The new numbers are out for 2026. What new numbers? All the rules set by Congress and the President and enforced by the IRS as it applies to our money and what we do with it is the basic idea. It pays to understand the rules and use them effectively to improve our financial situation as best we can. There is a lot of money at stake. Let's make sure your money is working as efficiently as possible for YOU!
Let's start with the simple stuff. The standard deduction has gone up for everyone. For singles, it is $16,100, head of household is $24,150, and married filing a joint return is $32,200. This is the amount you can earn in 2026 tax free at the federal level (higher if you itemize). When your earned income goes higher, you enter the 10% bracket, then the 12%, 22%, 24%, and so on. See the new real tax brackets for 2026 here.
If you are 65 you can add an extra $8,050 on top of the standard deduction if single. For married filing a joint return, that is $13,650 if you are both 65. It does pay to get old! Here is a big plus with the new bill starting in 2026. You can deduct $1,000 (single) or $2,000 (married filing joint) from your taxes with any charitable donations to church or charity without having to itemize on your tax return, which most people don't.
The maximum IRA contributions have risen to $7,500 for those under age 50 for 2026 and $8,600 for those over age 50 (must have earned income). The 401(k) maximum contributions increase to $24,500 or $32,500 (over 50). If you are between 60 and 63, you can add an extra $3,250 on top of that $32,500, if you are still working. As a rule, we should strive to max out both accounts while working when possible.
Health Savings account contributions go up to $4,400 (single) and $8,750 (family) with an extra $1,000 if you are over 55. Those numbers include what an employer puts in and what the individual puts in. Wise folks will move HSA money to Fidelity and invest in no fee stock index funds like FZROX or FZILX and treat the HSA as an investment account while paying out of pocket for medical expenses. Learn more here.
You can give away (QCDs) up to $111,000 per person for 2026 to your favorite church or charities out of your Traditional IRA, all tax free if over age 70.5. Long term capital gains are still at 0% if the gain is kept in the 12% bracket or lower. Invest wisely in tax efficient index funds in a brokerage at Vanguard using VTSAX or VTIAX or at Fidelity using the funds stated earlier. This eliminates short term capital gains.
You can give away up to $19,000 to any person in 2026 and not have to report it. You must report bigger amounts on your tax return, but there will be no tax owed unless you go over the $15 Million mark over time. I think we will be safe on that in almost all cases. The first 25,000 in tips and $12,500 in overtime pay is tax free in 2026 with the new bill. There are income limits ($150,000 single/$300,000 married).
The new bill created a deduction up to $10,000 on interest paid when buying American made cars without having to itemize (income limit of $100,000 for singles and $200,000 for married filing joint applies). Let's not get carried away with this deduction. Please do not go out and spend a bunch of money on a vehicle and get a loan just so you can deduct up to $10,000. That would be dumb. Don't be dumb!
The child tax credit went up to $2,200 for children under age 17 in 2026. Income limits apply for those making $200,000/$400,000 when single/married. There is no limit on the amount of credits if you have a bunch of those little ones. The EV tax credit of $7,500 has gone away. Guess what? EV sales have tanked and American vehicle sales are expected to rise! The prices will probably rise as well.
The new Trump account for newborns starts in 2026. If you had a child born in 2025 thru 2028, the government will fund a brokerage account with $1,000 for that child. It must be invested in an index fund. There are no income limits. You can still open this account for children not born in those years, but you just won't receive the $1,000. The money grows tax deferred until age 18 and then options open up.
That money could be used for a home purchase, college or starting a small business. More options will probably open up in the future. Here is an idea. Leave the money alone to grow! Starting at $0, and then adding $5,000 per year to the account at a 10% average return (below historical U.S. stock market return), you would end up with $250,795 at age 18. Leave it alone to grow for 12 more years? $787,103!
Now we have another child account, called the Dell account. Michael and Susan Dell are donating $6.25 Billion to place $250 in the first 25 million accounts that sign up. The child must be 10 years or younger before January 1st, 2025. The child needs to live in a zip code with median income below $150,000 per year. Investing in VBR (Vanguard small cap value ETF) would be a wise option.
This is a great opportunity to reach people who are not investing in the stock market. Currently white adults are at 70%. Black adults are at 53%, Asians are at 47% and Hispanics are at 38%. We need to get all of these numbers up! These new accounts should help. The accounts can be opened starting July 4th, 2026. Hopefully, more will join the Dell's in giving back. Learn more about these accounts here.
The Path to Prosperity shows the way. We must get started early, helping our youth invest in markets all over the world while never stopping over time. It worked for Warren Buffett and it can work for us! Warren started at 11, we should start on the day we are born! I think he would agree. What if we invested $10,000 per year after age 18 into that account that got to $250,795? It would be $1,022, 330 at age 30!
So, there are some of the new numbers for 2026. Now what? Share the information with those you care about. I realize many people's eyes glaze over at numbers while others become quite large. Figure out your situation and keep things simple is my advice. Take small steps toward reaching lofty goals that you want to achieve. Keep repeating those small steps and you might just be amazed where you end up.
The year 2026 is here! Opportunities abound for those who see their potential. This is the land of opportunity. Don't let anyone tell you different. It comes down to that person in the mirror. Believe in that person and understand that no one will have a bigger impact on your future life than YOU. Stop looking at others to save you. YOU save YOU. Wisdom followed by action changes lives. Let's go!!!
