Why You Should Care About Your 2026 Taxes Now
It's not too early to prepare for the possibility that your taxes will go up in 2026.


After filing your state and federal tax returns, it’s tempting to move on to more rewarding pursuits. But there are good reasons to start to prepare for the possibility that your taxes will rise in 2026.
Provisions in the 2017 Tax Cuts and Jobs Act (TCJA) that lowered individual tax rates, doubled the standard deduction and shielded the vast majority of estates from federal estate taxes are scheduled to expire on December 31, 2025. Many Republicans in the House of Representatives have called for making the individual tax provisions of the TCJA permanent, which would add a projected $3 trillion to the federal deficit over 10 years, according to the Congressional Budget Office.
President Biden supports extending the individual tax cuts for most families but wants to pair the extension with higher taxes on high-income households and corporations. If Congress and the White House fail to reach an agreement by the end of 2025, tax rates will automatically revert to 2017 levels.

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Although taxpayers in the top brackets would be hit hardest, the majority of taxpayers would see their taxes go up, says the Tax Foundation’s Erica York. “The law didn’t just lower the top tax rate—it lowered rates throughout the entire tax system,” she says.
Federal estate tax in 2026
An end to the individual tax pro-visions in the TCJA would also increase the number of taxpayers who are subject to the federal estate tax. In 2024, up to $13.61 million in assets is exempt from estate tax, or up to $27.22 million for a married couple.
If the law expires, the exemption will drop to half of that amount, on an inflation-adjusted basis—about $7 million for a single person or $14 million for a couple.
While the majority of taxpayers would still be exempt from federal estate taxes under those thresholds, a couple with a well-funded retirement account, a home they’ve owned for many years and other taxable assets could end up owing estate taxes, “even though they’re not rolling in money,” says Lawrence D. Mandelker, an attorney with Venable LLP in New York City.
- The most effective way to avoid estate taxes is to take advantage of the annual gift tax exclusion.
- In 2024, you can give away up to $18,000 (or $36,000 as a married couple) to as many people as you’d like without filing a gift tax return.
In addition to reducing the size of your estate for federal estate tax purposes, taking advantage of the annual gift tax exclusion may also help you avoid state taxes on your estate. Twelve states and Washington, D.C., have lower estate tax exemptions than the federal government. Oregon, for example, taxes estates valued at more than $1 million.
You can give away even more money tax-free by making direct payments to cover a beneficiary’s medical bills or college tuition costs. There are no limits on the amount you can give, as long as the payments are made directly to a medical or educational institution.
Taxes on required minimum distributions
An increase in tax rates could also make withdrawals from your traditional IRAs and other tax-deferred accounts more expensive. Even if you don’t need the money, you’ll have to take required minimum distributions (RMDs) when you turn 73 (the age for RMDs will increase to 75 in 2033) and pay taxes on those withdrawals at your ordinary income rate, which could be higher in 2026 than it is now.
Converting some of the funds in your traditional IRA to a Roth is one strategy to consider because withdrawals from a Roth are tax-free as long as you’re 591⁄2 or older and have owned the Roth for at least five years.
While a Roth conversion will protect your savings from future tax hikes, a large conversion could push you into a higher tax bracket and trigger other unexpected consequences, such as the ones below:
- A high-income surcharge on Medicare Part B premiums
- Taxes on Social Security benefits
- Higher taxes on investment income
For that reason, consider spreading out conversions and converting just enough to remain within your income tax bracket.
If you’re 701⁄2 or older, you can also reduce the size of future RMDs by making a qualified charitable distribution from your IRA. In 2024, you can transfer up to $100,000 from your traditional IRA to a qualified charity (or to multiple charities). The contribution isn’t deductible, but in addition to shrinking the size of your IRA, it will reduce your adjusted gross income, which could lower your federal and state taxes and shield you from the Medicare surcharge. If you’re 73 or older, it will also count toward your RMD.
Tax planning for the future
Don’t let the threat of higher tax rates compel you to make decisions you’ll regret later, such as giving away money you may need for long-term care. And keep in mind that even if overall tax rates go up in 2026, your personal tax rate could decline, says Timothy Steffen, director of advance planning for Baird. For example, if you retire at the end of 2025, you could fall into a lower tax bracket in 2026, he says.
Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
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Block joined Kiplinger in June 2012 from USA Today, where she was a reporter and personal finance columnist for more than 15 years. Prior to that, she worked for the Akron Beacon-Journal and Dow Jones Newswires. In 1993, she was a Knight-Bagehot fellow in economics and business journalism at the Columbia University Graduate School of Journalism. She has a BA in communications from Bethany College in Bethany, W.Va.
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