Important Financial Planning Changes for 2026

Key Points

• Cost‑of‑living adjustment (COLA) for Social Security benefits rises by 2.8% for 2026, slightly higher than 2025’s 2.5% increase.
• Employees aged 60‑63 can still make a “super‑catch‑up contribution” of $11,250 for 2026, if their plan allows.
• New IRS rules require catch‑up contributions to be Roth (after‑tax) for high‑income earners beginning in 2026.

Important Changes Coming in 2026

As we approach the new year, it’s important to keep up with regulatory changes affecting taxes, retirement savings, and Social Security. For 2026, the IRS has issued annual inflation adjustments across key thresholds and contribution limits.

Notable IRS Tax Adjustments

Standard Deductions:

• Single taxpayers: $16,100
• Married filing jointly: $32,200
• Head of household: $24,150
  
  

  Marginal Tax Rates:

• 37% for individual single taxpayers with incomes greater than $640,600 ($768,700 for married couples filing jointly).
• 35% for incomes over $256,225 ($512,450 for married couples filing jointly).
• 32% for incomes over $201,775 ($403,550 for married couples filing jointly).
• 24% for incomes over $105,700 ($211,400 for married couples filing jointly).
• 22% for incomes over $50,400 ($100,800 for married couples filing jointly).
• 12% for incomes over $12,400 ($24,800 for married couples filing jointly).
• 10% for incomes of single individuals with incomes of $12,400 or less ($24,800 for married couples filing jointly).

   

  Other Key Adjustments 

• The estate tax credit (basic exclusion amount) increases to $15,000,000 per individual.
• The annual gift tax exclusion remains $19,000 per recipient.
• The Alternative Minimum Tax (AMT) exemption amount for 2026 is approximately $90,100 for single filers and $140,200 for married couples filing jointly, with phaseouts starting at about $500,000 (single) and $1,000,000 (joint).

   

  Click here for a full list of the 2026 IRS Tax Adjustments.
  
  

  Changes to Social Security in 2026

• Cost‑of‑living adjustment (COLA) rises by 2.8% for 2026, higher than the 2.5% increase in 2025. This 2.8% bump will take effect with benefits payable in January 2026 for most recipients. For the average retired worker, this translates to about a $56 monthly increase, bringing the typical benefit to around $2,071 per month. 
• Maximum earnings subject to Social Security taxes (the wage base) increases to $184,500 in 2026, up from $176,100 in 2025.
• Maximum Social Security benefit at full retirement age (FRA) also rises for 2026. For those who delay claiming benefits until age 70, the maximum monthly benefit increases to about $5,251 (from $5,108 in 2025). 
• Social Security benefits for widows, widowers and the disabled will increase by the same COLA percentage (2.8%), meaning average survivor and disability checks also see a proportional boost.
• The Annual Retirement Earnings test exempt amounts will increase in 2026, to read more about this click here. 
  
  

• Make sure to update your annual Social Security payment in WealthTrace to ensure your plan projections are as accurate as possible.

  Updated IRA / 401(k) Contribution Limits for 2026

  
  401(k) and Retirement Plan Limits

• 401(k), 403(b), and most 457 plans: $24,500 standard deferral limit.
• Catch‑up contributions (ages 50+): $8,000, up from $7,500 in 2025.
• Super catch‑up (ages 60‑63): $11,250 (unchanged).
• Total possible 401(k) contribution (base + catch‑up): up to $32,500 for 50+ and $35,750 for ages 60‑63 (if allowed).

New Roth Requirement: Starting in 2026, high‑income employees (based on prior year wages) must make catch‑up contributions as Roth (after tax) rather than traditional pre‑tax contributions.

IRA Contribution Limits

• IRA annual limit: $7,500 (up from $7,000 in 2025) for 2026.
• IRA catch‑up contribution (age 50+): $1,100.

 
You can update your annual 401(k) and IRA contributions in WealthTrace.

Year‑End 2025 and Early 2026 Reminders

• You can make 2025 IRA contributions up until April 15, 2026.
• If you exceeded 2025 IRA limits, withdraw excess contributions by the tax return due date to avoid penalties.

• RMDs (Required Minimum Distributions) generally must be taken by December 31, to avoid a 25% excise tax. This tax can be lowered to 10% if the RMD is timely corrected within two years.

  Update the following items in WealthTrace:
• • IRA/401(k) contributions
  • Social Security payments
  • Annual Expenses
  • Goals & Additional expenses
  • Current balance of assets & liabilities

Are you really prepared for retirement? If you aren’t sure, sign up for a free trial of WealthTrace to build your financial and retirement plan today.