As we enter the holiday season and 2025 concludes, we believe it is important to make you aware of important year-end financial planning considerations shaped by the One Big Beautiful Bill Act (“OBBBA”) signed on July 4, 2025 and the significant changes scheduled for 2026 through 2028. These adjustments affect income tax planning, charitable strategies, retirement savings, long-term estate planning and business expensing.
We have also included our “2026 Threshold Guide” that highlights the federal adjustments from 2025 to 2026. Based on the new tax law, the next few years may provide a golden opportunity for tax planning. This brief summarizes the key provisions and planning opportunities for the coming year and beyond.
1. OBBBA Individual Income Tax Adjustments
■ SALT Deduction Returns: Beginning in 2026, the State and Local Tax (“SALT”) deduction cap increases to $40,000 for married couples and $20,000 for single filers through 2029, up from $10,000, but has modified adjusted gross income (“MAGI”) phaseouts of $505,000 for married filed joint filers and $252,500 for single filers.
■ Changes to Charitable Deductions: In 2026, itemized charitable deductions will be subject to a 0.5% adjusted gross income (“AGI”) floor and a 35% maximum-value cap, reducing the benefit for many higher-income households. As a result, we encourage clients in the top income tax brackets to consider adding to your donor advise funds (DAF) by year end 2025. The OBBBA does, however, introduce a new above-the-line charitable deduction—$1,000 for single filers or $2,000 for married couples with no income threshold—for direct cash gifts to public charities beginning in 2026.
■ Tax on Social Security: A new feature of the OBBBA is the potential for a partial deduction of Social Security benefits. Starting in 2026 up to 25% of taxable Social Security income may be deducted for eligible filers. The deduction phases out for taxable income between $120,000–$150,000 for single filers and $160,000–$200,000 for married couples. This provision remains in effect through 2028 at which point Congress must consider renewal or revision.
2. Retirement Savings and HSA Planning for 2026
■ Adjustments to Retirement Account Funding: Retirement savings rules become more generous and complicated in 2026 because of SECURE Act 2.0. Please refer to the “threshold guide” for highlighted adjustments from 2025 to 2026.
■ Roth 401(k) Election: This option is now offered in over 94% of employer plans—provide meaningful tax-free growth potential, we encourage clients with access to Roth 401(k)s to strongly consider this option for retirement funding and look forward to discussing if this strategy may be appropriate for you.
■ Health Savings Account (HSA): The contribution limits rise to $4,400 for individuals, $8,750 for families, with a $1,000 catch-up for those age 55+. Maximizing and investing HSA savings remains one of the most tax-efficient strategies for long-term healthcare planning. It is often described as a “super-Roth” (triple tax benefit of pre-tax contributions, no tax on growth, and no tax upon withdrawal). It may also serve as an excellent “bridge” to Medicare coverage for pre-65 retirees.
3. Estate Planning: Federal Estate and Gift Tax Planning
■ Federal Estate and Gift Tax Exemption: Beginning in 2026, the federal estate and gift tax exemption rises to $15,000,000 per individual and $30,000,000 for married couples.
■ Annual Gift Exclusion: The annual gift exclusion remains unchanged from 2025 to 2026, as it stays at $19,000 per recipient, or $38,000 for married couples.
■ Advanced Estate Planning: The pressure for advanced estate planning and accelerated gifting has subsided with the extension and increase of the estate tax exemption in the OBBBA. However, we remain focused on opportunities for lifetime gifting, trust-based planning, charitable strategies, and multigenerational wealth-transfer structures as this exemption is a political football that is not permanent. We are proactively available to review your personal circumstances as well as family members and friends, as we have plenty of arrows in the quiver to tackle this potential tax exposure.
4. Section 179 and Bonus Depreciation for Business Owners and Real Estate Investors
■ Optimizing the Benefits: The OBBBA expands opportunities for business owners and real estate investors to deduct capital investments immediately rather than depreciating them over time. These provisions can meaningfully reduce taxable income in years when significant purchases or improvements are made. We welcome the opportunity to have a strategy session with your tax professional to ensure you are maximizing these available benefits.
■ 100% Bonus Deprecation Returns: Bonus depreciation allows a 100% immediate deduction for qualifying assets with a useful life of 20 years or less, including equipment, technology, heavy vehicles, interior improvements, appliances, and many fixtures commonly upgraded in rental properties. It applies to both new and used property, offering broad planning flexibility and the potential for substantial tax benefits.
■ Applying Section 179: Section 179 expensing provisions are particularly valuable for businesses undertaking upgrades or expansions, and for rental property owners completing renovations or replacing major systems. In these matters, classification of the expense, repair, or improvement is key. Thoughtful timing of purchases and placed-in-service dates (post January 19, 2025) can significantly reduce tax burdens and improve overall cash flow. The reduced taxable income because of these deductions may also open the door for additional long-term strategies such as Roth conversions, capital gains tax offsetting, and more.
5. Review and Repeat
As most of our clients know, our 19-point Checklist is a centerpiece of our Wealth Planning program and allows us to provide proactive guidance and anticipatory service. As we transition to 2026, we will continue to highlight, design, and implement key strategies that are custom-tailored for the individual needs of our clients and their families.
PB FAM Private Wealth is here to guide you and your family through the ever-changing economic and financial landscape. Please call or e-mail a member of the team if there is anything we may assist with. We are always here for you and your family and remain honored by the opportunity to serve you. We wish you and yours a wonderful holiday season!
Source: Internal Revenue Service (IRS). Guidance Issued October 2025.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.