here’s an old line that tax complexity is a tax all by itself. That idea feels especially true heading into 2026.
Several meaningful tax changes are taking effect, and while none of them exist in a vacuum, together they can materially affect how much you save, how much you deduct, and how predictable your retirement income really is. For people in their 50s, 60s, and early 70s, especially higher earners, these rules deserve attention sooner rather than later.
The goal here isn’t to memorize tax code. It’s to understand how the rules shape good decisions.
For years, workers age 50 and older have had an important planning lever: catch-up contributions. These allow you to save more than the standard limits in retirement accounts, often during peak earning years.
Until now, you could choose whether those catch-up dollars went in pre-tax or Roth. Starting in 2026, that choice goes away for higher earners.
If you earn $150,000 or more in wages, all catch-up contributions must be made as Roth contributions. In other words, the money is taxed today, grows tax-free, and can be withdrawn tax-free later—but it no longer reduces your current tax bill.
A few numbers worth noting:
Why does this matter? Many high earners have relied on pre-tax catch-ups as a way to soften their tax hit during their final working years. That option is now off the table.
Imagine a 55-year-old earning $150,000. In the past, a pre-tax catch-up contribution reduced taxable income dollar for dollar. Beginning in 2026, that same contribution increases take-home planning value, but not tax relief today.
Roth dollars are powerful, but timing matters. This change forces a re-think of how taxes are managed across working years, early retirement, and required distributions later on.
Another major shift moves in the opposite direction and creates opportunity.
The state and local tax deduction—often called the SALT deduction—has been capped at $10,000 since 2017. For many households, that cap made itemizing deductions pointless, especially after the standard deduction was expanded.
That’s changing.
The SALT cap rises to:
For households in higher-tax states, this is a meaningful swing. It also means many people who have taken the standard deduction for years may once again benefit from itemizing.
To put this in context, the 2026 standard deduction is $32,200 for married couples filing jointly. If your state and local taxes alone approach or exceed that figure, itemizing deserves a fresh look.
Consider a married couple in California paying:
Under the old SALT cap, itemizing didn’t make sense. Under the new rules, itemizing could reduce taxable income by more than $20,000 compared to the standard deduction.
One important caveat: this expanded SALT deduction is temporary. Unless extended, it reverts back to $10,000 in 2030. That creates a planning window, not a permanent fix.
Tax changes never operate in isolation, and this is where things get more nuanced.
Social Security taxation is based on income thresholds that haven’t been adjusted in decades. Any change that increases your adjusted gross income—such as losing pre-tax catch-up contributions—can cause more of your Social Security benefit to become taxable.
At the same time, there’s a new temporary “senior bonus” deduction available from 2025 through 2028:
This deduction applies whether you itemize or not, but it phases out as income rises. Decisions that increase AGI may reduce or eliminate this benefit entirely.
Layer in Roth contributions, itemized deductions, Social Security taxation, and temporary provisions, and it becomes clear why rule-of-thumb planning falls short.
The real risk isn’t missing a deduction or misunderstanding a contribution limit. It’s failing to see how the pieces interact across time.
The expanded SALT deduction may open the door to strategies like bunching charitable gifts or re-timing deductible expenses. Roth-only catch-ups may increase flexibility later but raise taxes today. Social Security taxation can quietly erode net income if not modeled properly.
These aren’t decisions to make in isolation, and they aren’t “one-and-done” moves. They’re part of a coordinated plan that looks at taxes across your entire retirement timeline, not just the next filing season.
The 2026 tax rules add complexity, but complexity isn’t the enemy. Unexamined complexity is.
For households nearing retirement, especially those with higher incomes or multiple tax levers, this is a moment to step back and review how savings, deductions, and income sources work together. Thoughtful planning now can prevent unpleasant surprises later—and, just as important, create more confidence around the decisions you’re making.
If there’s a single takeaway, it’s this: tax planning isn’t about chasing loopholes. It’s about making sure today’s choices don’t quietly undermine tomorrow’s retirement.