Gustin Furlow Newsletter
The Gustin Furlow Group 1st Quarter 2026 Newsletter Every year, the IRS reviews key figures – like income tax brackets, retirement contribution limits and estate tax thresholds – and adjusts them as needed to account for inflation. For 2026, those updates come alongside additional changes stemming from the One Big Beautiful Bill Act (OBBBA), passed in the summer of 2025. Here’s what you need to know, and how you can work with your advisor to stay prepared: Personal Income Tax The new standard deductions for 2026: Married filing jointly: $32,200 Takeaway: The OBBBA permanently increased the standard deduction, making it more difficult for some to itemize their deductions in 2026 and beyond – which means your tax payments, mortgage interest and charitable contributions are less likely to provide you a tax benefit. However, the increased limit to the state and local tax deduction could have the opposite effect, making it easier to itemize. While bunching your charitable contributions may be an effective strategy to use here, new provisions created by the OBBBA make techniques around mitigating taxes very dependent on each individual situation – so be sure to connect with our team to develop the best strategy for your situation. Retirement Savings Contributions For participants aged 50 and up, the catch-up contribution limit has increased to $8,000. Meanwhile, the additional “super catch-up” contribution limit for employees aged 60-63, introduced in 2025, fell to $3,250 – meaning those participants can contribute a total catch-up amount of $11,250. Additionally, a new rule for 2026 will require employees considered “highly compensated” (those who made $150,000 or more from the retirement plan sponsor in 2025) to make catch-up contributions to a Roth account – which means you won’t get a tax deduction in the year of the contribution, but will get tax-free income later in retirement. There are other rules around this as well, so check with your employer about how this applies to you. Traditional and Roth IRA contribution limits have increased to $7,500, and the thresholds on who can qualify for a Roth contribution have also changed: Married couples with income below $242,000 can make a full Roth contribution in 2026, as can singles with income below $153,000. Those are up from $236,000 and $150,000, respectively, in 2025. Takeaway: Make sure you assess your retirement contributions to ensure you’re maximizing your benefits. Keep in mind the phaseout ranges have changed; couples with income over $252,000 (and singles over $168,000) are not eligible to contribute to a Roth IRA in 2026. Barring any legislative or other changes, it remains an option for those under the applicable income levels. Social Security Takeaway: Although inflation has slowed compared to prior years, prices remain elevated to pre-2024 levels. This may require you to view your cash flow strategy to help ensure your retirement income keeps pace wtih ongoing costs. As always, retirees have many factors to consider when choosing their start date for benefits – including how your start date could impact a surviving spouse. And especially as we wait to find out the future of the Social Security program, it’s best to weigh all your options before deciding when to begin benefits. Estate Taxes and Gifting By contrast, the lifetime exemption amount increased $1,010,000 per person, up to $15 million per individual. This increase means that a married couple can shield a total of $30 million from federal estate or gift tax. Those individuals who used their full exemption in recent years will now be able to make an additional tax-free gift to family members or others. Takeaway: The $15 million lifetime gift and estate tax exemption is a significant shift from prior expectations that the exemption would fall to as low as $7 million in 2026 (before the passing of the OBBBA). Because of this, those with a net worth between $7 million and $15 million (or between $14 and $30 million for couples) now have more flexibility. Planning around gift and estate taxes will now be most vital for families with very large estates. However, basic estate planning – such as reviewing powers of attorney and beneficiary designations – is still important for all individuals. Although these changes won’t affect you until you file your 2026 taxes in the spring of 2027, they can be of tremendous help in your tax planning over the course of the year. Remember that certain kinds of planning strategies can take months or even years to implement. To get out in front of your taxes for next year and beyond, reach out to our team. The information offered is provided to you for informational purposes only. Robert W. Baird & Co. Incorporated is not a legal or tax services provider and you are strongly encouraged to seek the advice of the appropriate professional advisors before taking any action. The information reflected on this page are Baird expert opinions today and are subject to change. The information provided here has not taken into consideration the investment goals or needs of any specific investor and investors should not make any investment decisions based solely on this information. Past performance is not a guarantee of future results. All investments have some level of risk, and investors have different time horizons, goals and risk tolerances, so speak to your Baird Financial Advisor before taking action. Mark Gustin, RICP, QPFC William Furlow, CFP® Erin Nowakowski Crystal Rutta The Gustin Furlow Group Baird – Nationally recognized as a great place to work since 2004. |