As 2025 comes to a close, one of the most important planning conversations on the horizon has to do with tax law changes. Specifically, what happens when many of the individual tax provisions from the Tax Cuts and Jobs Act (TCJA) of 2017 are scheduled to expire at the end of 2025.
Unless Congress acts to extend or modify those rules, the tax landscape will look very different starting in 2026. And while we’re not in the business of scare tactics, we do believe it’s wise to plan ahead—especially when it comes to your income, your retirement, and your estate.
Here’s what’s changing, what it could mean for you, and how we’re helping clients prepare for a smoother, more intentional 2026.
What Tax Law Changes Are Coming in 2026?
The TCJA introduced several temporary provisions that were designed to sunset after eight years. If lawmakers don’t intervene, many individual-focused tax rules will revert to their pre-2018 form. That includes:
- Higher tax rates: The TCJA lowered marginal tax rates across income brackets. In 2026, those rates will increase—returning to what they were prior to the law’s passage.
- A lower standard deduction: The nearly doubled standard deduction will shrink. Personal exemptions, which were eliminated under the TCJA, will return.
- The end of certain deductions: The cap on state and local tax (SALT) deductions—currently $10,000—is expected to expire. That means more taxpayers in high-tax states may be able to deduct more. The deduction for qualified business income (QBI) from pass-through entities will also sunset.
- A reduced estate and gift tax exemption: The federal estate and gift tax exemption is currently at a historic high. If no new legislation is passed, it will drop by roughly half in 2026—reducing the amount you can pass on tax-free.
Together, these changes could add up to a very different financial environment—especially for families in their peak earning and retirement planning years.
Why This Matters for You
While the exact impact will depend on your situation, many Americans—especially those in the middle- to upper-income brackets—could face higher taxes in 2026.
Data from USAFacts shows that the TCJA lowered average tax rates for most income groups, especially those earning between $50,000 and $200,000. If the law expires without changes, effective tax rates will climb back up—meaning you could owe more even if your income stays the same.
That has ripple effects across:
- Retirement income strategies
- Charitable giving plans
- Estate and legacy planning
- Business income and pass-through entities
That’s why we encourage our clients to look at 2025 as a year for strategic planning, not scrambling at the end of the year.
What You Can Do in the New Year
The good news is that you don’t have to have it all figured out today. But the beginning of the year is a perfect time to revisit your plan with this upcoming change in mind. Here are a few places we’re focusing with clients heading into 2026:
Review Your Income Plan
If you expect to be in a higher tax bracket in 2026, it may be smart to realize more income in 2025. This could include things like Roth IRA conversions or harvesting capital gains, depending on your broader goals and tax bracket.
This isn’t about timing the market or making hasty moves. It’s about understanding how current tax rates could work in your favor while they’re still in place.
Explore Estate Planning Moves
If leaving a legacy is important to you, 2025 may be the last year to take full advantage of the current federal estate exemption. You don’t need to give everything away to benefit—but some forward-thinking strategies like gifting, trusts, or charitable contributions could make a big difference for the next generation.
Even if you already have an estate plan in place, it may be time for a review to see if it still aligns with the new tax horizon.
Think About Charitable Giving Timing
A smaller standard deduction in 2026 may make it harder to deduct annual charitable gifts. You might want to consider “bunching” several years’ worth of giving into 2025 or setting up a donor-advised fund to preserve flexibility and tax efficiency.
The goal is to make sure your generosity continues to have the greatest possible impact, both personally and financially.
Our Approach
We don’t believe in financial planning by panic or headlines. But we do believe in using timely changes like this one as an opportunity to review your strategy with intention.
At SD Capital, we take the time to listen, learn what matters most to you, and make sure your plan reflects your values, not just your numbers. That’s why we’re encouraging early-year conversations about the 2026 changes now. It gives you time to weigh options, take action if needed, and move forward with confidence.
Whether we decide to act or simply monitor together, the best plans start with early, honest conversations.
Ready to Talk Strategy?
If you’re wondering how these tax law changes might impact you, let’s talk. Whether we end up recommending a few simple adjustments or more significant steps, we’ll walk through it together—just like we always do.
When you’re ready to take the next step, schedule an introductory call with us here.
The opinions expressed in this material are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is not a guarantee of future results. All indices are unmanaged and cannot be invested in directly.
Investing involves risk, including the potential loss of principal. No investment strategy can guarantee success or protect against loss in all market conditions.
This material is not intended to be a substitute for individualized financial, tax, or legal advice. Please consult your financial advisor, tax professional, or legal counsel regarding your specific situation.
