Jennifer Raess JD, CFP®, CLU®

Nov 05, 2025

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2026 Tax Planning Reset: What Advisors Need to Know About OBBBA and IRS Updates

The IRS has released its inflation-adjusted numbers for 2026, confirming key updates for estate, gift, and income tax planning. These changes, combined with provisions from the One Big Beautiful Bill Act (OBBBA), will reshape how advisors approach gifting, deductions, and trust taxation. Now is the time for advisors to revisit clients’ estate strategies to prepare for 2026.

Here’s a snapshot of the key changes advisors need to know:

2026 Changes at a Glance

Now let’s break down what these changes mean for your clients and how to take action.

What is (and isn’t) changing in estate and gift tax planning 

The New $15M Exemption

The One Big Beautiful Bill Act (OBBBA), passed in July 2025, eliminated the 2026 sunset provisions and established permanent estate tax rules with a lifetime estate and gift tax exemption of $15 million per individual ($30 million for married couples) starting in 2026. Beginning in 2027, this amount will adjust annually for inflation.

For couples who haven’t yet maximized their gifting strategies, locking in today’s exemption through lifetime transfers, SLATs, or other irrevocable trusts can help preserve wealth ahead of potential future legislative changes.

Annual Gifting stays at $19,000 but don’t overlook strategy

The annual gift tax exclusion will remain at $19,000 per recipient in 2026; same as it was in 2025. Married couples can elect gift-splitting, allowing up to $38,000 per recipient without using lifetime exemption.This makes year-end gifting a simple but effective strategy to reduce taxable estates while helping family members directly. 

Advisors should review client annual gifting strategies, especially those involving recurring gifts to children or grandchildren or funding 529 plans. Contributions to 529 plans can be accelerated, allowing five years’ worth of annual exclusion gifts to be made in a single year — an effective way to reduce a taxable estate. 

Additionally, payments for medical or educational expenses when paid directly to the healthcare provider or educational institution, remain unchanged. Clients can give any amount this way and not use any annual exclusion or lifetime exemption. 

The $40K SALT Cap: A Game-Changer for High-Income Clients

For clients who itemize deductions, one of the more significant income tax changes under the OBBBA is the increased SALT (state and local tax) deduction cap in effect from 2025 through 2029. High-income earners need to be especially aware, as the benefit phases down depending on AGI. 

How It Works

• The cap increases from $10,000 to $40,000 starting in 2026, offering meaningful relief for taxpayers who itemize.
• However, the benefit phases down for higher earners:
  • Full $40,000 deduction is available for those with AGI up to $500,000.
  • The deduction is reduced by 30% of the income above the $500,000 AGI threshold.
  • For taxpayers with AGI above $600,000, the cap returns to $10,000.

Action Steps for Clients Near the Threshold

This sliding AGI scale makes income tax planning more important than ever. Clients near the phaseout thresholds can benefit from careful timing of income, increasing pre-tax contributions to retirement plans, like 401(k)s, and prepaying property taxes to increase deductible SALT expenses in the current tax year. Coordinating charitable giving with SALT timing may further enhance deductions for clients who itemize. 

New Charitable Giving Rules Require Strategic Timing

The OBBBA introduced several charitable giving rule changes effective in 2026. While the details are nuanced, they can carry significant planning implications when paired with the increased SALT deduction cap.

• Above-the-line charitable deduction: New for non-itemizers at $1,000 (single) or $2,000 (joint) for cash gifts to public charities (excluding DAFs and supporting organizations).
• New AGI floor: For itemizers, only charitable contributions exceeding 0.5% of AGI will be deductible.
• 35% deduction cap: For taxpayers in the top income tax bracket, the value of itemized deductions—including charitable gifts—is capped at a 35% benefit.

Consider combining charitable “bunching” of Donor-Advised Fund (DAF) contributions with the new SALT cap to maximize itemization efficiency. High-income clients may wish to accelerate large charitable gifts before these new limitations take effect and may want to consider charitable contributions of highly appreciated assets to avoid the capital gains implications. 

The Qualified Charitable Deduction (QCD) remains unchanged under the OBBBA. A QCD allows taxpayers age 70½ and older to contribute directly from an IRA to a charity, satisfying all or a portion of their RMD requirement for the year and not incurring any income tax. For 2026, the QCD limit will go up to $115,000 (from $108,000 in 2025). 

With these new rules taking effect in 2026, the window for certain tax-efficient giving strategies is narrowing. Check out this post for planning considerations advisors may want to review with clients before year-end.

Advanced Strategy: Using Trusts to Maximize SALT Deductions

The intersection of trust taxation and the SALT rules presents a unique window for creative income tax management in 2026.

Grantor vs. Non-Grantor Trusts

• Grantor trusts pass income taxation through to the grantor, providing estate tax efficiency but no separate SALT deduction.
• Non-grantor trusts pay their own income tax and receive their own $40,000 SALT deduction, opening the door to potential “SALT stacking” when multiple trusts are properly structured.
• Advisors can coordinate with estate attorneys to explore toggling grantor status off for certain trusts, where appropriate, to diversify deduction use while maintaining control of trust income flow.

Incomplete Gift Non-Grantor (ING) Trusts

For clients in high income tax states, an ING trust can be an alternative planning tool. By structuring a trust as an incomplete gift, clients avoid triggering gift or estate tax consequences while shifting income to a potentially more favorable jurisdiction. These trusts come in different flavors depending on their jurisdiction: 

• WING trusts (Wyoming Incomplete Gift Non-grantor trusts)
• NING trusts (Nevada Incomplete Gift Non-grantor trusts)
• DING trusts (Delaware Incomplete Gift Non-grantor trusts)

INGs can preserve exemption amounts for future estate planning strategies while helping reduce current-year state income tax exposure. INGs require careful consideration of state tax laws, to ensure you get the benefits you are looking for. 

Next Steps: Turn 2026 Changes Into Client Value

The 2026 tax landscape represents a significant shift—and a meaningful opportunity for advisors who act now. With the increased estate tax exemption, the increased $40K SALT deduction (and its phaseout), and stricter charitable giving rules, there’s no shortage of planning levers to pull for clients.

The key is timing. Clients who proactively adjust their strategies in 2025 can maximize the benefits of these changes before they take effect. Whether it’s accelerating charitable gifts, optimizing SALT deductions through income timing, or exploring advanced trust structures, the advisors who lead with education and strategy will differentiate themselves.

Review your high-net-worth clients’ current plans, identify where these changes create exposure or opportunity, and schedule year-end planning conversations now. The clients who benefit most in 2026 will be the ones whose advisors took action in 2025.

The information provided here does not constitute legal, financial, or tax advice. It is provided for general informational purposes only. This information may not be updated or reflect changes in law. Please consult with an estate attorney, financial advisor, or tax professional who can advise as to your particular situation.