The New Money Rules Of 2026 And How They Affect You

According to a Vanguard survey, almost three-fourths of U.S. adults failed to achieve their personal financial goals for 2025. Despite this widespread failure to follow through, Americans remain resolute in their pursuit of improved financial circumstances. In fact, the same survey revealed that 84% of people set financial goals for 2026, undeterred from last year's shortcomings. Uncertainty regarding the economy stood out as the largest perceived obstacle to those financial goals, with 22% of Americans highlighting it as their top concern. While broad fiscal policies and economic events are largely out of the control of everyday individuals, there's still plenty of changes people can make to reach their financial objectives.

The trick is staying abreast of all the relevant changes heading into the new year. Generally speaking, a confluence of legislative and market forces combined to shape the landscape of personal finance for hundreds of millions of U.S. adults. Namely, the Trump administration's flagship One Big Beautiful Bill Act (OBBBA) overhauled the tax code and allowed some key healthcare subsidies and tax advantages to sunset. Several funding limits increased to keep up with inflation, while threat levels increased in specific areas. Looking at the new money rules of 2026 and how they affect you can put you in the best position for financial success.

Every tax year, the Internal Revenue Service (IRS) allows taxpayers to reduce their taxable income automatically through a standard tax deduction. This write-off applies to most people who pay taxes without itemizing their deductions. If you've accumulated enough tax breaks to eclipse the standard amount, you can list out your deductions — a process known as itemization. Annually, the standard deduction is increased to keep pace with inflation, although the specific amount a taxpayer receives depends on their age and filing status. The OBBBA elevated the standard tax deduction, giving Americans extra breathing room when paying back Uncle Sam.

When filing for the 2026 tax year, single filers — including married couples who file individually — can write off $16,100. Those filing jointly can now claim a deduction double that of single filers, at $32,200 for the year. If you're the head of a household, that figure is $24,150. These numbers are up considerably for the 2025 tax year. For that period, single and joint filers have a standard deduction of $15,750 and $31,500, respectively. Similarly, heads of a household have a lower write-off for the 2025 tax year at $23,625. You should know when to itemize your taxes because you don't want to leave money on the table.

In late 2017, the Tax Cuts & Jobs Act (TCJA) was passed as a sort of temporary version of the OBBBA, which enshrined many of its predecessor's changes. Perhaps most notably for parents, the child tax credit was made permanent. The amount was raised from $2,000 for the 2025 tax year to $2,200 for the 2026 tax year. This potential deduction can be applied per qualified dependent child.

This automatic credit is designed to provide families with a financial reprieve by reducing their tax burden. Generally, you can claim this tax credit on every child who is under 17, lives with you for most of the year, doesn't provide most of their financial support, and is your legal dependent. To receive this tax break in full, make sure to avoid the child tax credit mistakes that could stop your refund.

If you're adopting, the amount you can write off on your taxes increased from $17,280 in 2025 to $17,670 in 2026, for each child. $5,120 of that total may be refundable, meaning those adopters with no earnings could be eligible for a cash refund up to that amount.

Not everyone is financially fortunate enough to live in one of the states with no income tax, raising annual tax burdens on the municipal, state, and federal levels. Recognizing this triple-threat tax bill, the IRS has allowed filers to deduct their state and local taxes, often shortened to SALT, from their taxable federal income. This way, Americans aren't paying multiple taxes on the same dollars. Of course, the federal government places a cap on these deductions. For years, this SALT deduction limit was set at $5,000 for single filers and $10,000 for couples.

Those remain the numbers for the 2025 tax year, but the amounts have been quadrupled for the 2026 tax year. Now, the SALT deduction is $20,000 for single taxpayers and a whopping $40,000 for married couples filing jointly. The IRS does implement an income threshold where these SALT deductions begin unwinding. Those earning a modified adjusted gross income over $250,000 as single filers or $500,000 as joint filers will see their deductions diminished, although never falling below $5,000 and $10,000, respectively. Typically, SALT deductions can be applied to offset some state and local taxes related to income, sales, and property.

If you're looking to protect your retirement accounts from rising inflation, you may be happy to hear about the senior-specific tax break. The OBBBA established an enhanced senior deduction, which expands the amount that elderly filers can write off from their taxable income. Single candidates can claim up to $6,000, and joint-filing couples can reduce up to $12,000. The only requirement to qualify for this enhanced senior tax break is to be 65 years old by the final day of the tax year. You can add this senior-focused deduction on top of the standard deduction, which has already been augmented for maximal savings.

Similar to other tax breaks, the IRS places an income threshold at which the deduction decreases. Right now, the phase-out limit is placed at $75,000 for individuals and $150,000 for couples. Take advantage of the enhanced senior deduction if you qualify, as it's only in effect until 2028. You don't have to fill out an extra tax form to obtain this benefit. Simply include your Social Security number in your standard Form 1040. The IRS should automatically apply the deduction as long as you're eligible.

You should avoid making 401(k) mistakes to prevent unnecessary losses, but you should also take advantage of all available perks. Every year, the IRS places a cap on how much taxpayers can contribute to their employer-sponsored 401(k)s, effectively limiting the tax advantages Americans can secure through these accounts. Fortunately, these limits tend to increase annually to help keep up with inflation. For the 2026 tax year, you can contribute up to $24,500 to a 401(k). That's up $1,000 from restrictions for the 2025 tax year, giving savers more financial breathing room. 

Although this heightened ceiling is most commonly associated with 401(k)s, due to the prevalence of these accounts, the newly-raised $24,500 limit pertains to a number of retirement savings plans, including 457 plans, 403(b)s, and Thrift Savings Plans. If you work for a company that matches your employer-sponsored retirement account contributions, this boost in eligible investments represents an amplified opportunity to improve your nest egg. Plus, maximizing these contributions can also reduce your taxable income, so you're beefing up your retirement savings while minimizing how much you pay now. It's a win-win situation.

Similar to company-backed retirement plans, annual contribution limits were also raised for individual retirement accounts (IRAs) for the 2026 tax year, albeit by slightly less. While 401(k) contributions saw a $1,000 increase, IRA contributions were only bumped by $500. The 2025 tax year has a $7,000 annual limit, while 2026 is governed by a $7,500 cap. This applies to both traditional IRAs, which are funded with pre-tax dollars, and Roth IRAs, which use after-tax funds. Notably, this $7,500 contribution limit is a cumulative cap across all IRAs, no matter how many you hold.

The bump in IRA contribution allowance occurred with an increase in income restrictions, which determine who can deduct their contributions to traditional IRAs for those covered by a workplace retirement account. Single filers with an employer-sponsored account, the ability to deduct IRA contributions from annual taxable income starts to phase out at $81,000 and is completely eliminated by $91,000. For joint filers, the curtailment of benefits starts at earnings of $129,000 and caps out at $149,000 if the person contributing is the IRA holder. Those earning thresholds are between $242,000 and $252,000 for a couple if the contributor is not covered by an occupational plan.

In acknowledgement of the struggle most people face when prepping for retirement, the IRS allows retirement plan contributions above the standard limit for older taxpayers. Known as a catch-up contribution, this perk is perhaps the most underrated way people over 50 can boost their savings. Along with other retirement plan contributions, these catch-up contributions tend to be raised yearly to account for the rising cost of living. In 2026, these supplemental savings opportunities are $1,100, representing a $100 increase from the 2025 tax year. The base contribution limits are much higher for employer-sponsored accounts. These plans have a catch-up contribution cap of $8,000 in 2026. For the 2025 tax year, the cap is $7,500.

In 2022, the SECURE Act 2.0 created a new catch-up category for pre-retirement individuals. Under the legislation, Americans between 60 and 63 years old could contribute up to $10,000. For the 2026 tax year, that super catch-up ceiling has been raised to $11,250. It's important to note that this only relates to workplace plans, not IRAs. Thus, it's specifically designed for taxpayers who are far behind on their retirement savings, even to the point where they remain in the workforce into their preretirement years.

Although many of the new money rules in 2026 stem from fresh legislation or inflation-related changes, some changes come from the expiration of previous regulations. Among the more impactful of these was the cessation of the Affordable Care Act (ACA) subsidies. This marketplace insurance space was established under the Obama administration to expand healthcare access. In 2021, when the COVID-19 pandemic was wreaking havoc, Congress implemented an enhanced tax credit, helping people save even more on health insurance, routinely one of the largest monthly expenses for Americans.

The tax break on these healthcare premiums wasn't made permanent and eventually expired at the end of 2025, when the government failed to enact renewal, effectively allowing health insurance premiums to rise for tens of millions of Americans. The Center on Budget and Policy Priorities warns that healthcare expenses aren't only going up for those who were receiving these premium tax credits. Those who never took advantage or didn't qualify may also experience a hike in premiums due to the dwindling pool of enrollees. KFF estimates that the average monthly healthcare premium in the ACA marketplace will spike by 26% in 2026. The overwhelming majority of recipients are impacted since 22 million out of the 24 million enrollees received these tax breaks.

With fuel costs on the rise, many people plan to save money by purchasing an electric vehicle (EV). In fact, TransUnion reports that 16% of Americans buying a new vehicle plan to avoid fossil fuel models. Up until recently, this environmentally and budget-conscious purchase would have come with a government subsidy, encouraging the country to transition to greener products, while reducing the carbon emissions inherent in combustible engines. Before the passage of the OBBBA, which revoked this write-off, EV buyers could claim a credit of $7,500 from the IRS. The green vehicle credit was eligible for fuel cell or plug-in EVs, so long as the buyer bought it for personal use in the U.S.

The official cut-off date for the tax credit was September 30, 2025. The OBBBA snubbed this tax credit opportunity outright, without offering any replacement. Reuters reports that the Trump administration's repeal of the EV tax credit was part of the widespread effort to reduce spending, along with a general distaste among leadership for federal renewable energy efforts. Opting for an EV may still work to lower your monthly transportation costs, but you shouldn't be factoring in the significant Biden-era green vehicle tax credit when balancing the financial equation.

Similar to the EV tax breaks, the government ended the energy-efficient home improvement credit. This specific tax policy allowed property owners to earn a credit worth 30% of particular projects deemed to help improve a home's energy efficiency. Some of the maximum write-offs allowed included $2,000 annually for water heaters or heat pumps and $1,200 for economical home upgrades. Perhaps the most rewarding part of this credit was that it didn't come with a lifetime cap, allowing homeowners to claim the maximum annual amount each year so long as qualifying changes were made. This tax credit officially ceased on December 31, 2025.

Once again, the OBBBA was the death knell for yet another sustainability-focused federal tax credit. Initially, the write-off opportunity wasn't supposed to expire until 2032, initially suggesting that the government planned to honor the credit opportunity for years to come. That's not to say you'll lose money on these home improvement projects. Updates focused on optimizing energy expenditure can still prove economical for property owners in 2026 and beyond. The key is understanding what tax incentives no longer exist to determine your budget more accurately.

Another crucial new money rule for 2026 you cannot afford to overlook is the elevated premiums on high-earning Medicare recipients. Retirees are often surprised to hear about the various medical costs Medicare won't cover for seniors, but it's often more of a shock for them to hear about income-related premiums. This federal medical insurance program levies an income-related monthly adjustment amount (IRMAA) for high earners. This is one of the taxing mechanisms by which the government has attempted to keep the cost-intensive Medicare program fiscally above water, purposefully targeting tax filers in the upper echelons of the income ladder.

These additional charges on exceptional income only affect beneficiaries of Medicare Part B and Part D, also known as prescription drug coverage. If you're earning more than $109,000 as a single-filer or greater than $218,000 as a married couple filing together, the IRS may tack on these IRMAA premiums. Both add-ons are applied on a graduated scale, which means taxpayers are levied with higher charges as their income increases. The government calculates these premiums based on the latest income information provided by a taxpayer. Part A Medicare isn't subject to these income-related price adjustments.

Charitable deductions are another hidden new money rule for 2026 that affects the average taxpayer. In the past, accepting the standard tax deduction would preclude a person from writing off charitable giving. The OBBBA not only dramatically expanded the standard deduction but also removed this exclusion. Under the new legislation, taxpayers who accept the standard write-off can knock off a further $1,000 from their taxable income for charitable contributions. This represents the deduction limit, although taxpayers can still make smaller reductions based on smaller donations. For instance, a qualifying $250 donation could cut your taxable income by $250. Yet, a $1,250 donation would still only result in a $1,000 deduction due to the cap.

It's vital to note that these rules apply to those who take the standard deduction. A completely different set of regulations applies when itemizing deductions. In this scenario, the initial donations equating to half-a-percent of a filer's income cannot be claimed as a deduction. For instance, an income of $200,000 would require charitable donations above $1,000 — which is 0.5% of those earnings — to be eligible for a write-off. While the OBBBA ushers in advantageous changes to charitable donations for most Americans, it actually claws back some of the write-offs that can be claimed by higher earners. Before, those in the highest tax bracket were able to reduce their income by $0.37 for every dollar donated. Now, that is reduced to $0.35.

Not all of the new money rules for 2026 were the result of legislative action or automatic inflation-adjustments. One of the most crucial developments is the terrifying amount of money Americans lose to scams and fraud. Recently, the Federal Trade Commission (FTC) revealed a jaw-dropping spike in consumer losses. In 2024, U.S. adults were swindled out of a staggering $12.5 billion. This unprecedented figure represents a 25% surge from the prior year, highlighting the growing frequency of financial-related crimes and accompanying losses. Alarmingly, the sheer rise in the amount of money stolen from Americans wasn't primarily the result of an increase in the volume of incidents.

In reality, the proportion of targeted people falling for financial scams increased along with the amount of money fraudsters were able to claim from each interaction. Between 2023 and 2024, the total number of fraud reports remained largely unchanged at around 2.6 million. The FTC highlights investment scams as accounting for a disproportionate amount of the country's financial losses to fraud, claiming $5.7 billion in 2024. Imposter scams, where someone pretends to be from an official government agency or financial institution, generated $2.95 billion worth of fraudulently obtained money.