Why put off until tomorrow what can save you money today? To help you better understand where to begin with tax planning, Citi Personal Wealth Management has outlined areas to consider when starting to think about how to confidently grow and protect your wealth in 2026 and beyond.
Prepare for your 2026 taxes today:
Check Your Tax Withholding
Use the IRS Withholding Calculator to evaluate whether your employer is withholding too little or too much in taxes. Visit irs.gov/individuals/irs-withholding-calculator.
Review if SALT deduction applies to you
The State and Local Tax (SALT) deduction permits taxpayers who itemize when filing federal taxes to deduct certain taxes paid to state and local government. The cap on the SALT deduction increased to $40,400 in 2026, but will be subject to a phaseout if your modified adjusted gross income (MAGI) exceeds $505,000 ($252,500 for married taxpayers filing separately). The increased SALT deduction is completely phased out if MAGI is $606,300 ($303,166 for married taxpayers filing separately) or more, in which case the $10,000 deduction limit will apply. The higher SALT deductions began in 2025 and sunsets at the end of 2029. The SALT cap will revert to $10,000 in 2030 and is not subject to income phaseouts or cost of living adjustments. Starting in 2026, the value of itemized deductions, including the SALT deduction, for those in the 37% tax bracket will be capped at 35%.
Certain retirees may receive a temporary tax break
The One Big Beautiful Bill Act added a temporary deduction of $6,000 under Section 151 (personal exemptions) for seniors (age 65 and older) in tax years 2025-2028. Income phaseouts for single filers begin at $75,000 ($150,000 for Married Filing Jointly) and the deduction is completely phased out when MAGI exceeds $175,000 ($250,000 for joint filers).
New rules on charity
The One Big Beautiful Bill Act allows a charitable deduction limit on cash donations for non-itemizers of $1,000 for single filers and $2,000 for married couples filing a joint return. These limits are not indexed for inflation. Clients who do not itemize and wish to make more substantial contributions to charity may wish to explore strategies such as the Qualified Charitable Distribution (QCD) where those individuals over age 70½ can use IRA assets to satisfy charitable bequests of up to $111,000 per person in 2026. For those seeking lifetime income and a transfer to charity at death, charitable gift annuities or a charitable remainder trust (for larger transactions) may be appealing.
The law also imposes a limit on deductions for itemizers in the top tax bracket, effectively limiting the tax benefit of donations to 35%.
Check investments by year-end
By selling investments at a loss, you can offset any realized gains and up to $3,000 of ordinary income if your filing status is single or married filing jointly or $1,500 if married filing separately. Any unused capital losses can be carried forward to offset future capital gains.
Jump-start education savings
Check with your tax advisor to see if you’re eligible for state income tax deductions on your resident state sponsored Section 529 plan, where you can save on a tax-deferred basis and withdraw tax free to pay qualified expenses for college and, in some cases, K-12. What’s more, the recent law expands the list K-12 qualified education expenses to include items such as standardized test prep and tutoring. (Please note: Approximately 30 states allow Section 529 plans to be used for qualified K-12 expenses, but the remaining states have not adopted the federal law.)
Avoid tax penalties
Pay your federal estimated tax installments on time to avoid tax penalties. You may wish to consider running through safe harbor tests or a tax projection with your tax advisor to avoid underpayment penalties (e.g., ensure you’ve paid at least 90% of tax owed for the current tax year, or have not exceeded the safe harbor threshold by owing less than $1,000 in tax). Higher income filers must pay at least 90% of the current year’s tax obligation or 110% of the tax shown on the return for the prior year.
Take everyday steps toward retirement
Save more for retirement on a tax-deferred basis and reduce your taxable income by increasing your pretax contributions to employer retirement plan(s), such as 401(k)s and 403(b)s, with limits in 2026 at $24,500, and if you are over 50 an additional $8,000, and for those between ages 60-63 as of year-end the catch-up contribution are up to $11,250. Starting in 2026, catch-up contributions made by those with FICA earned income (i.e., subject to tax for funding Social Security and Medicare) in excess of $150,000 are required to be directed into Roth accounts. If you have self-employment income, there may be additional options available that could increase your total retirement plan contributions. To learn more about alternative defined contribution or defined benefit plan options that may be right for you, please contact your tax advisor. Whether to save on a pretax or post-tax basis involves a variety of considerations. To receive a comparison about Roth and Traditional IRAs, and discuss which may be best for you, contact your Wealth Advisor.
Set up your estate today
Reduce the size of your taxable estate by making annual present interest gifts, up to $19,000 (annual gift tax exclusion as of 2026) to as many beneficiaries as you want. If married and both spouses are U.S. citizens, and consent to the gift by filing Form 709, you can jointly gift $38,000 per recipient.
Plan for tomorrow:
Continue to grow your retirement savings
The initial required minimum distribution (RMD) for a traditional IRA must be taken by April 1 of the year following the year you turn 73 (for those born between 1951 and 1959) and be taken by December 31 each year thereafter. (RMD age increases to age 75 for those born in 1960 and later.) But, you do not need to take annual distributions from Roth IRAs and Roth 401Ks. Consider converting a traditional IRA or tax-deferred retirement plan to a Roth, but you should consult with your tax advisor first about the potential tax consequences of a conversion. Keep in mind that you can no longer recharacterize a Roth IRA conversion made on or after January 1, 2018.
Keep your estate plan up-to-date
In 2026 the federal estate tax exemption settled at $15 million per individual ($30 million for a couple), with adjustments made annually for inflation. As a result, take the time to re-examine your existing estate plan, including wills, power of attorney, revocable and irrevocable trusts, and insurance plans alongside your legal and/or tax advisor.
Give generously
Because the limit on the deduction for cash gifts to public charities is generally 60% of adjusted gross income, consider charitable strategies for larger gifts. You may also consider pooling smaller gifts to overcome the expanded standard deduction amount.
Maximize your business benefits
The Tax Cuts and Jobs Act instituted a single income tax rate of 21% for C corporations. In addition, any dividend distributions of earnings and profits are also taxed to the shareholders at a rate as high as 23.8%. In other words, the income can be taxed twice. However, business owners of pass-through entities may qualify for a 20% “off-the-top” deduction on qualified flow-through income. Consequently, because LLCs and S Corps. are pass-through entities and the income from the business is only taxed once, they may be more tax efficient than C corporations. With the various changes in business income taxation, a key question to ask your legal and tax advisors is whether you need to make changes to your entity structure.
Remember: Get tax advice on your particular situation from an independent tax advisor. Please read the “Important Information” section at the bottom of this page.