Big tax changes arrive in 2026 — watch for these 3 hidden traps before it’s too late

Tax planning tips for 2026 OBBBA changes: The One Big Beautiful Bill Act (OBBBA) is set to bring major changes to the federal tax code in 2026. While the law introduces new credits and deductions that could reduce your tax bill, it also contains hidden traps that could limit or even eliminate potential savings, as per a report.

Tax Changes in 2026: Seniors' Extra Savings With Income Limits

One of the biggest changes is the new seniors deduction. Individuals over 65 can claim up to $6,000 in extra deductions on Social Security, while married couples filing jointly can claim up to $12,000, as per a Moneywise report. However, this deduction is only available through 2028, so seniors who delay Social Security benefits until age 70 could miss some of these savings.

How Income Thresholds Could Reduce Your Seniors Deduction

Income thresholds also apply. For singles, the deduction phases out above $75,000 and disappears entirely at $175,000. For married couples filing jointly, the phaseout starts at $150,000 and ends at $250,000. Large capital gains or Roth conversions could push taxpayers over these limits, reducing deductions by thousands of dollars. Spreading gains or conversions over multiple years can help avoid this trap.


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Who Benefits Most From SALT Deduction Updates

The OBBBA also updates the State and Local Tax (SALT) deduction. Since 2025, the cap has increased from $10,000 to $40,000, with an expected 1% annual increase through 2029 before reverting to $10,000 in 2030, as per the Moneywise report. High-income families in states like New York, California, New Jersey, and Connecticut are the main beneficiaries.

SALT Deduction Changes: Higher Caps, But Watch Your Income

The deduction is phased out for incomes above $500,000. Realizing big investment gains, selling rental property, or receiving a large bonus could push taxpayers over the limit and cause them to miss out on this deduction, as per the Moneywise report.

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Alternative Tax Benefits for High-Income Earners

Even if you don’t qualify for SALT, commercial real estate investments provide other tax benefits. Owners of income-producing properties may deduct up to 20% of qualified rental income under the Qualified Business Income (QBI) deduction. Section 1031 exchanges allow deferral of capital gains by reinvesting proceeds into like-kind properties, as per the Moneywise report. Accredited investors can also access commercial properties through First National Realty Partners (FNRP), earning passive income without the usual landlord responsibilities.

Charitable Donation Floor Limits Deductible Contributions

The OBBBA introduces a new floor for charitable deductions. Starting January 1, 2026, only donations exceeding 0.5% of adjusted gross income (AGI) are deductible, as per the Moneywise report. For example, someone earning $150,000 can only deduct donations above $750. Higher incomes mean a higher floor, limiting the deductions you can claim for charitable contributions.

FAQs

Who benefits from the seniors deduction?

Individuals over 65 and married couples filing jointly can claim extra Social Security deductions.

Are there income limits for the seniors deduction?

Yes, it phases out for singles above $75,000 and for married couples above $150,000.