2026 tax changes for people earning $100K or more

0:00 I just finished reviewing a client's tax projection for 2026. And what I found actually shocked me. This person makes around $180,000 per year. They have solid income, does everything by the book, but because of the new tax changes from the big beautiful bill, they were about to leave over $14,000 in tax savings on the table. And here's the thing, their CPA had no idea these changes even apply to them. If you're making $100,000 or more, whether you're W2, business owner, or somewhere in between, there are at least seven major tax changes hitting in 2026 that could either save you a significant amount of money or cost you if you don't plan for them. Now, what I've seen is that most tax professionals are still catching up on these rules. Some of these provisions were literally just released by the IRS in the last few weeks. Here's what we're going to cover. First is the new standard deduction amounts and why they matter more than most people think. And then we're going to talk about the changes to the itemized deductions, including the massive salt cap increase that affects people in high tax states. And after that, I'm going to walk you through the new tips and overtime deductions, even if you don't think they apply to you. And then we'll get into the retirement contribution changes, followed by the business owner provisions that can literally eliminate your tax liability if you use them correctly. That last part is what most people completely miss. So, let's get into it. Now, I work with clients who earn anywhere from a h 100,000 to several million dollars a year. And I've been tracking every single update from the big beautiful bill since it was signed into law in 2025. And what I can tell you from actually implementing these strategies is that the gap between people who plan around these changes and people who don't is getting wider. So, let's make sure that you're on the right side of the gap. Let's start with the

1:16 standard deduction because everyone's going to have to deal with this when they file. For 2026, the standard deduction is $16,100 if you're filing single and $24,150 for head of household and $32,200 if you're married filing jointly. Now, these numbers are slightly higher than 2025 due to inflation adjustments, but here's what most people don't realize. The big beautiful bill made these elevated standard deduction amounts permanent. Before this law passed, there was a real possibility these were going to revert back to much lower pre207 levels, and that's not happening anymore. Here's where it gets interesting for certain people. If you or your spouse is 65 or older, there's a brand new deduction that stacks on top of everything else. It's called the senior bonus deduction, and it's worth up to $6,000 per qualifying person. So, if both spouses qualify, that's up to $12,000 in additional deductions. This is separate from the regular additional standard deduction for seniors that already existed. Now, there is an income limit. This phases out starting at $75,000 for single filers and $150,000 for joint filers. So, if you're watching this and you have parents or family members who are seniors with moderate income, make sure they know about this.

2:11 It's available whether they itemize or take the standard deduction. Now, let's talk about itemized deductions because this is where things change significantly. The SAL cap, which stands for state and local tax deduction, just got a major increase. Previously, you could only deduct $10,000 of your state and local taxes. That cap has been raised to $40,000 for people with income under $500,000. If you're married finally separately, it's $20,000. For anyone living in high tax states like California, New York, New Jersey, or even certain counties with high property taxes, this is a significant change. Under the old rules, you might have been paying $25,000 or even $30,000 in stay in local taxes, but only getting to deduct $10,000. Now, you can deduct up to $40,000. Here's the math you need to look into. If you're stay in local taxes, plus your mortgage interest plus your charitable contributions plus your medical expenses that exceeds $7.5% of your income, add up to more than your standard deduction, then you should itemize. For a married couple, that threshold is $32,200. So, if you're paying $35,000 in state taxes alone, plus maybe $15,000 in mortgage interest, you're already well above that number.

3:05 One thing I should mention is that there's also new charitable deductions for people who take the standard deduction. You can now deduct up to $1,000 of charitable donations if you're single or $2,000 if you're filing jointly, even if you don't itemize it. It's not huge, but it's something that wasn't there before. Now, before you think this next part doesn't apply to you, hear me out. The big beautiful bill created two new deductions, one for qualified tips and one for qualified overtime compensation. These are available between 2025 to 2028. The tips deduction allows you to deduct up to $25,000 of tip income if you work in an occupation that customarily receives tips. The overtime deduction allows you to deduct the premium portion of your overtime pay up to $12,500 for single filers or up to $25,000 for joint filers. Now, here's a key detail that a lot of people miss. The overtime deduction only applies to the premium portion. So, if you make $50 an hour and you get time and a half for overtime, that's $75 an hour. The deduction only applies to the extra $25, not the full $75. These deductions phase out for people with income over $150,000 if you're single or $300,000 if you're joint. But even if you don't personally qualify, if you run a business with employees who work overtime or receive tips, this is something that you should communicate to them. It affects their withholding and the IRS released guidance requiring employers to update their systems to account for these new deductions. Now, quick pause here. I'm doing a free live master class this week where we're going to go much deeper on how to actually implement these strategies. We're going to be covering the specific tax moves that you should be making and how to structure your income and deductions for 2026. Also

4:22 going to go over how business owners can use the provisions I'm about to talk about to potentially pay zero in taxes legally. We're going to go live, you can ask questions, and we're going to cap attendance so I can actually help you. If you're interested, link is in the description. All right, so with that being said, let's keep going. Now, let's talk about retirement accounts because the limits just went up again. For 2026, you can contribute up to $24,500 to your 401k. If you're 50 or older, you can add another $8,000 in catch-up contributions. That's going to bring your total up to $32,500. Now, here's a new one. If you're between ages 60 and 63, there's a super catch-up that let you contribute up to $1,250 extra for a total of $35,750. For IAS, the limit is $7,500 or $8,600 if you're 50 or older. Now, if you're self-employed or you have a side business, the number gets even better. The total contribution limit for a solo 401k, including both employee and employer contributions, is $72,000 for 2026. If you're over 50, you can add the catch up on top of that, potentially getting over $80,000 into a tax advantage account in a single year. I also want to mention HSAs, which are health savings accounts. If you have a high deductible health plan, you can contribute $4,400 for individual coverage or $8750 for family coverage in 2026. If you're 55 or older, add another thousand dollar. HSAs are one of the only accounts that give you tax deduction going in, tax free growth, and then taxfree withdrawals when used for qualified medical expenses. It's a triple tax advantage that I think more people should be using. All right, now let's get into what I consider the most valuable changes for people who have any kind of business income. The QBI

5:38 deduction, which stands for qualified business income, has been made permanent. This is a 20% deduction that allows owners of pass through businesses like escorps and sole proprietorships to deduct up to 20% of the business income right off the top. Before the big beautiful bill, this deduction was scheduled to expire at the end of 2025. Now it's permanent, which means you can actually build strategies around it. There's also been an expansion to who qualifies. The phase and range for the income limitations has been increased from $100,000 to $150,000 for joint filers and from $50,000 to $75,000 for everyone else. What this means is that more business owners will qualify for at least a partial deduction even at higher income levels. And there's a new minimum deduction of $400 for anyone with at least $1,000 in qualified business income who materally participate in their business. It's not a huge amount, but ensures that even smaller operations get something. Now, here's one thing that can literally change everything for business owners who are making strategic investments. 100% bonus appreciation is back and is permanent. And let me explain why this matters. Bonus appreciation allows you to write off the full cost of qualifying business assets in the year you purchase them rather than spreading that deduction out over several years. Before the big beautiful bill, bonus depreciation was phasing down. It was at 60% in 2024. It was supposed to be 40% in 2025, 20% in 2026, and gone completely by 2027. Now, for any property acquired after January 19th of 2025, you get a 100% bonus appreciation permanently. This applies to equipment, machinery, vehicles over a certain weight, computers, furniture, and qualified improvement property. I

6:54 have clients who are using this to completely offset six and seven figureure incomes by making strategic purchases that grow their businesses while eliminating their tax liability at the same time. And here's something that a lot of people don't realize. You can claim bonus depreciation even if you finance the purchase. You don't have to pay cash. So, you can put $50,000 down on a $300,000 piece of equipment, claim the full $300,000 depreciation deduction, and create a massive tax benefit while preserving your cash. Section 179 also got an increase. The limit went from $1.25 million to $2.5 million with a phase out starting at $4 million in total purchases. Between section 179 and bonus appreciation, business owners have more flexibility than ever to manage their taxable income. Now, I know some of you are thinking, Preston, I already have a CPA. Shouldn't they be telling me all this? And look, I'm not here to throw your CPA under the bus. Most of them are good at what they do. But there's a difference between a tax preparer who files your return after the fact and a tax strategist who helps you plan throughout the year. The strategies I'm talking about require proactive planning. By the time you're sitting down in February to file your taxes, it's too late to implement most of this. I also hear a lot of people saying, "I'm a W2 employee. Does any of this actually apply to me?" The answer is yes. The standard deduction changes apply to you.

7:54 The all cap increase might apply to you if you itemize. The overtime deduction might apply to you. The retirement contribution increases definitely apply to you. And if you have any side income, rental property, or you're thinking about starting something on the side, the business provisions become relevant as well. I also see another group of people saying, "Okay, what if I just wait and see how things shake out?" Here's the thing. Most of these provisions already in effect or take effect January 1st of 2026. Waiting means that you're leaving money on the table. The people who plan around these rules in advance are the ones who benefit. And the people who wait end up overpaying, and they try to fix it after the fact, which is almost harder and sometimes even impossible to do. Let me leave you with this. You know more about the 2026 tax changes than most people do. And honestly, more than a lot of tax professionals who haven't even had the time to dig into all this yet. You know about the standard deduction amounts, the stall cap increases, the new deductions for tips and overtime, the retirement contribution limits, and the business provisions like the QBI and bonus appreciation that can dramatically reduce what you owe. Here's one thing you can do this week. Pull up your most recent tax return and look at your total tax liability. And then you want to ask yourself, am I taking advantage of all the deductions and the strategies that are available to me? And if you're not sure, that's a sign that you need better planning and not just better preparation. If you want to go deeper on all this and actually build a strategy for your specific situation, again, I'm hosting a free master class of this week. We're going to be covering the exact moves that you should be making based on your income level, whether you're W2 employee, business owner, or both. Link is in the description below.

9:05 And if you found this video helpful, comment the word 2026 below so I know to keep making content like this. If you have parents or family members who might benefit from the senior deduction we talked about, send them this video as well. That one provision alone could be worth over $6,000 or more to them. Hope you enjoy the video. Watch this video next at the YouTube algorithm recommends.