Resources
2026
Year-end is an ideal time to take stock of your financial picture and prepare for the tax law changes that have resulted from the One Big Beautiful Bill (OBBBA). Proactive planning now can help you preserve deductions, avoid surprises, and position yourself for 2026 and beyond.
Keeping us informed ensures your tax and financial plan stays aligned with your goals. Please notify us of:
Reducing taxable income is one of the simplest planning wins.
With OBBBA introducing tighter charitable deduction limits for high-income taxpayers starting in 2026, 2025 may be an advantageous year to give.
Tax-efficient portfolio management is especially important heading into 2026.
The current window for strategic gifting remains open.
Efficient withdrawal planning can prevent unnecessary taxes.
For business owners, accelerated planning before December 31, 2025, is key.
Taxpayers must e-file W-2s and 1099s if they are filing more than 10 forms total. Penalties apply to any paper filed forms in excess of 10. Plan ahead and obtain W-9 information from your service providers well ahead of the January 31 deadline.
Beginning on 1/1/2025, the standard mileage rates for the use of a car are 70 cents per mile driven for business, 21 cents per mile driven for medical or military moving, and 14 cents per mile driven in service of charitable organizations.
Meals remain a 50% deduction in 2025. Entertainment is not deductible.
Contribute as much as 20-25% of your net earnings from self-employment, up to $70,000 for 2025.
Starting with assets purchased after January 19, 2025, businesses can once again fully deduct the cost of qualifying equipment, software, vehicles, furniture, and land improvements in the first year. This 100% bonus depreciation is now a permanent feature of the tax code. While this immediate expensing can significantly reduce your 2025 taxable income, it’s important to plan strategically. Using all deductions now may mean missing out on valuable deductions in future years when they could be more beneficial.
The new law allows taxpayers to fully deduct U.S. research and experimental (R&E) expenditures for tax years beginning after December 31, 2024. Deciding whether to take this deduction, how it interacts with the research credit, and whether retroactive relief is available will depend on your specific situation. Consult us before filing or amending returns to ensure you’re making the best choice.
For stock acquired after July 4th, 2025 there have been expansions to the stock requirements. These include a graduated exclusion for how long the stock has been held, exclusion increased to $15M and the gross asset limitation has increased to $75M. Both of these are indexed for inflation adjustments.
Starting in 2026, corporations will only be able to deduct charitable contributions to the extent that they exceed 1% of their taxable income. While the overall charitable deduction limit will remain at 10% of taxable income, any contributions below the 1% threshold will be lost. However, contributions that exceed the 1% floor but are still subject to the 10% cap can be carried forward for up to five years, allowing them to be used in future tax years before being forfeited
The 20% deduction for pass-through business income is now permanent and will not expire after 2025. The phase-in threshold has increased to $75,000 for single filers and $150,000 for joint filers, after which wage/property or other limits may apply. Additionally, active owners with at least $1,000 of QBI are guaranteed a minimum $400 deduction.
Business losses are now permanently capped at $313,000 for single filers and $626,000 for joint filers. Any disallowed losses will be carried forward as Net Operating Losses (NOLs).
Most clean energy credits, including those for vehicles and commercial property, will expire for property placed in service after 2025 or 2026.
From 2025 to 2028, employees and self-employed individuals in certain occupations may deduct qualified tips on their personal 1040s, even without itemizing. Maximum annual deduction is $25,000, or for self-employed individuals, limited to net income from the business where the tips were earned. Married couples must file jointly to claim the deduction.
Effective 2025–2028, individuals may deduct qualified overtime pay above their regular rate (e.g., the “half” portion of “time-and-a-half”). Maximum annual deduction is $12,500 ($25,000 for joint filers).
Allows deduction for up to $10,000 of interest on new personal car loans through 2028. Applies only to vehicles under 14,000 pounds with final assembly in the US, secured by a lien. Lease payments and used cars do not qualify. Deduction phases out for taxpayers with modified AGI over $100,000 ($200,000 joint).
The federal government will contribute $1,000 to an investment account for every American baby born between Jan. 1, 2025, and Dec. 31, 2028. Parents, employers, or other private entities may contribute an additional $5,000 annually.
Refund checks for individuals ended Sept. 30, 2025. Additional e-payment guidance will be issued for the 2026 filing season.
The seven-rate federal income tax system (10%, 12%, 22%, 24%, 32%, 35%, 37%) is now permanent and will continue to adjust for inflation.
2025 IRA contribution limit is $7,000, with an additional $1,000 catch-up for those 50+. 2026 limits increase to $7,500 and $8,500 for those over 50. The 401(k) limit increases to $23,500 in 2025, with additional catch-ups of $7,500 (or $11,250 for ages 60–63, if plan allows).
First RMD for those turning 73 in 2025 is due April 1, 2026. Rules for inherited IRAs changed for account owners who died after Dec. 31, 2019. Planning is especially important for first-year RMDs.
A one-time $54,000 QCD is allowed to fund a charitable trust from IRAs in 2025 as part of the $108,000 annual limit.
IRA funds may also be transferred directly to an HSA without tax or penalty.
It’s a good idea to contribute to your HSA as much as possible to maximize your tax benefits. The contribution limits are $4,300 for individuals and $8,550 for family in 2025 and $4,400 for individuals and $8,750 for family in 2026. If you are 55 or older by the end of 2025.
Applies only if long-term capital gains exceed $278,000 in 2025 and the gains allocated to Washington State. Rates are 7% for the first $1,000,000 of taxable gains and 9.9% for amounts above $1,000,000. The cap on the Charitable Donation Deduction for 2025 has increased to $111,000
2025 standard deduction: $15,750 (single), $23,625 (head of household), $31,500 (married filing jointly).
Seniors 65+ may claim an additional deduction of $6,000 ($12,000 joint), which phases out at MAGI $75,000 (single) / $150,000 (joint).
State and local tax deduction capped at $40,000, phasing to $10,000 for high-income filers. Mortgage interest limited to $750,000 of indebtedness. Medical expenses deductible only above 7.5% of AGI. Charitable contributions capped at 30% of AGI for non-cash gifts and 60% for cash.
Charitable deductions for itemizers are limited to contributions above 0.5% of AGI. Non-itemizers may claim an above-the-line deduction of $1,000 (single) / $2,000 (MFJ). 1099 reporting thresholds increase to $2,000. K-12 529 withdrawals double to $20,000, and 529-to-Roth rollovers remain ($35,000 lifetime).
Estate and gift planning doesn’t have to feel daunting. Think of it as shaping your financial legacy with purpose—and taking advantage of valuable tax opportunities along the way. Below are the key updates for 2025, along with what you should prepare for as we approach 2026.
One of the easiest ways to transfer wealth tax-efficiently is through annual exclusion gifts.
Consistent annual gifting can make a meaningful impact over time, reducing your taxable estate while supporting the people you care about.
The federal lifetime exclusion continues to remain high:
These figures create a substantial window for estate planning—especially if your net worth is at or near these thresholds.
Washington State continues to have a lower estate tax threshold:
Residents should pay particular attention to state-level planning—especially homeowners, business owners, and those with rapidly appreciating assets.
The start of a new year is a great time to revisit your overall plan. Consider reviewing your:
Ensuring these elements align with current tax laws can help avoid surprises and keep your legacy intact.
We recommend you reach out to us and your estate planning attorney to discuss gift planning strategies. Given the upcoming changes—especially at the state level in Washington and the federal exclusion projection for 2026—planning proactively is a wise move.