.5% AGI threshold. 
• Larger or less frequent gifts through charitable giving accounts may help preserve deductibility for higher-income taxpayers. 
• Standard deduction filers should track and retain documentation for eligible cash donations to ensure the nonitemizer deduction can be claimed. 
• Charitable giving strategies should be reviewed alongside cash-flow needs, projected income and multiyear tax planning goals. 

Temporary SALT Deduction Cap Increase 

The cap on the state and local tax (SALT) deduction is temporarily increased from $10,000 to $40,000 ($20,000 for married couples filing jointly), subject to a phase-out for higher-income taxpayers. 

Planning considerations: 

• Taxpayers with significant SALT liabilities may see a meaningful increase in allowable deductions, at least temporarily. 
• The phase-out makes income management critical, as higher-income may reduce or eliminate the benefit. 
• Timing of property tax payments or estimated state tax payments may influence deductibility during the temporary window. 

More Alternative Minimum Tax (AMT) Exposure 

Beginning in 2026, changes under the OBBBA may subject more taxpayers to the alternative minimum tax (AMT). While the top AMT rate remains 28% — lower than the 37% top regular tax rate — it applies to a broader taxable income base and disallows certain deductions. The AMT exemption thresholds revert to their 2018 levels (eliminating inflation adjustments made for 2019–2025) and begin phasing out at lower income levels, with the exemption now phasing out twice as fast. As a result, higher-income taxpayers are more likely to trigger AMT liability in 2026. 

Planning considerations: 

• Taxpayers who may be subject to AMT should consider accelerating income or short-term capital gains into an AMT year to take advantage of the lower maximum rate. 
• Deferring expenses disallowed for AMT purposes, such as state and local taxes, may help preserve deductions in a regular tax year (while monitoring SALT limitations). 
• Charitable contributions, which are deductible for AMT purposes, may become more valuable in a non-AMT year when taxed at higher regular rates. 
• Multiyear projections are critical to identify whether AMT exposure is temporary or recurring. 

Expanded Tax Advantaged Savings Opportunities for Families 

Beginning in 2026, new OBBBA-created 530A accounts (“Trump Accounts”) allow up to $5,000 in annual contributions for U.S. citizens under age 18, with tax-deferred growth until the account converts to a traditional IRA. Certain eligible children may also receive a onetime, tax-free federal contribution of $1,000.  

In addition, the annual limit for tax free 529 plan withdrawals for K–12 expenses increases to $20,000 per beneficiary and now includes a broader range of qualified expenses. 

Planning considerations: 

• Families may benefit from using a combination of savings vehicles, with 529 plans focused on education expenses and 530A accounts geared toward long-term retirement savings for children.  
• Parents and grandparents may want to frontload contributions to take advantage of tax-deferred growth and expanded withdrawal limits.  
• Coordination with existing 529 plans, custodial accounts and estate planning strategies can help avoid overlap and improve overall tax efficiency.  
• State tax conformity rules should be reviewed to confirm whether state-level benefits align with federal treatment. 

Plan with Confidence 

Let our pros guide you through evolving tax compliance requirements while developing forward-looking strategies to keep you on a strong financial path. This year brings plenty of individual tax planning opportunities, both now and for future tax years.