New Federal Tax Rules for 2026 and 2027: What Every Household Should Know
New Federal Tax Rules for 2026 and 2027
Ten federal tax rules took effect this year. One more is arriving in 2027. Here's a clear, household-level breakdown of what changed — and what it means for you.
Live for 2026
Standard Deduction
- $16,100 — Single filers
- $32,200 — Married filing jointly
Senior Deduction (Ages 65+, 2025–2028)
- Up to $6,000 per person
- Phases out above $75,000 single / $150,000 joint
- Works alongside the standard deduction (not a replacement)
0% Capital Gains Bracket
- Up to $98,900 — Married filing jointly
- Up to $49,450 — Single
- Long-term gains on appreciated assets are tax-free below these thresholds
401(k) Contribution Limit
- $24,500 base limit
- $8,000 catch-up for filers 50 and older
- $11,250 super catch-up for filers ages 60–63
Roth Catch-Up Mandate
- If 2025 FICA wages exceeded $150,000: all catch-up contributions must now go to a Roth account
- Affects high earners using the 50+ or 60–63 catch-up
Estate & Gift Exemption
- $15 million per person for 2026
- Annual gift exclusion is $19,000 per recipient (no reporting required under this amount)
SALT Cap
- $40,400 — up from $10,000
- Phases back to $10,000 above $505,000 in income
- Major benefit for households in high-tax states
Charity (No Itemizing Required)
- $1,000 — Single filer
- $2,000 — Married filing jointly
- New above-the-line deduction for cash charitable gifts, even for standard deduction filers
529 Plans for K-12
- $20,000 per year — doubled from $10,000
- Now includes tutoring expenses alongside private school tuition
ACA Subsidy Cliff
- 400% FPL cliff is back for 2026
- $1 over the income threshold ends the premium tax credit entirely
- Critical for early retirees managing income before Medicare
Coming in 2027
The Saver's Match
Starting in 2027, the Saver's Credit becomes a direct deposit into your retirement account rather than a credit on your return. Washington will match 50% of your first $2,000 saved — up to $1,000 — paid directly into your qualifying retirement account.
Income limits apply. The match cannot go into a Roth IRA.
The Bigger Picture
Several of these provisions are temporary — the Senior Bonus Deduction runs through 2028, the super catch-up window is only four years wide, and the ACA cliff affects early retirees who depend on subsidized marketplace coverage.
The next two years represent one of the most favorable planning environments many retirees will ever have — higher deductions, a wider 0% capital gains bracket, and an expanded 401(k) contribution ceiling all at once.
Want to Know More? Here's the Truth.
Knowing the rules is step one. Using them in a coordinated strategy — where your Roth conversions stay below IRMAA thresholds, your capital gains land in the 0% bracket, and your charitable giving uses QCDs from your IRA — is where the real savings are.
Scott Borhauer builds retirement tax plans that account for all of these moving pieces simultaneously. If you haven't reviewed your plan in light of the 2026 changes, now is the time.
Not individualized tax or financial advice. Tax law subject to change. Consult a qualified tax advisor.
About the Author
Scott Borhauer
Scott Borhauer is the founder and principal advisor of Smart Life Financial, where he designs retirement income, tax, and estate strategies for federal employees, business owners, and pre-retirees. His work centers on the arithmetic most people never get shown — Roth conversion sequencing, Social Security timing, and the tax cost of doing nothing — and he coordinates with CPAs and estate attorneys to execute the plan, not just write it. Licensed insurance producer, NPN 20016169.
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