Savvy Tax Moves Before 2026

by | Oct 25, 2023 | Uncategorized

Since 2017, taxpayers have been enjoying the tax cuts provided by the Tax Cuts and Jobs Act. Now, at the end of 2025 they are due to expire unless extended by Congress. That leaves you about two years to take advantage of the tax cuts and avoid the consequences of not planning for your, and your family’s, financial future.

The Tax Cuts and Jobs Act (TCJA), among other initiatives, lowered individual income-tax rates, raised the estate-tax exemption, and nearly doubled the standard deduction. Here are a few pieces we suggest discussing with a qualified advisor.

Income Taxes

Income-tax brackets are set to revert to their higher pre-2017 levels at the end of 2025. People in the highest tax bracket may see their marginal tax rate jump from 37% to 39.6%. What can you do today to plan for this? One way is to get more money into Roth 401Ks and Roth IRAs. Both accounts allow you to pay today’s tax rates while never worrying about the future’s higher tax rates, assuming you follow the Roth guidelines. You can get money into Roth accounts through your employer’s 401K plan, by contributing to a Roth IRA (if you meet the income requirements), or by converting a pre-tax IRA to a Roth IRA. Be sure to speak with a qualified advisor before taking action.

Estate Taxes

Individuals currently have a lifetime estate tax exemption of just under $13 million. This means you can gift up to ~$13 million to others, either during lifetime or at death, without triggering federal estate taxes. Amounts over this $13 million, or $26 million for a married couple, are taxed at tax rates up to 40%! However, at the end of 2025, this exemption amount will be cut by about half to roughly $7 million per individual, which means the steep estate tax will impact many more households. The consequences of not acting can be dire. If your family does not have the liquid assets to pay an estate tax, they may have to sell long-held family assets such as houses or businesses.

Thankfully, individuals and households with a net worth near or above these limits can implement planning strategies today that lock in the current higher exemption amounts, mitigating the risk of needing to sell meaningful family assets just to pay steep estate taxes. Now is the time to act!


Ready to start planning for a brighter future? Call today at (408) 840-4030, or contact our team online.