With President Donald Trump's tax and spending bill signed into law, advisors will now shift to putting the One Big Beautiful Bill Act into practice. "The emphasis is no longer on 'what might expire tomorrow,' but instead on how to optimize within current laws while anticipating where incremental changes are most likely to happen," according to Jeff Bush of The Washington Update.
The OBBBA provided "stability and predictability" for advisors, Bush said. "The new tax code makes minor adjustments to the existing code, but essentially, it remains the same with key elements like individual rate brackets, standard deductions, and AMT thresholds now secure and unlikely to face near-term expiration."
As a result, "2026 will be a year of relative stability, giving advisors a solid foundation for multi-year planning," according to Bush.
Bush spoke via email with ThinkAdvisor about the tax planning landscape in 2026, along with "wild card" retirement legislation that could be in the offing, and what to expect from the Internal Revenue Service.
THINKADVISOR: What’s your biggest takeaway from the One Big Beautiful Bill?
JEFF BUSH: Stability does not mean stagnation. Inflation indexing continues to increase deduction amounts, bracket thresholds and exemptions. Even without changes to statutory rates, effective tax outcomes will shift, especially for higher-income households, retirees with growing distributions, and business owners experiencing income fluctuations.
THINKADVISOR: You mention that effective tax rates may vary for high-income households. Can you explain that further?
BUSH: Specifically, high-income W-2 households are most at risk of their effective tax rates actually increasing. The majority of filers will see a decrease, but this group could experience the opposite.
THINKADVISOR: Why?
BUSH: There are several changes in the new code that may raise a filer’s effective tax rate.
1. Itemized deductions are limited to 35%, compared to the 37% marginal rate
2. 401(k) catch-up provisions forced to Roth if FICA income exceeds $150,000
3. Charitable deductions are only deductible if they exceed 0.5% of the contribution base (generally AGI)
4. Pease limit now includes a 100% haircut to deductions
5. AMT phase-out accelerated to $500,000 for single filers and $1 million for joint filers.
THINKADVISOR: There were some positives for filers too, right?
BUSH: Absolutely. One of the most important planning factors for 2026 is the expanded state and local tax (SALT) deduction cap, which now allows for significantly higher deductions — but only within a specific time frame. While this provides much-needed relief for clients in high-tax states, the key planning point is timing. It’s only a temporary increase until 2030, and it’s limited to families earning less than $500,000 in MAGI.
THINKADVISOR: Is charitable planning still a key concern for advisors, and are there any changes expected for 2026?
BUSH: The new tax law worsened the divide between itemizers and non-itemizers.
For itemizers, charitable deductions continue to be a valuable planning tool — especially when integrated with the expanded SALT cap, mortgage interest, and income smoothing strategies.
For non-itemizers, the new tax code includes an above-the-line charitable deduction. From a planning perspective, advisors should assist non-itemizing clients in shifting their charitable goals toward tax efficiency rather than just tax deduction — using QCDs, donation bundling, appreciated assets, or strategic timing to maximize impact even without itemized deductions.
THINKADVISOR: Which strategies should advisors review?
BUSH: Advisors should continue to emphasize:
— Donation bundling strategies focus on consolidating charitable contributions into one tax year to exceed the standard deduction limit, thus maximizing deduction benefits for clients who do not itemize.
— Donor-advised funds as tools for timing deductions while retaining flexibility in grant distributions.
— Qualified charitable distributions for clients over age 70½, especially those who no longer itemize but want tax-efficient giving directly from IRAs.
THINKADVISOR: Any wild cards you’re watching in 2026 that advisors should be aware of?
BUSH: I’m keeping an eye out for Secure Act 3.0.
Although no major retirement legislation is planned for 2026, retirement policy remains a possible target for bipartisan action. Much of the discussion in Washington centers on a potential Secure Act 3.0, which would build on previous Secure legislation.
Rather than completely overhauling retirement taxation, Secure Act 3.0 is more likely to focus on:
— Refinements to catch-up contribution rules
— Continue the trend of “Rothification” of retirement in the U.S.
— Additional incentives to encourage small employer plan adoption
— Technical adjustments to RMD rules
THINKADVISOR: Any thoughts on the Affordable Care Act premium tax credit status?
BUSH: These credits, expanded during the pandemic, expired at the end of 2025 and will remain expired without congressional action. If that occurs, many early retirees, self-employed individuals, and small-business owners could face a significant increase in health care costs.
Because ACA subsidies are closely linked to modified adjusted gross income, any change here directly affects:
— Roth conversion strategies
— Capital gain realization
— Retirement timing
— An extension of enhanced ACA credits continues to be a viable legislative option, especially considering the political sensitivity around health care affordability. Advisors should model both scenarios and prepare clients to be flexible.
THINKADVISOR: What can we expect from the IRS this year?
BUSH: Even in a relatively stable tax environment, compliance continues to evolve. The IRS is consistently improving data matching, reporting systems, and enforcement effectiveness. While this doesn't necessarily result in more audits, it does narrow the margin for error.
Advisors should highlight the importance of accurate withholding, estimated payments and documentation — especially for clients with multiple income streams, charitable deductions or complex retirement distributions.
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