New IRS Tax Rules for 2026 Key Strategies to Pay Less in Taxes
Changes in deductions, retirement plans, and tax benefits could help millions of taxpayers in the United States reduce their tax burden.
The new IRS tax rules for 2026 in the United States are prompting many taxpayers—especially those with higher incomes or those approaching retirement—to rethink their tax strategies. Financial experts warn that ignoring these changes could mean paying more taxes than necessary. The updates come from new legislation approved by Congress last year, known as the “One Big Beautiful Bill Act,” which introduces important changes in:
- tax deductions
- retirement savings limits
- tax benefits for businesses and families
Below, we explain the most important IRS tax changes for 2026 and how they could affect your taxes.
Reviewing paycheck withholding will be essential in 2026
One of the simplest steps to legally reduce taxes is reviewing how much money is withheld from each paycheck. The Internal Revenue Service (IRS) recommends using its digital tool called Paycheck Checkup, which helps determine whether a worker is paying too much or too little tax during the year. Many people end up lending money to the government interest-free because their withholding is too high.
Experts recommend reviewing withholding particularly in these cases:
- People with multiple sources of income
- Workers who receive bonuses, stock compensation, or variable income
- Families with dependents over age 17
- Residents of states with high state taxes
Reviewing these factors can help avoid surprises when filing your tax return.
Retirement savings limits increase in 2026
The new legislation also raises contribution limits for retirement savings plans, which can reduce taxable income.
The new limits include:
- 401(k): up to $24,500
- IRA: up to $7,500
Additionally, workers between ages 60 and 63 will be eligible for a special additional contribution known as a “super catch-up.” This allows contributions of up to $11,250 extra, bringing the potential annual contribution to $35,750 in a 401(k). However, this benefit disappears once the taxpayer turns 64.
Another important change is that starting in 2026, additional contributions for higher-income individuals must be made into Roth accounts, meaning taxes are paid now but withdrawals can be tax-free in the future.
The SALT deduction limit temporarily increases
Since 2018, many taxpayers have been limited to deducting $10,000 in state and local taxes (SALT).
The new law increases this limit to $40,000 from 2026 through 2029.
For married taxpayers filing separately, the limit will be $20,000.
This change represents significant tax relief for many upper-middle-income households, especially in states with higher tax rates.
However, there is an important limitation.
If modified adjusted gross income exceeds:
- $500,000
- $250,000 for married taxpayers filing separately
the additional deduction gradually phases out.
At income levels around $600,000, the benefit essentially disappears and the deduction returns to the $10,000 cap.
Tax strategies for business owners
For business owners with pass-through income, a strategy known as PTET (Pass-Through Entity Tax) remains available.
This allows businesses to pay certain state taxes at the entity level, which can then be deducted as a business expense.
Currently, nearly 40 states allow this tax strategy.
It may be particularly useful when:
- state tax payments exceed $40,000
- the taxpayer loses part of the SALT deduction due to income limits
- the taxpayer claims the standard deduction
This approach can help reduce taxable income for business owners.
Changes to charitable donation deductions
Starting in 2026, deductions for charitable contributions may be limited to amounts exceeding 0.5% of adjusted gross income (AGI).
This means smaller donations that previously generated deductions may no longer provide the same tax benefit.
One commonly used strategy is “charitable bunching,” which involves consolidating several years of donations into one year to maximize deductions.
Donor-Advised Funds allow taxpayers to apply this strategy with greater flexibility.
100% bonus depreciation returns
Another important change for businesses is the return of 100% bonus depreciation in 2026.
This allows companies to immediately deduct the full cost of certain business assets.
The benefit applies to assets placed into service after January 19, 2026.
This may encourage businesses to accelerate investments in:
- machinery
- vehicles
- technology
- business infrastructure
Possible increase in AMT impact
The Alternative Minimum Tax (AMT) will continue to affect a small number of taxpayers, but new thresholds may expand the number of people impacted.
This may particularly affect individuals exercising Incentive Stock Options (ISOs).
Experts recommend carefully planning when these options are exercised in order to minimize tax consequences.
Tax planning becomes essential as rules may be temporary
Many of the benefits included in the new tax law are temporary, meaning they could change in the coming years.
These include:
- the higher SALT deduction cap
- bonus depreciation
- certain tax benefits for businesses
Financial advisors recommend planning ahead to take advantage of these benefits before they expire.
Effective tax planning does not depend on a single decision. Instead, it involves combining multiple long-term strategies to reduce the overall tax impact over time.