2026 Tax Changes Simplified: What the New Year Means for Your Retirement Strategy

 | by PIFP

Key Takeaways

  • The One Big Beautiful Bill Act made most TCJA individual tax provisions permanent, so the current seven-bracket system (10%–37%) remains in place for 2026 with IRS inflation adjustments.
  • Retirement contribution limits increased for 2026:
    • 401(k)/403(b)/457: $24,500
    • IRA: $7,500
    • Catch-up (50+): $8,000
    • Super catch-up for ages 60–63: up to $11,250
  • High earners with prior-year wages above the indexed ~$150,000 threshold must make all catch-up contributions as Roth starting in 2026.
  • Medicare IRMAA thresholds increased only modestly, making strategic income management more important for retirees.
  • The 2026 Medicare Part B premium is $202.90 per month.

What’s Staying the Same (and What’s Changing) in 2026

Every new year brings adjustments that can significantly impact retirees, business owners, and high-earning professionals. For 2026, Congress and the IRS delivered several notable updates that shape how you save, withdraw, and plan for taxes. Understanding these changes early can help you fine-tune your retirement strategy and avoid surprises down the road.

TCJA Becomes Permanent: What That Means for Your Tax Bracket

For years, many expected the 2017 Tax Cuts and Jobs Act (TCJA) to expire after 2025. Instead, the One Big Beautiful Bill Act extended most TCJA individual tax provisions indefinitely. That means:

  • The seven tax brackets remain: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
  • The IRS applied 2026 inflation adjustments to the bracket thresholds.

For married couples filing jointly, the 2026 brackets now approximate:

  • 22% bracket: $100,801 to $211,400
  • 24% bracket: $211,401 to $403,550

These increases may give some taxpayers slightly more room before moving into higher tax brackets.

The standard deduction for 2026 is:

  • $32,200 for married couples filing jointly
  • $16,100 for single filers

Overall, this stability may help families plan with more confidence, especially in high-income households or those managing Roth conversion strategies.

Higher Contribution Limits: More Space to Save in 2026

The IRS released new, higher retirement plan limits for 2026—creating bigger opportunities to boost tax-advantaged savings.

Employer Plans (401(k), 403(b), and 457)

  • Employee contribution limit: $24,500
  • Catch-up contribution (age 50+): $8,000
    • Total possible: $32,500
  • Age 60–63 super catch-up: up to $11,250
    • Total possible: $35,750

For professionals still working—especially physicians and executives—maximizing these higher limits can materially improve long-term retirement outcomes.

IRA and Roth IRA Contributions

  • IRA limit: $7,500
  • IRA catch-up: $1,100 (age 50+)
  • 2026 Roth IRA phase-outs:
    • Singles/Heads of Household: $153,000–$168,000
    • Married Filing Jointly: $242,000–$252,000

These increases provide meaningful opportunities to save more—and keep more of your retirement income sheltered from taxes.

Mandatory Roth Catch-Up for High Earners Begins in 2026

Starting in 2026, catch-up contributions for certain high earners must be made on a Roth (after-tax) basis.

This rule applies if:

  • Your prior-year Social Security wages from the same employer exceeded the indexed ~$150,000 threshold.

For many high-income workers—such as physicians, executives, and partners—this eliminates the ability to take a tax deduction for catch-up contributions. But it also comes with long-term benefits:

  • Tax-free growth
  • Tax-free withdrawals in retirement
  • Helps reduce future RMDs
  • Helps manage future Medicare IRMAA exposure

If your income places you above the threshold, consider reviewing your broader tax strategy to see how Roth savings fit into your long-term plan.

Medicare IRMAA: Small Changes with Big Impact

Medicare’s Income-Related Monthly Adjustment Amount (IRMAA) can significantly affect retirement cash flow, especially for those with higher incomes.

2026 IRMAA Thresholds

  • Single: $109,000
  • Married Filing Jointly: $218,000

These increases were modest—meaning even small increases in retirement income could push you into a higher premium tier.

2026 Medicare Premiums

  • Standard Medicare Part B: $202.90 per month
  • Higher-income retirees may pay over $700 per month per person when IRMAA surcharges for Parts B and D are included.

Remember, IRMAA uses a two-year lookback:

  • 2026 premiums are based on 2024 income
  • 2027 premiums are based on 2025 income

This makes proactive planning—Roth conversions, capital gains timing, and qualified charitable distributions—especially critical.

How to Position Yourself for Success in 2026

If You’re Still Working

  • Maximize higher contribution limits early in the year
  • Determine whether the age 60–63 super catch-up applies to you
  • Evaluate whether shifting toward Roth contributions aligns with your long-term plan
  • Review employer plan settings to ensure 2026 withholding is correct

If You’re Already Retired

  • Review withdrawal strategies to avoid IRMAA surprises
  • Consider Roth conversions while tax rates remain favorable
  • Use QCDs to satisfy RMDs while reducing taxable income
  • Revisit structured withdrawal strategies or bucket systems for tax efficiency

Tax planning is not a “set it and forget it” exercise—it’s a year-round process that benefits from expert guidance.

Plan Confidently with Partners in Financial Planning

Partners in Financial Planning offers tax-focused, comprehensive, fee-only financial planning and investment management services from our offices in Salem, Virginia and Charleston, South Carolina. With over 100 years of combined experience, our team helps clients across the country navigate the evolving tax landscape with clarity and confidence.

If you’d like a personalized review of how these 2026 changes may affect your retirement plan, we’re here to help.

Resources: 

IRS Official Sources

Government & Legislative Text

Other Helpful Third-Party Summaries

About Us

Partners in Financial Planning provides tax-focused, comprehensive, fee-only financial planning and investment management services. With locations in Salem, Virginia and Charleston, South Carolina, our team is well-equipped to serve clients both locally and nationally with over 100 years of combined experience and knowledge in financial services.

To learn more, visit https://partnersinfinancialplanning.com