Don't Let Clients Miss These 7 Tax Benefits in 2026

The modified adjusted gross income limits above which the deduction begins to phase out are $75,000 for single filers and $150,000 for joint filers. The deduction fully phases out for single filers with incomes over $175,000 and $250,000 for couples.

Higher SALT Cap

One of the biggest changes in the tax rules starting with the 2026 tax year is the increase in the state and local tax deduction cap for most taxpayers. The cap increases from $10,000 to $40,000 for tax years 2026 through 2029, adjusted annually, for both single and married joint filers. For married taxpayers who file separately, the increased cap is $20,000.

While this is a particularly good opportunity for single clients, whose standard deduction is only $16,100, the higher SALT cap offers a chance for all clients to think through what they can deduct.

For some, simply taking the full deduction for their property taxes might put them over the threshold. Beyond this, they might consider bunching charitable donations or medical expenses into a single year before the cap resets. Theft and casualty losses due to a federally declared disaster in their area can also be deducted, as can mortgage and student loan interest.

For clients with income in the phase-out range — $500,000 to $600,000 for both individuals and couples — careful planning is important to avoid unpleasant surprises.

Student Loan Assistance

Student loan assistance for employees becomes a permanent tax-free benefit beginning with the 2026 tax year. Your client's employer can offer them up to $5,250 annually, to be indexed for inflation, in tax-free educational assistance benefits. This is a combined limit for student loan repayments and reimbursement of educational expenses like tuition.

Encourage clients with student loan debt to ask if their employer offers this benefit. For some employers, it may be a new offering, as student loan assistance was first allowed as a tax-free benefit in 2021, on a temporary basis.

This is also an important discussion to have with clients who have adult children with outstanding student loans. Not only will your clients appreciate this attention to their children, it is a good way to help build family wealth for the next generation.

Permanent Lower Income Tax Brackets

The OBBBA permanently extends the lower personal federal income tax brackets that were set to expire after 2025 in the Tax Cuts and Jobs Act. Note that this change only applies to federal tax brackets.

Higher Gift and Estate Tax Limits

The OBBBA made the higher lifetime gift and estate tax limits of the Tax Cuts and Jobs Act permanent. Additionally, the cap increases to $15 million per person in 2026, with $30 million for a married couple. This amount will be indexed for inflation.

One benefit for wealthy clients is, of course, the higher exemption limit itself. They can leave more to their heirs in lifetime gifts and upon their death. For many wealthier clients, this reduces or eliminates any worries about federal estate taxes. These higher limits can now be used to be able to plan with more certainty.

These limits can be especially helpful for clients who want to provide lifetime gifts to beneficiaries such as children or other relatives. In light of these changes, you might review how you are using life insurance in your client's estate plans.

This change makes it a good idea to revisit existing estate plans for some clients to ensure they are taking full advantage. Trusts, lifetime gifts and other tactics should be examined.

Immediate R&D Expensing

The OBBBA allows companies to fully expense research and development expenses paid or incurred after Dec. 31, 2024. The legislation also allows transitional rules for the immediate deduction of unamortized expenses paid or incurred from 2022 through 2024.

For clients who own businesses that incur these types of expenses, this can be very beneficial to the bottom line. Note that there are a number of provisions that will determine the amount and the exact types of expenses that can be deducted.

One of these provisions differentiates between domestic expenses and those incurred in a foreign country. Generally, R&D expenses incurred in a foreign country must still be amortized. This could lead your client to reassess where they incur these expenses and who they hire to do this work.

You should ensure that applicable clients are aware of this change and that they encourage their internal financial team and their accountant to look at the pros and cons of alternatives under this provision.

Permanent Qualified Business Income Deduction  

The qualified business income (QBI) deduction is another tax break that is now permanent under the OBBBA. This allows eligible clients who are self-employed to deduct up to 20% of their qualifying business income on their return.

Many pass-through entities may qualify for the QBI deduction, including:

• Sole proprietorships
• Limited liability companies (LLCs)
• S corporations
• Partnerships

Additionally, some trusts may also qualify.

For clients whose business may qualify, it's important to review the rules surrounding this tax break as part of the overall planning work you do with them. Note that this deduction is available whether your clients itemize or take the standard deduction. For clients who own applicable small businesses, this deduction can be significant.