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Your 2026 tax bill just got a major overhaul, and if you're a high-income earner, executive, or business owner, these changes will impact your wallet in ways you might not expect.
The "One Big Beautiful Bill Act" changed many of the rules we've been playing by for years. Some of these changes are wins, some are losses, and some are just complicated. But one thing is certain: understanding these shifts now will save you thousands of dollars and countless headaches down the road.
In this article, we'll walk through the six biggest tax changes for 2026 that actually matter to high-income earners, and more importantly, what you need to do about them.
1. The SALT Cap Expansion (That High Earners Still Can't Use)
The State and Local Tax (SALT) deduction has been controversial since 2017 when it was first capped at $10,000. This limit hit hard for people in high-tax states like Minnesota, California, and New York, where property taxes alone can exceed that amount.
The cap was supposed to expire completely, but instead, Congress modified it. In 2026, the deduction cap increased to $40,400 (up from $40,000 last year). Sounds like good news, right?
Here's the catch: The expanded cap only applies if your modified adjusted gross income is $505,000 or less. If you're married filing separately, that threshold drops to $252,500.
What happens if you earn more than that? The deduction phases out at 30 cents for every dollar you earn over the limit. Once your income crosses $606,000, your state and local tax deduction snaps all the way back down to $10,000.
The bottom line: If you live in a high-tax state and you're making half a million dollars or more, you won't get much benefit from this expanded cap. It's essentially a middle-income tax break that high earners can't fully use.
2. Business Deductions: The SUV Loophole Lives On (Sort Of)
Business owners have long loved Section 179, which allows you to deduct equipment purchases. The good news? Section 179 is still alive and well in 2026, allowing you to deduct up to $2.56 million in equipment purchases.
But here's what changed: Bonus depreciation has dropped to just 20% for 2026. A few years ago, you could depreciate 100% of certain purchases in year one. That percentage has been phasing down, and now it's down to just 20%.
What does this mean practically? If you buy a heavy SUV over 6,000 pounds for your business, you can still use Section 179 for about $31,000. But the bonus depreciation that used to give you a huge first-year write-off is mostly gone.
There is one bright spot: The IRS has set the business mileage rate to 72.5 cents per mile in 2026. If you're tracking business miles, that increased rate can help offset some of the lost depreciation benefits.
3. Estate Tax Exemption: Now Permanent at $15 Million
Here's some genuinely good news. The estate tax exemption is now $15 million per person, or $30 million for married couples, and it's permanent.
If you were paying attention in 2025, there was significant panic because this exemption was supposed to be cut in half. Estate planning attorneys were swamped with clients trying to move assets before the deadline.
Congress made these high exemption levels permanent and indexed them for inflation. If you've been putting off estate planning because you were waiting to see what would happen, the waiting is over. The rules are set.
But don't misunderstand—this doesn't mean estate planning isn't important anymore. If your estate exceeds these thresholds, you're still facing a 40% tax rate on everything above that amount. Many people forget to include life insurance policies and business valuations in their estate calculations.
Even if you're under the threshold, proper estate planning is about more than just taxes. It's about protecting your legacy, avoiding probate, and ensuring your assets go where you want them to go.
4. Qualified Business Income Deduction: Permanent and Expanded
This is a big win for business owners and anyone with pass-through income from an S Corp, LLC, or partnership.
Remember how the SALT exemption was limited to $10,000 for high-income earners? Well, if you own one of these types of businesses, you can have the business pay some of those state taxes for you through the Qualified Business Income (QBI) deduction.
The QBI deduction—that 20% deduction you get for pass-through entities—was supposed to expire at the end of 2025. Now it's permanent. And not only is it permanent, but the phase-in ranges got wider.
In 2026, if you're married filing jointly, you won't start seeing limitations on your deduction until you hit $394,600 in taxable income. For service businesses—think doctors, lawyers, consultants, or architects—that cliff used to be really steep. Now it's a much gentler slope all the way up to $544,600.
The bottom line: If you own a business structured as a pass-through entity, you can continue planning around this 20% deduction with confidence. It's not going anywhere.
5. The Mandatory Roth Catch-Up Rule for High Earners
This is probably the most painful change of 2026 for high-income earners.
Here's the rule: If you earned more than $150,000 last year (up from $145,000 previously), all your age 50+ catch-up contributions to a 401(k) must go into a Roth account.
Let me explain what that means. If you're 50 or older, you can contribute an extra $7,500 to your 401(k)—or $11,250 if your plan allows for super catch-ups. This extra money used to be pre-tax, which meant it reduced your taxable income for the year.
Not anymore. If you're a high-income earner, those catch-up dollars now have to go into an after-tax Roth account. You don't get the deduction today, but the money will grow tax-free and come out tax-free in retirement.
Roth contributions aren't inherently bad—in fact, for many people they're great. But if you're in the 35% to 37% tax bracket and you were counting on that deduction to lower your tax bill, this change is going to hurt.
On the positive side, you're building up tax-free money for retirement, so you're paying more today but you'll have more flexibility later.
6. Charitable Giving: New Floors and Caps
The charitable giving rules changed in ways that significantly affect high-income donors.
First, there's now a floor on charitable deductions. You can only deduct donations that exceed 0.5% of your adjusted gross income. For someone making $500,000, that means the first $2,500 they donate is effectively non-deductible.
Second, if you're in the top 37% tax bracket, your charitable deduction is now capped at 35%. Essentially, you're losing 2% of the tax benefit for every dollar you give.
There is one positive change: If you don't itemize your deductions, there's now a new above-the-line deduction of $1,000 for singles or $2,000 for married couples filing jointly. That's for cash donations, and you can take it even if you just take the standard deduction.
What this means for you: If you're charitably inclined and you itemize, you might want to consider bunching your donations—giving multiple years' worth of donations in one year to clear that 0.5% floor and maximize your deduction. Donor-advised funds are an excellent tool for this strategy.
Your Action Plan for 2026
Let's recap the six major changes:
- SALT cap increased to $40,400, but high-income earners are phased out
- Business deductions still available, but bonus depreciation dropped to 20%
- Estate tax exemption now permanent at $15 million per person
- QBI deduction permanent with wider phase-in ranges—great news for business owners
- Catch-up contributions now Roth-only for high-income earners earning $150k+
- Charitable giving has new restrictive floors and caps
These aren't minor tweaks. These are fundamental changes to how you should approach tax planning in 2026 and beyond.
What You Should Do Next
Now that you know the major tax changes for 2026, here's the reality: Your situation is unique. The tax code doesn't operate in a vacuum—it interacts with your income sources, business structure, retirement accounts, charitable goals, and estate plan.
That's exactly why we've created our complimentary financial review for corporate executives, business owners, and pre-retirees. We'll look at your specific situation, run the numbers, and show you exactly what these changes mean and which strategies make the most sense for you.
If you're ready to get clarity on your 2026 tax situation, schedule a call with our team at Quarry Hill Advisors.
Ready to find out if we're the right fit for your financial planning needs? Schedule a complimentary discovery meeting where we'll provide a real assessment of how we can help your specific financial situation.
-A note from Bjorn Amundson, CFP®
This material is intended for educational purposes only. You should always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. Nothing contained in the material constitutes a recommendation for purchase or sale of any security, investment advisory services or tax advice. The information and opinions expressed in the linked articles are from third parties, and while they are deemed reliable, we cannot guarantee their accuracy.
