If you are a high-income earning family, it is important to keep track of the various income limits that come with filing your taxes. Most deductions or credits are only available up to a certain amount. Here are 6 tax strategies to keep in mind as we head into 2026.
- New in 2026 is the AGI floor of 0.5% for charitable contributions. This means that only contributions made above 0.5% of your AGI will count towards itemized deductions. So, if your AGI is $300,000 the first $1,500 will not be tax deductible. It may be a good idea to utilize a donor advised fund to bunch up donations to cross that limit in one year.
- Another new deduction is the senior deduction which is up to $6,000 per person over the age of 65. Married filers will begin to phaseout of this if their MAGI is above $150,000 and will phaseout completely at $250,000. The limit is half for single filers. Qualifying for this will add the deduction to your standard deduction, you do not need to itemize to use it.
- Net Investment Income Tax hasn’t changed. If you’re married and have a MAGI of $250,000 or more you will pay an additional 3.8% tax on any investment income. For single filers, the additional tax applies over $200,000.
- There are still various income breakpoints for the Income-Related Monthly Adjusted Amount, otherwise known as IRMAA. This is a surcharge to your Medicare part B and D plans if your MAGI reaches certain limits. If you can, it is important to keep income below these breakpoints as it is not progressive like tax brackets. Just one dollar over the next tier and you will pay a flat higher premium.
- In 2026, you can gift up to $19,000 per person without needing to file a gift tax return. It can be useful to start gifting early if you know you plan on leaving large amounts of money for your family later in life.
- Many people make contributions to their IRA’s each year. While a traditional IRA contribution is normally tax deductible, if you are married and your MAGI is over $149,000, yours would be nondeductible. For single filers, the limit is $91,000. If that is the case, it may be beneficial to consider a Roth conversion for the year.
Strategies for high income earners typically boils down to trying to manage your income to stay below certain phaseout limits. This is more applicable for folks who have retired and can directly control how much money they pull from accounts like IRA’s. It probably would not be best to turn down a raise this year just for smaller capital gains taxes. If you have any questions regarding your own situation, please reach out to an experienced tax professional or financial advisor to learn more.