3 Key Tax Changes for U.S. Investors in 2026

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12 minutes ago

January 28, 2026

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Julia Wendling

Article & Editing

Ryan Bellefontaine
Jenna Ross

Graphics & Design

Jennifer West

The following content is sponsored by New York Life Investments

3 Key Tax Changes for U.S. Investors in 2026

Tax rules rarely sit still, so 2026 could bring meaningful planning ripple effects. As a result, many households may want a fresh look at deductions, transfers, and savings.

This graphic, in partnership with New York Life Investments, shows three key tax-law shifts for U.S. investors using data from the Internal Revenue Service.

1. A New SALT (State & Local Tax) Cap

For households that itemize deductions, the SALT deduction cap jumps from $10,000 to $40,000.

Consequently, in an illustrative example of a married couple filing jointly in the 32% bracket with $40,000 in state and local taxes, federal tax savings rise from $3,200 to $12,800.

Here is a table that shows the old and new SALT caps and the illustrative federal tax savings.

Deduction	Federal Tax Saved
Old SALT cap ($10,000)	$3,200
New SALT cap ($40,000)	$12,800

Based on a married couple filing jointly, in the 32% tax bracket, with income below the SALT phase-out and $40,000 in state and local taxes.

However, the benefit can swing widely by state. New York ($7,092) leads the nation, while South Dakota ($1,033) trails, with big coastal states also near the top.

Meanwhile, state tax differences can compound over time for investors.

2. A Rise in the Federal Estate and Gift Tax Exemption

In 2026, the federal lifetime estate and gift tax exemption rises from $13.99M to $15.00M per person. That added headroom can help reduce forced asset sales during wealth transfers.

Here is a table showing the result if someone invested the roughly $1M difference at a 10% annual return, which is the average since 1957.

Year	Total Savings (Millions of U.S. Dollars)
0	1.0
1	1.1
2	1.2
3	1.3
4	1.5
5	1.6
6	1.8
7	2.0
8	2.2
9	2.4
10	2.6

Average annual return on the S&P 500 since 1957. For illustrative purposes only. Past performance is not a guarantee of future results.

Although results will vary, and markets don’t move in straight lines, it could approach $2.6M after a decade.

3. New Rules for Extra Retirement Contributions After Age 50

The IRS raised the 401(k) elective deferral limit to $24,500 for 2026, up from $23,500 in 2025. At the same time, the age-50 catch-up limit increases from $7,500 to $8,000.

Year	Base contribution	Catch-up contribution
2025	$23,500.00	$7,500.00
2026	$24,500.00	$8,000.00

Amounts shown are the IRS maximum employee deferral limits for 401(k), 403(b), and governmental 457 plans for individuals age 50 and older. Beginning in 2026, the $8,000 catch-up portion must be made with money that has already been taxed for workers whose prior year wages from that employer exceed the income threshold in the law, approximately $150,000 for 2026 contributions. Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60-63 if their plan allows. The catch-up would be $11,250 (totaling $35,750).

However, the SECURE 2.0 retirement package adds a twist: certain higher earners must make catch-up contributions after-tax as Roth. Because of that, investors may rethink how they balance pre-tax and Roth savings.

What These Key Tax Changes Mean for Investors

Taken together, these Key Tax Changes can free up after-tax cash flow and broaden long-term options. Yet each outcome depends on income levels, itemizing behavior, plan rules, and macro trends such as interest rate changes.

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3 Key Tax Changes for U.S. Investors in 2026