The Annual Inflation Adjustments

Each year, the IRS publishes inflation-adjusted versions of:

• Federal tax brackets (ordinary income).
• Long-term capital gains brackets (especially the 0% bracket).
• Standard deduction amounts.
• Retirement contribution limits (401(k), IRA, HSA).
• QCD annual limit.
• Lifetime gift / estate exemption.
• IRMAA tier thresholds for Medicare premiums.
• Annual gift tax exclusion.

These adjustments are typically modest (2–4%), but they compound across a multi-year plan and can shift the defensible Roth conversion size, capital gain harvest target, and IRMAA management threshold.

The TCJA Sunset Question

Several provisions of the 2017 Tax Cuts and Jobs Act are scheduled to sunset after 2025 unless Congress extends them. The provisions most relevant to retirees and pre-retirees:

• Lower marginal tax brackets (the 24% bracket would revert to 28%, etc.).
• The doubled standard deduction (would roughly halve).
• The expanded lifetime estate and gift exemption (would roughly halve).
• The QBI (Qualified Business Income) deduction for pass-through entities.
• The $10,000 SALT cap (would be eliminated, returning to pre-2018 unlimited deduction).

Whether and how Congress extends these provisions is uncertain and politically contested. The planning implication is that 2026 may be the last year of certain favorable rates, which affects Roth conversion sizing, gifting strategies, and state-tax planning decisions.

SECURE 2.0 Provisions Continuing to Phase In

SECURE 2.0 was signed into law in late 2022 and includes provisions that phase in over multiple years. Notable items that may apply in 2026:

• Mandatory Roth treatment for catch-up contributions in employer retirement plans for higher earners (those with prior-year wages above the threshold).
• The age-60-to-63 super-catch-up window with elevated catch-up limits.
• Continued automatic enrollment requirements for new 401(k) plans.
• Updated rules for Roth SEP and Roth SIMPLE contributions.

The Implications by Household Type

Pre-retirees expecting higher brackets later: Accelerate Roth conversions while current rates apply. The breakeven math improves materially if 2026 turns out to be the last year of the lower TCJA brackets.

Charitably inclined retirees over 70½: Prioritize QCDs. The annual limit is now indexed and continues to provide one of the highest-leverage tax tools for retirees.

Households near IRMAA cliffs: 2026 December planning matters more than ever, with mutual fund distributions and end-of-year sales potentially pushing into the next bracket.

Households with large estates: The lifetime exemption may revert to roughly half its current level after 2025 if TCJA sunsets. Lifetime gifting strategies and trust structures benefit from being executed while the higher exemption is locked in.

Real Scenario: A Pre-Retiree Couple Considering Conversions

A married couple, 64, in the 22% bracket today with $1.6M in pre-tax IRAs. They were planning $60K/year of Roth conversions.

If TCJA brackets sunset, the 22% bracket reverts to roughly 25%. Their planned conversion that costs $13,200 today would cost $15,000 next year — a 14% increase in tax cost on the same conversion. The implication: completing more of the planned conversions in 2026 (while the lower bracket still applies) is worth real money.

The plan adjustment: accelerate $20K–$30K of additional conversions into 2026, capturing the lower bracket while available.

The December Discipline

Most 2026 tax planning value lives in the last six weeks of the year. November is when projections become reliable (most income is in, year-end bonuses and distributions are visible). December is when the moves get made: final Roth conversion sizing, charitable giving execution through DAF or QCD, capital gain harvesting or loss harvesting, year-end IRA distributions for IRMAA management.

Households that treat November and December as the tax planning window — rather than waiting for April — capture multiples of the value the same households would otherwise leave on the table.

Common Mistakes

• Treating 2026 as a routine tax year and missing windows that may close.
• Assuming the TCJA provisions will continue without change.
• Skipping QCDs for charitably inclined households over 70½.
• Failing to coordinate Roth conversions, capital gains, and charitable giving in a single integrated tax plan.

The Bottom Line

2026 is structurally more important than most tax years because of the TCJA sunset question and continued SECURE 2.0 phase-ins. Roth conversion sizing, charitable giving structure, and IRMAA management all depend on which set of rules ultimately applies.

The right action depends on your situation. Households expecting higher brackets later may want to accelerate conversions; charitably inclined retirees should prioritize QCDs; households near IRMAA cliffs need careful December planning.