As we turn the page to this new calendar year, it is the perfect time to take a fresh look at your financial picture. We are currently navigating a unique intersection of new tax and legislative landscapes that directly affect how we plan for your future. Between the ongoing implementation of SECURE Act 2.0 and the newer provisions of the "One Big Beautiful Bill Act" (OBBBA), the rules for retirement accounts and tax planning are shifting significantly.
Understanding how these changes impact your specific "bottom line" is essential. Here is a breakdown of the key changes hitting in 2026 that we should discuss:
1. The "Rothification" of Catch-Up Contributions
(Courtesy of SECURE Act 2.0)
If you are a high earner making catch-up contributions to your 401(k) or 403(b), the rules have changed effective January 1, 2026.
- The Change: If your wages exceeded $145,000 (indexed) in the previous year (2025), you must now make your catch-up contributions to a designated Roth account.
- What This Means: You will lose the upfront tax deduction on those catch-up dollars, but they will grow tax-free. We need to review your cash flow and tax projections to ensure you are prepared for the slight dip in take-home pay resulting from tax withholding on these contributions.
2. New "Super" Catch-Up Limits
(Courtesy of SECURE Act 2.0)
For those of you nearing the retirement finish line, you have a new opportunity to save more aggressively.
- The Change: If you are between the ages of 60 and 63, your catch-up contribution limit has increased to $11,250 (up from the standard catch-up).
- Action Item: If you fall into this age bracket, let's adjust your payroll deferrals immediately to take full advantage of this higher cap.
3. The "One Big Beautiful Bill Act" Provisions
This newer legislation has introduced several tax-saving opportunities that we want to capitalize on for you this year:
- Senior Bonus Deduction: If you are age 65 or older, you may be eligible for an additional $6,000 standard deduction. Note that this phaseout applies to single filers with income over $75,000 and joint filers with income over $150,000.
- SALT Cap Relief: For our clients in higher-tax states, the State and Local Tax (SALT) deduction cap has temporarily increased from $10,000 to $40,000, provided your adjusted gross income is under $500,000.
- Tax-Free Tips & Overtime: There are new deductions available for qualified tip and overtime income (up to caps of $25,000 and $12,500, respectively), which could lower your taxable income significantly if you are still working in eligible fields.
Let's Get Proactive
It can be a lot to digest, but you don't have to figure it out alone. These changes create both challenges and opportunities, and we want to ensure your plan is optimized for the current environment.
Start the new year with an Annual Review.
If we haven't met recently, or if you have friends or family who are asking questions about these new legislative changes, we invite you to book a complimentary consultation with David and me. We can review your current allocations, check your catch-up eligibility, and ensure you aren't missing out on the new deductions.
Let's make 2026 your best financial year yet. We look forward to seeing you soon! Call our office today to schedule, 702.982.2479.
We look forward to working with you in 2026.
Jacob, David, & Tami
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Please consult a qualified professional regarding your situation.
LPL Financial and Dixon Financial Group do not offer tax advice or services.