Beta Tax Blueprint:Quarterly Update
2026 thus far has seen continued implementation of the One Big Beautiful Bill Act, or OBBBA. Staying proactive can help ensure you’re positioned to take advantage of available opportunities while avoiding surprises. Below are the most relevant updates and planning considerations for this year.
• Rates: TCJA-era lower individual rates and wider brackets continue permanently; top rate stays at 37%.
• Standard deduction: Higher standard deduction structure continues, inflation-adjusted after 2025.
• New/expanded “above-the-line” style planning items: Senior deduction, higher SALT cap (federal), auto-loan interest, and deductions tied to tips and overtime.
• Filing season reality check: Average refund reported at $3,273 (11.1% higher year-over-year); over 60 million claimed at least one of the new “no tax on” deductions (tips, overtime, auto-loan interest, or enhanced senior deduction).
• Retirement: Higher earners’ catch-up contributions generally must be Roth for 2026 (plan feature dependent).
• Energy: Several individual energy/vehicle credits ended after 2025; EV charger/refueling property credit hinges on a June 30, 2026 placed-in-service deadline.
Mandatory Roth Catch-Up Contributions for High Earners
Under SECURE 2.0 changes affecting Code Section 401(k) plans and similar arrangements, catch-up contributions made by certain higher-income participants must be treated as Roth contributions beginning in 2026. For 2026, a participant whose 2025 wages from the employer sponsoring the plan exceed $150,000 is subject to mandatory Roth treatment for catch-up contributions.
Treas. Reg. §1.414(v)-2 provides rules for this mandatory Roth treatment. Importantly, if a plan does not offer a Roth contribution feature, affected higher-income employees may effectively be unable to make catch-up contributions under that plan.
If you are age 50 or older and earned more than $150,000 from your employer in 2025, confirm that your workplace plan can accept Roth catch-up contributions in 2026.
Inflation Adjustments Continue to Impact Planning
Many core tax provisions have been adjusted upward again for inflation in 2026. This includes higher income thresholds for tax brackets, increased contribution limits for retirement accounts, and higher standard deductions.
For high-income households, these adjustments may create incremental opportunities to:
Maximize tax-deferred contributions
Manage bracket exposure through income timing strategies
Revisit Roth conversion thresholds with greater flexibility
2027 HSA Limits Announced
In Rev. Proc. 2026-24, the IRS announced 2027 inflation-adjusted amounts for Health Savings Accounts:
HSA Contribution Limit - self-only coverage: $4,500
HAS contribution limit - family coverage: $9,000
Minimum HDHP Deductible - self-only coverage: $1,750
Minimum HDHP Deductible - family coverage: $3,500
Maximum HDHP out-of-pocket - self-only coverage: $8,700
Maximum HDHP out-of-pocket - self-only coverage: $17,400
For those with HSAs or those who wish to open one, confirm whether your health coverage remains HSA-compatible for 2027 and whether planned contributions fit within the new limits during 2026 open enrollment.
Practical Planning Checklist for Individuals
Income, Deductions, and Withholding
• Review 2026 withholding and estimated tax payments, especially if your income changed materially.
• If you are age 65 or older, estimate whether your modified adjusted gross income may reduce the new senior deduction.
• Track state and local taxes paid in 2026 to evaluate whether itemizing may be beneficial under the higher SALT cap.
• If you bought a qualifying new vehicle with a loan, keep loan documents, VIN information, and interest records.
• If you receive tips or overtime, maintain detailed records and compare them to employer or payer reporting.
• If you are age 50 or older, confirm your 2026 catch-up contribution eligibility.
• If your 2025 wages exceeded $150,000, verify that your employer plan accepts Roth catch-up contributions.
• Review whether any retirement plan distribution qualifies for an exception to the 10% early distribution tax.
• If considering long-term care insurance, determine whether your plan allows qualified long-term care distributions under IRS Notice 2026-33.
California/Arizona add-ons (state-tax + SALT)
• If you are a pass-through business owner, ask whether a PTE/SALT workaround election should be modeled for 2026 (cash flow, estimated payments, credits, and owner mix matter).
• If you are an Arizona taxpayer: confirm whether your 2026 planning assumptions incorrectly relied on the federal SALT cap increase (AZ fixed-date conformity may not track the 2025 Act change).
• If you are a California taxpayer: confirm whether your itemized deduction strategy and any PTE election planning aligns with CA-specific rules and time window (2021–2030 taxable years).
Closing Note
Q2 2026 was a significant quarter for individual tax planning because taxpayers are now operating under the post-2025 Act framework. The headline changes are favorable for many individuals, but several provisions - especially the senior deduction, SALT cap, auto loan interest deduction, and tip and overtime deductions - depend heavily on income levels, documentation, and detailed eligibility rules.