Prepare for Major Tax Changes in 2026: Key Updates You Need to Know
The 2017 Tax Cuts and Jobs Act (TCJA) brought significant changes to the tax code, many of which are set to expire at the end of 2025. Here are some of the key changes that will take effect in 2026:
***Changes in Deductions and Exemptions***
• Standard Deduction: Currently $14,600 for single filers and $29,200 for married filing jointly, will drop to $8,300 and $16,600 respectively.
• Personal Exemptions: Currently $0, will be reinstated at $5,300 per individual, spouse, and dependent child.
• Salt and Local Tax (SALT) Deduction: The $10,000 cap on state and local tax deductions will be eliminated.
***Mortgage Interest Deduction Changes***
• Current Rule: Interest on new mortgages is tax-deductible up to $750,000 of mortgage debt.
• 2026 Rule: The limit reverts to $1 million for mortgage debt, and interest on home equity lines of credit (HELOCs) will be deductible up to $100,000, regardless of how the proceeds are used.
These changes will affect taxpayers in various ways, potentially increasing tax liabilities for some while providing benefits for others, especially those in high-tax states or with many dependents.
Please contact us today to optimize your tax strategy.