Key Numbers

Key figures — 2025 vs 2026

Standard deductions & add-ons

Adoption credit

Alternative Minimum Tax (AMT)

Charitable deductions

Child tax credit (CTC) & dependent credit

Educator classroom expenses

¹ Educator expenses above this limit may be claimed as an itemized deduction

Earned income tax credit (EITC)

Expatriation

Foreign earned income exclusion

Itemized deductions

Kiddie tax

Medicare taxes: Additional Medicare tax + NIIT (net investment income tax)

Nanny tax

Overtime deduction

“Saver’s Credit” (Elective Deferrals and IRA or ABLE Contributions by Certain Individuals)

Senior deduction (individuals age 65 or older)

Standard mileage rates & tip income deduction

Reading these tables:

• These are federal ordinary income rate schedules based on taxable income.
• The U.S. system is progressive: income is taxed in layers.
• These tables are one piece of the picture—other taxes and limits may apply (e.g., payroll taxes, AMT, NIIT, credits, phaseouts, capital gain schedules).

2026 Federal Income Tax Rate Schedules (Individuals, Trusts, and Estates)

Single taxpayers

Married filing jointly and surviving spouses

Married individuals filing separately

Heads of household

Trusts and estates

Trusts and estates reach the highest federal ordinary income tax bracket at much lower income levels than individuals. This is often referred to as having compressed tax brackets.

Planning note: Because trust and estate brackets are compressed, retaining income inside a trust or estate can sometimes create higher federal income tax costs than distributing income to beneficiaries. The right approach depends on the trust terms, beneficiary circumstances, cash flow needs, and broader estate plan.

2027 Federal Income Tax Rate Schedules (Individuals, Trusts, and Estates) — pending IRS release

The IRS has not released the 2027 inflation-adjusted rate schedules yet — they are typically issued by mid-December. We’ll add them to this page as soon as they’re out.

Why this matters for planning: Many decisions—Roth conversions, bonus timing, retirement withdrawals, capital gain realization, and estimated taxes—benefit from knowing your likely bracket thresholds. When 2027 brackets are pending, you can still plan effectively by focusing on directional bracket management and building a buffer.

Planning for 2027 with 2026 brackets:

• Use 2026 brackets to estimate your current marginal bracket and how much “room” you may have before the next bracket.
• Assume 2027 bracket thresholds will likely be somewhat higher than 2026 due to inflation indexing—but don’t rely on a specific increase.
• For close-call decisions (e.g., a large Roth conversion), consider a conservative approach: leave extra room below the next bracket and revisit once 2027 brackets are published.
• If your income is highly variable (bonus/commission/business income), plan withholding/estimates to avoid penalties even if brackets move modestly.

Inflation adjustment note (client-facing): Bracket thresholds are updated using cost-of-living adjustment rules that reference the C-CPI-U inflation measure. Because the C-CPI-U is based on a 12-month period ending in August and final August data timing occurs in September, the final 2027 figures are not finalized as of August 6, 2026.

Key figures — 2025 vs 2026

Adoption assistance programs (exclusion)

Earnings subject to FICA taxes (taxable wage base) & rates

¹ An additional Medicare (HI) employee contribution rate of 0.9% (for a total employee contribution of 2.35%, and a total combined Medicare contribution rate of 3.8%) is assessed on wages exceeding $200,000 ($250,000 for married couples filing joint returns, $125,000 for married individuals filing separate returns). For married individuals filing joint returns, the additional 0.9% tax applies to the couples combined wages (to the extent the combined wages exceed $250,000).

Health insurance deduction for self-employed

Qualified transportation fringe benefits

Section 179 expensing

Small business tax credit for providing health-care coverage

Special additional first-year depreciation allowance (bonus depreciation)

² For property acquired after January 19, 2025

Standard mileage rate (per mile) — business use

Key figures — 2025 vs 2026

American Opportunity & Lifetime Learning credits

Coverdell education savings accounts

Deduction for student loan interest

Gift tax exclusion / 529 front-loading amounts (as provided)

Kiddie tax

U.S. savings bonds interest exclusion for college expenses

Key figures — 2025 vs 2026

Eligible long-term care premium deduction limits

Per diem limit (LTC periodic payments)

Archer Medical Savings Accounts (MSAs)

Flexible spending account (FSA) for health care

Health Savings Accounts (HSAs) & HDHP thresholds

Key figures — 2025 vs 2026

¹ Basic exclusion amount plus deceased spousal unused exclusion amount (exclusion is portable for 2011 and later years)² The GST tax exemption is not portable

2025 and 2026 gift and estate tax rate schedule

Credit shelter amount $13,990,000 in 2025 and $15,000,000 in 2026Unified credit amount $5,541,800 in 2025 and $5,945,800 in 2026

Key figures — 2025 vs 2026

Social Security

¹ An additional 0.9% Medicare/hospital insurance tax (for a total employee contribution of 2.35%) is assessed on wages exceeding $200,000 ($250,000 for married couples filing joint returns, $125,000 for married individuals filing separate returns). An additional 0.9% Medicare/hospital insurance tax (for a total Medicare portion of 3.8%) is assessed on self-employment income exceeding $200,000 ($250,000 for married couples filing joint returns, $125,000 for married individuals filing separate returns).

Medicare

² This is the standard Part B premium amount. However, some people who get Social Security benefits will pay more or less than this amount.

Medicaid

³ Amounts listed actually effective as of July of prior year; different amounts apply to Alaska and Hawaii.

Key figures — 2025 vs 2026

Employee/individual contribution limits

¹ Must aggregate employee contributions to all 401(k), 403(b), SAR-SEP, and SIMPLE plans of all employers. 457(b) plan contributions are not aggregated. For SAR-SEPs, the percentage limit is 25% of compensation reduced by elective deferrals (effectively, a 20% maximum contribution).

² Special catch-up limits may also apply to 403(b) and 457(b) plan participants.

Employer contribution/benefit limits

³ For self-employed individuals, compensation generally means earned income. This means that, for qualified plans, deductible contributions for a self-employed individual are limited to 20% of net earnings from self-employment (net profits minus self-employment tax deduction), and special rules apply in calculating the annual additions limit.

Compensation limits/thresholds

IRA deductibility & Roth IRA phaseouts

Qualified charitable distribution (QCD)

Key figures — 2025 vs 2026

Maximum tax on long-term capital gains and qualified dividends

Unearned income Medicare contribution tax (NIIT)

Before Year-End

• Income & bracket check: Estimate taxable income and identify bracket thresholds.
• Withholding/estimated payments: Update W-4/withholding and confirm estimated payments if needed.
• Charitable giving plan: Confirm amounts, timing, and whether cash vs. appreciated assets fits best.
• Investment tax actions: Consider tax-loss harvesting, gain management, and rebalancing with tax awareness.
• Retirement contributions: Confirm plan deferrals and deadlines; evaluate Roth vs. traditional.
• Business year-end moves (if applicable): Review payroll, owner pay, deductible expenses, capital purchases, and bookkeeping clean-up.
• Document review: Confirm beneficiaries and store key documents securely.

Early in the Year

• Organize tax documents: W-2/1099s, brokerage statements, K-1s, charitable receipts, medical/HSA records.
• Confirm prior-year tax outcomes: Use last year’s return to refine withholding, estimates, and planning assumptions.
• Set a quarterly cadence: Schedule check-ins for estimated taxes, cash flow, and major financial moves.

After a Major Life Event

• Job change, bonus/RSU event, relocation, marriage/divorce, birth/adoption, inheritance, business sale/purchase, retirement, home purchase/sale, large medical event, death in the family.
• Action: Re-run the tax projection, update beneficiaries, revise insurance coverage, and coordinate estate documents and cash flow planning.

Individual Income Tax Planning

The basics:

• Taxable income vs. gross income: Tax brackets apply to taxable income, not your salary or total income.
• Gross income includes wages, interest, dividends, business income, retirement distributions, etc.
• Taxable income is generally gross income minus allowable adjustments and deductions (standard or itemized), after applying tax rules.
• Marginal vs. effective tax rate:
• Marginal rate = the rate on your next dollar of taxable income.
• Effective rate = your average rate across all taxable income layers.
• Moving into a higher bracket does not mean all your income is taxed at the higher rate—only the portion in that bracket.
• Withholding & estimated payments: Many “surprise balances due” happen because withholding/estimates didn’t keep up with income changes (job change, bonus, RSUs, business profit, investment income, retirement distributions).
• Standard vs. itemized deductions:
• If itemizing, watch timing of deductible items (e.g., charitable gifts, certain state/local taxes, mortgage interest where applicable).
• If not itemizing, consider strategies like bunching deductions (especially charitable giving) into one year.
• Credits: Certain credits (e.g., child/dependent-related, education-related) can reduce tax directly and may phase out based on income and other factors.
• AMT / NIIT caveat: Some households may be affected by Alternative Minimum Tax (AMT) and/or Net Investment Income Tax (NIIT) depending on income sources and levels.
• Deductions vs. credits:
• Deductions reduce taxable income.
• Credits reduce tax dollar-for-dollar (and some may be partly refundable).

Where planning helps:

• Bracket management (“fill the bracket”): If you expect higher income next year (or expiring deductions), you may consider pulling income forward; if you expect lower income next year, consider deferring income where possible.
• Timing deductions: Some households can benefit by accelerating or bunching deductions into one year (often charitable gifts) and taking the standard deduction the next year.
• Retirement distribution planning: Coordinate IRA/401(k) withdrawals, Roth conversions, and taxable account sales to manage brackets, Medicare premiums, and investment surtaxes.
• Charitable strategies: Consider whether donating cash vs. appreciated investments fits your goals and tax situation.
• Family & dependent planning: Filing status, child/dependent rules, and who claims which benefits can meaningfully impact total family tax.

Common mistakes we see:

• Under-withholding: Raises the chance of a large balance due (and possible penalties), especially with bonuses, multiple jobs, RSUs, or investment income.
• Confusing “gross pay” with taxable income: Bracket decisions require an estimate of taxable income after deductions/adjustments.
• Overlooking surtaxes/thresholds: NIIT and Medicare-related thresholds can change the after-tax result of additional income.
• Forgetting state tax impact: Moves that look good federally may differ at the state level (and vice versa).

Before year-end:

• Estimate year-end taxable income and likely marginal bracket.
• Identify large income events (bonus, RSU vesting, Roth conversions, IRA/retirement withdrawals, business profit, capital gains).
• Review deductible opportunities and timing (charitable gifts, business expenses, certain medical items where applicable).
• Check withholding/estimates after major income events.

Worth asking:

• What is our expected filing status and taxable income this year vs. next year?
• Are we near a bracket threshold where timing income/deductions could help?
• Do we need to adjust withholding/estimated payments due to investment or business income?
• Are we exposed to AMT, NIIT, or Medicare premium thresholds based on this year’s income mix?
• What records should we keep now to support deductions/credits and simplify next year’s planning?

Business Planning

Business owner checklist:

What matters most:

• Entity choice affects taxes and risk: Your legal/tax structure (sole prop, partnership, S-corp, C-corp) can change payroll taxes, income taxes, deductions, and liability exposure.
• Owner pay matters: How owners are paid (W-2 wages, guaranteed payments, distributions, dividends) drives payroll tax, retirement plan contributions, and audit risk.
• Estimated taxes are not optional: Many business owners should plan quarterly cash set-asides and make timely payments to avoid penalties.
• Bookkeeping is a tax strategy: Clean books improve deductions, reduce missed opportunities, and support financing and valuation.
• State and local compliance: Nexus, residency, and payroll rules can create unexpected filings and tax bills.

Where planning helps:

• Entity & compensation planning: Review whether your current entity still fits your income level, payroll taxes, benefit goals, and growth plans.
• Accountable plan: A properly run accountable plan can reimburse eligible business expenses without turning them into taxable wages (documentation is key).
• Depreciation & capital expenditures: Map equipment/software/vehicle purchases and placed-in-service timing; coordinate with cash flow and operational needs.
• Retirement plans for owners and employees: Explore plan design and deadlines (SEP/SIMPLE/401(k)-type plans). Good design can increase owner savings and improve recruiting/retention.
• QBI: Some businesses may qualify for a deduction under QBI rules, subject to limitations—coordinate with entity choice, wages, and business type.
• Succession planning: Even small businesses benefit from a basic plan (key person risk, buy-sell concepts, continuity, and valuation awareness).
• Year-end income/expense timing: Evaluate invoicing, collections, bonuses, and deductible expenditures within the rules that apply to your accounting method.

Common mistakes we see:

• Contractor vs. employee misclassification: Can trigger penalties and back payroll taxes; review roles and documentation.
• Poor documentation: Meals, travel, vehicle use, and home office-type items can be disallowed without substantiation.
• Missing payroll/benefit deadlines: Late filings and late deposits can create costly penalties.
• Underestimating cash needs: Taxes, payroll, and inventory can strain cash flow—plan proactively.

Worth asking:

• Is our current entity structure still a fit based on profitability, payroll taxes, and risk?
• Are owner wages/distributions/reimbursements set up correctly and documented?
• What’s our estimated-tax plan and cash reserve target for taxes?
• Are we taking all eligible deductions with proper documentation?
• Should we adopt or redesign a retirement plan for owners/employees?
• Do we have any exposure in payroll, contractor classification, or state filings?

Education Planning

Checklist:

What to coordinate:

• Multiple benefits can’t always be “stacked”: Some education benefits interact; coordination determines which combination is most valuable.
• Who claims the student matters: Dependency and filing decisions can drive who can claim education-related tax benefits.
• Timing of payments can matter: Paying tuition in late December vs. early January can shift eligibility across tax years (within the applicable rules).

Where planning helps:

• 529 plans: Review contributions, investment choices, and beneficiary updates; coordinate withdrawals with eligible education costs and timing.
• Education credits: Some credits may apply for qualifying education expenses, subject to income limitations and other requirements.
• Scholarships and grants: Confirm how awards affect qualified expenses and any taxable portions.
• Student loan interest: Interest may be deductible for some taxpayers depending on income and other rules.
• Coordination with other support: If parents, grandparents, and the student all contribute, set a plan for who pays what and when to maximize benefits and avoid mistakes.

Common mistakes we see:

• Paying from the “wrong” account without a plan: The funding source can affect which benefits are available.
• Documentation gaps: Keep bills, statements, and proof of payment and enrollment.
• Assuming benefits apply automatically: Many benefits require specific eligibility and reporting.

Worth asking:

• Are we maximizing education-related tax benefits we may qualify for?
• Is our 529 funding strategy aligned with timelines and risk tolerance?
• Who should claim the student and which education benefits should we target this year?
• Do we need a payment timing plan across December/January?

Protection Planning

Checklist:

Risk management is part of tax planning:

• A strong protection plan can prevent forced taxable events (e.g., selling investments at the wrong time) and keep long-term plans intact.
• Small coverage gaps often show up during life transitions—new home, new baby, job change, business growth, or retirement.

Where planning helps:

• Insurance review: Confirm coverage types and amounts align with current risks and responsibilities.
• Life insurance: Income replacement, debt coverage, estate liquidity, and family protection.
• Disability insurance: Often a key risk for working households.
• Long-term care planning: Consider options and affordability; align with family support plans.
• Property & casualty: Homeowners/renters/auto; verify deductibles, replacement costs, and special riders (jewelry, collectibles, flood, etc.).
• Umbrella liability: Often a cost-effective layer of protection.
• Health insurance & HSAs: If eligible, HSAs can be a tax-advantaged tool; confirm contributions, investment approach, and recordkeeping.
• Emergency reserves: Liquidity helps avoid tax-inefficient moves during unexpected events.
• Beneficiary designations: Keep beneficiaries aligned with intent (especially after marriage/divorce/remarriage, births, deaths).
• Document storage: Maintain a secure system for policies, account lists, estate documents, and key contacts.

Common mistakes we see:

• Outdated beneficiaries: One of the most common (and painful) planning failures.
• Insuring the wrong risk: Overpaying for low-impact risks while underinsuring high-impact ones (income loss, liability).
• No centralized “family file”: In emergencies, delays create financial and tax problems.

Worth asking:

• What risks would most disrupt the plan, and are we insured appropriately?
• Have family, income, debts, or responsibilities changed?
• Are our beneficiaries and document storage system current and accessible?

Estate Planning

Checklist:

What to prioritize:

• Core documents: Keep wills, powers of attorney, and health care directives current.
• Beneficiary designations often control: Retirement accounts and insurance commonly pass by beneficiary designation—review regularly and coordinate with the overall plan.
• Titling matters: Ensure asset titling and account ownership match the estate plan (especially for jointly held assets and trusts).
• Basis is a tax lever: Cost basis impacts future capital gains; decisions around gifting vs. holding can change the family’s after-tax outcome.
• Trust taxation is different: Trusts and estates can hit high tax brackets quickly (compressed brackets), so distribution decisions can have tax consequences.

Where planning helps:

• Family communication: Clarify roles (executors/trustees/agents), key intentions, and where documents are stored.
• Gifting: Consider whether gifts support family goals; confirm reporting needs and long-term impact.
• Estate liquidity planning: Plan for cash needs (taxes, expenses, equalization among heirs, business succession).
• Charitable strategies: Charitable giving can be integrated into estate planning and income-tax planning.
• Trust income planning: Coordinate trust distributions and beneficiary tax brackets where appropriate and consistent with the trust terms.

Common mistakes we see:

• Plan-document mismatch: Beneficiary designations and account titling that contradict the will/trust.
• Outdated documents after life changes: Marriage, divorce, remarriage, relocation, business changes, and births/deaths.
• No plan for digital assets: Access issues can delay administration and create cost.

Worth asking:

• Do our documents and beneficiaries reflect current wishes?
• Should we consider gifting, trusts, or updates due to life changes or asset growth?
• Do we anticipate liquidity needs or family complexities that should be planned for now?
• Are any trusts creating avoidable income tax due to compressed brackets?

Government Benefits

The short version:

Coordination is the win:

• Social Security planning: Claiming age choices affect lifetime benefits; coordinate with retirement income plan and survivor considerations.
• Medicare planning: Enrollment timing matters; premiums can be affected by income in some cases (IRMAA awareness).
• Medicaid: Long-term care and eligibility rules are complex and state-specific—plan early if relevant.
• Other benefits: Unemployment, disability, and veterans benefits may have tax and income-planning implications depending on the program.

Where planning helps:

• Coordinate benefit timing with taxable income: Withdrawals, Roth conversions, and capital gains can affect Medicare premiums and taxation of benefits.
• Enrollment deadlines: Avoid coverage gaps and penalties by planning Medicare enrollment and employer coverage transitions.
• Long-term care planning: If Medicaid planning may be relevant, start early and get state-specific advice.

Common mistakes we see:

• Missing enrollment windows: Can cause lifetime penalties or delayed coverage.
• Ignoring income-related premium thresholds: Higher income years may increase Medicare premiums later.
• Not integrating benefits into withdrawal planning: Benefits and withdrawals should be modeled together.

Worth asking:

• What is our Social Security claiming strategy and why?
• Are there upcoming Medicare enrollment decisions or income changes to plan for?
• Could this year’s income affect future Medicare premiums, and should we manage income timing?
• Do we need a plan for long-term care costs and potential benefit coordination?

Retirement Planning

Checklist:

What to coordinate:

• Contribution strategy: Employer plans and IRAs can be powerful tools; align contributions with cash flow, employer match, and tax goals.
• Traditional vs. Roth: Traditional contributions may reduce current taxable income; Roth strategies may increase taxable income now but can reduce future taxable withdrawals.
• Catch-up contributions (general concept): Many plans allow larger contributions at certain ages—confirm eligibility and deadlines with your plan provider.
• Self-employed options: Business owners may have additional plan choices; plan design can materially change savings capacity.
• RMD awareness: Required distributions can affect taxes and Medicare-related income thresholds; plan ahead.
• Beneficiaries matter: Beneficiary designations on retirement accounts can drive tax outcomes for heirs.

Where planning helps:

• Roth conversions (multi-year): Consider partial conversions with bracket management; plan how to pay the tax and how conversions affect Medicare premiums and surtaxes.
• Withdrawal sequencing: Coordinate taxable, tax-deferred, and Roth accounts to manage brackets and keep flexibility.
• Health care costs: Build a plan for premiums, out-of-pocket costs, and long-term care; integrate HSA strategy if eligible.
• Social Security integration: Coordinate claiming decisions with portfolio withdrawals and tax planning.

Common mistakes we see:

• Missing employer match: Often the highest-return “investment” available.
• Ignoring RMDs until the deadline year: Can force high taxable income and higher Medicare premiums.
• Beneficiary mistakes: Outdated or inconsistent beneficiaries can derail estate intentions.

Worth asking:

• Should we fill up a bracket with Roth conversions this year?
• Are we on track for RMDs and future cash-flow needs?
• Are we using the best mix of Roth vs. traditional contributions for our long-term plan?
• How do Social Security and Medicare considerations affect our retirement income strategy?

Investment Planning

Checklist:

Tax-aware investing:

• Capital gains vs. ordinary income: Different income types may be taxed differently; planning starts with knowing what type of income you’re generating.
• Qualified dividends: May be taxed differently than ordinary income; confirm how your holdings are producing income.
• NIIT caveat: Some households may face additional investment-related taxes depending on circumstances.
• Asset location matters: Where you hold investments (taxable vs. tax-deferred vs. Roth) can affect after-tax results.

Where planning helps:

• Tax-loss harvesting: Harvest losses where appropriate to offset gains and manage taxable income (watch wash sale rules and portfolio alignment).
• Capital gain harvesting: In some situations, realizing gains strategically can reset basis and manage future taxes.
• Charitable gifting of appreciated assets: For charitable households, donating appreciated investments can be more tax-efficient than donating cash.
• Municipal bonds: May be appropriate for some taxable investors; compare after-tax yields and state considerations.
• Concentrated positions: Develop a plan for risk reduction (gradual sales, diversification strategies, charitable approaches) while managing taxes.
• Rebalancing: Keep risk aligned with goals; coordinate rebalancing with tax impact and cash needs.
• Fees and implementation: Costs and trading activity affect returns; review investment fees, turnover, and fund distributions.

Common mistakes we see:

• Unplanned taxable distributions: Funds can distribute gains even if you didn’t sell—review holdings and tax characteristics.
• Ignoring state taxes: State treatment of capital gains and municipal interest varies.
• Letting taxes drive everything: Tax planning supports investment goals; it shouldn’t override risk/return needs.

Worth asking:

• Do we have embedded gains/losses we should manage before year-end?
• Is our asset location optimized for taxes and long-term goals?
• Do we have concentrated risk that needs a plan?
• Are we coordinating charitable goals with our investment and tax strategy?