A lot of the individual tax breaks from the 2017 tax law are scheduled to expire after December 31, 2025. Translation: many people will see higher tax rates, a smaller standard deduction, the SALT cap reshuffled, and several other rules revert in 2026. You’ve got one more full year to plan. Here are five high-impact moves to consider before 2026.
Quick refresher: What’s likely to change in 2026?
- Individual tax rates increase and brackets shift.
- The standard deduction drops, and personal exemptions return.
- The $10,000 SALT cap could change (policy-dependent).
- The Child Tax Credit reverts to pre-2018 rules.
- The 20% QBI deduction (§199A) for many pass-through businesses is set to expire.
- The estate & gift exemption is expected to drop roughly by half in 2026 (indexed exacts TBD).
1) Lock In Today’s Lower Brackets (Roth Conversions & Income Timing)
Why: If your marginal rate is likely to be higher in 2026, paying tax at today’s lower rates can be a bargain.
Moves to consider (by 12/31/2025):
- Partial Roth conversions in 2024–2025 to “fill” your current bracket without tipping into the next one.
- Harvest income you’ll pay anyway (e.g., stock options, bonuses you can elect, deferred comp choices) while rates are lower.
- For retirees: coordinate conversions with RMD start to avoid bracket creep later.
Who benefits most:
Pre-retirees/retirees with sizeable IRAs; business owners in a low-income year; anyone expecting higher income or higher rates post-2025.
2) Use the Higher Estate & Gift Exemption Before It Shrinks
Why: The lifetime estate/gift exemption is historically elevated now and is expected to shrink in 2026. If you have a taxable estate, using the bigger exemption now can remove future appreciation from your estate.
Moves to consider:
- Make larger lifetime gifts to heirs (outright or via trusts).
- Consider Spousal Lifetime Access Trusts (SLATs), Dynasty/Generation-Skipping strategies, or Grantor-Trust planning.
- Pair gifts with valuation discounts (where appropriate) and 529 front-loading.
Who benefits most:
Families expecting a taxable estate after 2025, business owners, real estate owners, and those with concentrated low-basis assets.
3) Re-Evaluate Your Business Structure & the QBI Deduction
Why: The §199A QBI deduction (up to 20%) for many pass-through businesses is set to expire after 2025. Your entity choice and compensation mix could look very different without it.
Moves to consider:
- Model 2026+ S-Corp vs. LLC vs. C-Corp outcomes assuming no QBI and higher rates.
- In 2024–2025, optimize “reasonable salary” (S-Corp) and W-2/UBIA factors while the deduction exists.
- Pull forward income or complete one-time restructures while rates and rules are favorable.
Who benefits most:
Profitable pass-through owners (especially service businesses near phase-out thresholds).
4) Plan Around SALT, Mortgage Interest & Itemizing vs. Standard Deduction
Why: The interplay of SALT limits, mortgage interest rules, and a smaller standard deduction in 2026 can swing whether you itemize.
Moves to consider:
- Bunch deductions in 2024–2025: time property taxes and charitable gifts to maximize itemizing while standard deduction is higher.
- Consider Donor-Advised Funds (DAFs) to pull forward several years of giving into 2025 for a single large deduction.
- If refinancing or buying, compare pre- vs. post-2025 interest rules and limits.
Who benefits most:
Homeowners in state/local tax areas, donors with charitable intent, and households on the edge between itemizing and standard deduction.
5) Harvest Gains (Strategically), Then Rebalance for the New Regime
Why: With brackets changing, today’s 0%/15%/20% capital gains thresholds might be kinder to you than 2026’s structure. Locking in basis now can add flexibility later.
Moves to consider:
- Harvest long-term gains inside your current favorable bracket to step up cost basis (careful of IRMAA/credits/phase-outs).
- Pair gain harvesting with loss harvesting to control net exposure.
- Rebalance toward tax-efficient holdings before the rule changes—especially in taxable accounts.
Who benefits most:
Investors with appreciated positions, retirees coordinating Social Security/IRMAA, and anyone with uneven annual income.
Timing & To-Do List
Now – Q1 2025
- Run a 2024–2026 multi-year projection (with and without sunsets).
- Map Roth conversion brackets (how much can you convert at 12%/22%/24% without bumping up).
- Estate planning meeting: confirm documents, discuss lifetime gifting options.
Q2–Q3 2025
- Execute partial Roth conversions and business owner compensation/QBI strategies.
- If using a DAF, fund it before year-end.
- Coordinate estimated taxes/withholding to avoid penalties.
Q4 2025 (hard deadline: 12/31/2025)
- Final Roth conversion tranche.
- Complete large gifts/trust funding with valuations ready.
- Finalize gain/loss harvesting and rebalance.
What to Bring to Your Planning Meeting
- 2023–2024 returns and latest paystubs/K-1s
- IRA/401(k)/403(b) balances + RMD ages
- Investment gains/loss reports (unrealized)
- Estate documents (wills, trusts, POAs)
- Charitable giving plans (including any DAFs)
The Bottom Line
You can’t control what Congress does next—but you can control your timing. Using 2024–2025 to lock in today’s favorable rules may be one of the highest-ROI financial moves you make this decade.
If you’re in Southern Utah, Thompson Tax & Trust can model these scenarios with your actual numbers—then execute the paperwork on time. Book a quick planning session and let’s keep more of what matters in 2026 and beyond.
Disclaimer: This article is for general education. Tax laws change and individual situations differ. Please seek advice for your specific circumstances.
