The One Big Beautiful Bill Act (OBBBA) introduced significant tax changes effective in 2026, creating new planning opportunities and potential pitfalls for individuals and families. Effective tax planning requires a comprehensive, year-round approach that considers income, deductions, investments, charitable giving, retirement, education, and estate strategies together. However, year-end is a great time to reassess and take stock of any missed opportunities throughout the year. Below we offer an overview of what you should consider with your tax advisers.
Begin with an assessment of the seven federal tax brackets, ranging from 10% to 37%. You may benefit from strategically timing income and deductions, maximizing retirement contributions and reviewing exposure to the alternative minimum tax (AMT). The OBBBA accelerates the phaseout of the AMT exemption for higher-income taxpayers. Also reviewing withholding and quarterly estimated payments is important to avoid penalties without creating unnecessary overpayments.
This area has become more complex. The standard deduction increased for 2026, with additional deductions available for qualifying taxpayers age 65 or older. The state and local tax deduction cap rose to $40,400 for most taxpayers but phased down to a minimum of $10,000 at higher income levels. In addition, taxpayers in the 37% bracket face a new limitation that generally caps the federal benefit of itemized deductions at approximately 35 cents per dollar. Bunching charitable gifts, taxes and other deductible expenses into selected years may improve their tax value.
When it comes to investments, a key area to address is tax efficiency. Consider holding less actively traded investments in taxable accounts, avoiding mutual fund purchases immediately before year-end capital gain distributions and harvesting investment losses to offset realized gains. Be mindful of the wash sale rules when repurchasing securities sold at a loss. If you are near the net investment income tax thresholds, you may also benefit from coordinating investment income with retirement contributions, and other income-planning strategies may help reduce or avoid the additional 3.8% tax.
Charitable efforts are affected by several new rules. If you are a nonitemizer, you may deduct qualifying cash gifts up to $2,000 (joint filers) or $1,000 (single filers). If you itemize, you are now subject to a 0.5% adjusted gross income floor, while top-bracket taxpayers also face the broader limitation on itemized deductions discussed above. Potential strategies include bunching donations, contributing appreciated securities, using donor advised funds and making qualified charitable distributions directly from an IRA when eligible.
This area of tax planning signifies a major opportunity. Evaluate maximizing your employer-plan contributions, funding Roth IRAs, completing Roth conversions in lower-income years and using backdoor Roth strategies when appropriate. Those turning 73 in 2026 should carefully time their first required minimum distribution to avoid taking two taxable distributions in 2027.
Families have many areas to consider across education and estate planning, kiddie tax rules, expanded uses of 529 plans and the new Trump Accounts for eligible children. For wealth transfers, the 2026 annual gift tax exclusion is $19,000 per recipient, while the lifetime estate and gift tax exemption increases to $15 million per person. Be sure to regularly review your trusts, beneficiary designations, gifting strategies and the different income tax consequences of transferring assets during life versus at death.
The items above only scratch the surface, but they provide a starting point for conversations with your tax advisers. With year-end approaching, now is the time to act.
Access our practical year-end planning checklist and take a deep dive into tax planning insights for individuals in our comprehensive guide: “2026 Year-End Tax Planning Guide for Individuals.”
Contact Tim Kaiser, Michael Boncher or a member of your service team to discuss this topic further.
In this blog Cohen & Co is not rendering legal, accounting, investment, tax or other professional advice. Rather, the information contained in this blog is for general informational purposes only. Any decisions or actions based on the general information contained in this blog should be made or taken only after a detailed review of the specific facts, circumstances and current law with your professional advisers.