There are a slew of changes in January 2026 pertaining to taxation. In this blog, we’ll cover the major ones you need to know about.
Before we get started, we are financial advisors in Morristown, New Jersey and we help people retire in New Jersey and across the country. You may want to check out these financial planning blogs we’ve written:
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Let’s get into it! Here are the major changes in the tax code in 2026, and its impact on the tools we use for wealth accumulation.
IRA limit changes for 2026
IRAs limits have changed for 2026, increasing to $7,500 from $7,000. The IRA catch-up limit for people older than 50 is now $1,100, up from $1,000 last year.
Roth-only catch up contributions
As of January 1st, 2026, anyone earning more than $150,000 who is making catch-up contributions must make them on a Roth basis (if your plan offers such an option). This means these contributions will be taxed at the ordinary income tax rate instead of being taxed upon distribution when they are withdrawn at RMD age. This applies to retirement plans such as 401(k)’s and 403(b)’s.
Higher standard deduction for seniors
The standard deduction will be $32,200 for taxpayers who are married and filing jointly, and $16,100 for single or married filing separately in 2026. For head of household, the standard deduction is $24,150.
If you are age 65 or older, you may receive an additional deduction of $2,050 (single or head of household) or $1,650 (married filing jointly or separately).
Social Security COLA
Every year around October, the Social Security administration releases what is called a Social Security COLA for the year coming up. COLA stands for “cost of living adjustment.” The Social Security COLA is 2.8% for 2026.
RMD age (Required minimum distribution)
The RMD age is now 73. If you turn 73 in 2026 you must take a distribution from your retirement accounts. There are a few special circumstances, such as deferring your first RMD until April 2027, or continuing to defer RMDs at employer plans while actively working.
Increase in Federal tax brackets
There have been some changes to Federal tax brackets in 2026. The rates did not change; the income ranges increased. This means that you won’t get pushed into a higher tax bracket as easily if your income went up.
According to the IRS, the new tax brackets are:
- 37% for individual single taxpayers with incomes over $640,600 ($768,700 for married couples filing jointly)
- 35% for incomes over $256,225 ($512,450 for married couples filing jointly);
- 32% for incomes over $201,775 ($403,550 for married couples filing jointly);
- 24% for incomes over $105,700 ($211,400 for married couples filing jointly);
- 22% for incomes over $50,400 ($100,800 for married couples filing jointly);
- 12% for incomes over $12,400 ($24,800 for married couples filing jointly).
Charitable gift deduction changes
In the recent past, you weren’t able to deduct your charitable donations if you take the standard deduction. However, starting in 2026, you can deduct up to $1,000. If you are married filing jointly, you can deduct up to $2,000.
Also, charitable deductions are capped at 35% (as opposed to 37% in the past) for top tax bracket taxpayers. Furthermore, there is a new 0.5% AGI floor for taxpayers who itemize deductions. These two changes reduce deductions for high income taxpayers.
Thinking about retiring in 2026?
Retirement is a big transition and you may be wondering how to keep all it all under wraps – and the 2026 tax changes don’t make it any easier. We are financial advisors in Morristown, NJ serving the local community and beyond. If you have questions about tax planning, retirement strategy, retiring in New Jersey, affording to live there, or (like us) are just plain old Bruce Springsteen fans, reach out and send us a message.
It’s important to note that this advice is general in nature and nothing may be interpreted as a recommendation specific to any one individual. We are not CPAs or tax advisors. As such, please consult with your tax or financial advisor for recommendations that apply to your personal situation.
Sources
CBIZ. 19 November, 2025. Roth Catch-up Rule Changes Take Effect January 1, 2026. https://www.cbiz.com/insights/article/roth-catch-up-rule-changes-take-effect-january-1-2026?utm_source=chatgpt.com
DAFgiving360. What the One Big Beautiful Bill means for charitable giving. https://www.dafgiving360.org/tax-law-changes
IRS. 13 November, 2025. 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500. https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500
IRS. 9 October, 2025. IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill. https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
Parys, Sabrina. 7 January, 2026. NerdWallet. Standard Deduction for 2025 and 2026: Amounts, When to Take. https://www.nerdwallet.com/taxes/learn/standard-deduction
Social Security Administration. 2026 Social Security Changes. https://www.ssa.gov/news/en/cola/factsheets/2026.html