2026 Tax Shift: What to Watch—and Plan For
Tax rules are slated for major updates beginning next year. That makes the coming year a useful benchmark for today’s rates—and a good time to understand what’s changing. Below are the key items to keep on your radar.
Bracket changes ahead
Several income tax brackets will reset in 2026:
The 12% bracket rises to 15%.
The 22% bracket moves to 25%.
The top rate increases from 37% to 39.6%.
If you fall within these bands, expect a higher bill once the new rates apply.
Estate tax thresholds are dropping
Estate rules face a significant adjustment. The current exemption is $14 million per individual (and $28 million for married couples). In 2026, those amounts are set to fall to $7 million and $14 million, respectively. Amounts above the exemption can be taxed at roughly 40%, a meaningful factor for larger estates.
SALT deduction cap lifts
The State and Local Tax (SALT) deduction—currently capped at $10,000 for itemizers—is scheduled to have no cap beginning in 2026. Taxpayers in high-tax states could see relief as the full amount of state and local taxes paid becomes deductible again.
AMT may hit more households
The Alternative Minimum Tax (AMT) becomes more relevant as exemptions decline starting in 2026. With lower AMT shield levels, more higher-income filers may find themselves within AMT territory.
QBI deduction remains a key lever
Owners of eligible pass-through entities may continue to benefit from the Qualified Business Income (QBI) deduction, which allows certain businesses to deduct 20% of qualified net business income. For partnership and S corporation owners, this provision can materially reduce overall liability.
Final takeaways
The 2026 updates could affect your cash flow, estate exposure, and overall strategy—from higher brackets to lower estate exemptions, along with a potential lift on SALT and ongoing opportunities like QBI. Reviewing your situation now can help you avoid surprises and position you to take advantage of what the law allows.
If you’d like a tailored review of how these changes may impact you, FMD Wealth Advisors can coordinate with your tax professional to map out proactive steps before the new rules take effect. Book your Free - Intro Call here.
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