2026 U.S. Tax Law Changes

Here’s an in-depth, reader-friendly blog post on the significant 2026 U.S. tax law changes—what’s morphing, who it affects, and how to prepare:

📉 1. Tax Rates & Brackets Revert to Pre-TCJA Levels

Ordinary income brackets increase: after current 10–37% rates expire December 31, 2025, top rate rises back to 39.6%, with other brackets increasing (e.g., 12 → 15%, 22 → 25%) horizon-advisors.com+1coldstream.com+1 forbes.com+3falconwealthplanning.com+3coldstream.com+3.
Capital gains tax again tied to bracket, likely boosting your long-term gain taxes .

🏠 2. Standard Deduction & Personal Exemptions

Standard deduction shrinks dramatically:
- Married filing jointly: from ~$29k (2024) to ≈ $16.6k
- Single: from ~$14.6k to ≈ $8.3k coldstream.com+2forbes.com+2smithkesler.com+2.
Personal exemptions return (~$5,300 per filer/dependent), previously eliminated nypost.com+15forbes.com+15wiss.com+15.

🧾 3. Itemized Deductions & SALT

SALT ($10k cap) lifted, allowing full deduction of state/local taxes again marketwatch.com+14wiss.com+14forbes.com+14.
Miscellaneous itemized deductions (e.g., investment fees, tax prep) return above 2% AGI bessemertrust.com+2coldstream.com+2horizon-advisors.com+2.
Pease limitation returns: reduces itemized benefits by 3% of AGI above thresholds washingtonpost.com+15wiss.com+15claconnect.com+15.

🏡 4. Mortgage & HELOC Interest

Deductible mortgage interest capped at $1 million (up from $750k), and HELOC interest deductible again up to $100k coldstream.com+4forbes.com+4claconnect.com+4.

🛡️ 5. Alternative Minimum Tax (AMT) Returns

AMT exemption reverts to lower pre-2018 levels, meaning more taxpayers — especially high earners or those with many deductions — may face AMT horizon-advisors.com+3wiss.com+3smithkesler.com+3.

👨‍👩‍👧‍👦 6. Family & Education Credits

Child Tax Credit shrinks to $1,000 per child (from $2,000), with tighter AGI phaseouts wiss.com.
Other education and care tax breaks (e.g., AOTC, Lifetime Learning Credit) might face stricter eligibility or cuts kiplinger.com+1reddit.com+1.

💼 7. Business & Investment Provisions

QBI deduction (Section 199A) for pass-through income ends—no more 20% break horizon-advisors.com+6wiss.com+6coldstream.com+6.
Bonus depreciation phases out: 20% left in 2026, gone in 2027 wsj.com+15wiss.com+15fraimcpa.com+15.
Business interest deduction limits tighten, back to pre-2018 rules wiss.com.
International tax breaks (GILTI/FDII) become less favorable wiss.com.

💰 8. Estate, Gift & Generation‑Skipping Taxes

Lifetime exemptions halve: from ~$14 million to about $7 million per person, adjusted for inflation fraimcpa.com+1falconwealthplanning.com+1.
GST exemption follows suit washingtonpost.com+8wsj.com+8en.wikipedia.org+8.

🔎 9. More IRS Audits on the Way

IRS audit rates targeting wealthy individuals, large corporations, and partnerships will surge in 2026, but small businesses (< $400k income) remain unaffected irs.gov+1nypost.com+1.

🧭 What It Means & How to Act

Tax Change	Who’s Affected	Planner’s Moves
Higher brackets & reinstated AMT	Middle and high earners	Accelerate income & deductions into 2025
Lower standard deduction	Most households	Bunch deductions; consider itemizing
Return of SALT, mortgage, exemptions	Homeowners, high-tax states, larger families	Shift deductions to 2026
QBI & bonus depreciation	Small business owners	Convert income/deductions timing; consider entity restructure
Estate/gift changes	High-net-worth individuals	Gift, trust, and estate planning now
More IRS scrutiny	Wealthier filers	Tighten tax reporting; ensure compliance

🧠 Final Outlook

These reverts reflect sunset clauses from the 2017 Tax Cuts & Jobs Act, poised to sharply reverse benefits for individuals and businesses in 2026. However, proposed extensions (e.g., in the “Big Beautiful Bill”) could alter outcomes smithkesler.com+8bessemertrust.com+8falconwealthplanning.com+8 marketwatch.com coldstream.com+2smithkesler.com+2wiss.com+2 coldstream.com+1smithkesler.com+1 forbes.com gobankingrates.com+1coldstream.com+1 en.wikipedia.org nypost.com.

✅ Bottom line: 2026 could bring tougher taxes—so proactive planning in 2024–25 is essential, especially if you’re facing higher income, hefty itemized deductions, acrued business income, or estate planning needs. ElementWise capitalization

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