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.

What OBBBA Settled — and What It Didn't

For years, planning was shadowed by the scheduled sunset of the 2017 Tax Cuts and Jobs Act after 2025. The 2025 One Big Beautiful Bill Act (OBBBA) resolved most of that uncertainty by making the core provisions permanent:

• The lower marginal brackets (10/12/22/24/32/35/37%) are now permanent — the 24% bracket does not revert to 28%.
• The roughly doubled standard deduction was made permanent.
• The elevated lifetime estate and gift exemption was made permanent and raised to $15 million per person for 2026 (indexed thereafter).
• The QBI (Qualified Business Income) deduction for pass-through entities was made permanent.
• The SALT cap was temporarily raised to $40,400 for 2026 (phasing down above $505,000 of MAGI) — but reverts to $10,000 in 2030.

So the headline risk that drove a decade of "convert before the sunset" planning is gone for rates and the estate exemption. The live planning questions in 2026 are different: the temporary OBBBA items with their own expiration dates (the SALT cap and the new senior deduction), the annual inflation drift in brackets and IRMAA tiers, and the SECURE 2.0 phase-ins below.

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 brackets are permanent under OBBBA, so the urgency is no longer a sunset — it is your own rising RMDs at 73–75 and the survivor's compressed single-filer brackets later.

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: OBBBA made the elevated exemption permanent and raised it to $15 million per person ($30 million per couple) for 2026. The estate-tax cliff that drove urgent lifetime gifting is gone for all but the largest estates — so trust structures built around a vanishing exemption deserve a fresh review, since some now needlessly forfeit the step-up in basis.

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.

With the TCJA brackets now permanent under OBBBA, the old "convert before the 2026 sunset" urgency is gone — the 22% bracket isn't scheduled to jump to 25%. But the case for conversions hasn't disappeared; it has shifted to their own trajectory. Left unconverted, that $1.6M compounds into far larger RMDs at 73–75, and the survivor will face those RMDs in single-filer brackets, where 24% and 32% begin at roughly half the joint thresholds.

The plan adjustment: size conversions to fill the 22% and 24% brackets each year through the gap years before RMDs — not to beat a sunset, but to move dollars out of a future higher-bracket, single-filer environment while rates are locked in.

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 2017 brackets and estate exemption will still sunset after 2025 — OBBBA made them permanent.
• 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 the 2025 OBBBA made the TCJA rates and estate exemption permanent (removing the sunset), temporarily raised the SALT cap, and SECURE 2.0 provisions keep phasing in. Roth conversion sizing, charitable giving structure, and IRMAA management now depend on your own bracket trajectory rather than on guessing whether rates will sunset.

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.