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2026: Your Guide to Contributions and Tax Law Changes

January 6th, 2026 by Blake Pinyan

Heading into 2026, recently enacted legislation – including the One Big Beautiful Bill Act (OBBBA) and ongoing provisions of SECURE Act 2.0 – continue to drive changes in contribution limits and tax rules that may affect your financial plan.

Changes in Contribution Limits

401(k) / 403(b) / 457 Plans / SEP IRAs

  • The maximum employee contribution limit for those under 50 has increased to $24,500 for 2026, marking a $1,000 rise from the prior year.
  • Individuals aged 50 or older may make an additional $8,000 catch-up contribution, allowing for maximum employee contributions of $32,500.
  • Under SECURE Act 2.0, individuals who are ages 60, 61, 62, or 63 in 2026 are permitted a higher catch-up contribution of $11,250 instead of $8,000.
  • The maximum total contribution allowed for most retirement plans is $72,000 for 2026, up $2,000 from 2025. This includes employee contributions, employer matching contributions, and employee after-tax (non-Roth) contributions.
  • SEP IRA accounts also have a maximum employer contribution of $72,000, as catch-up contributions are not permitted.

SECURE Act 2.0 Roth Catch-Up Requirement (Effective 2026)

Beginning in 2026, SECURE Act 2.0 requires certain higher-income participants to make catch-up contributions to employer-sponsored retirement plans on an after-tax Roth basis only.

  • Individuals aged 50 or older who earned more than $150,000 in FICA wages in the prior year (2025) must make any catch-up contributions to applicable plans as Roth contributions. Pre-tax catch-up contributions are not permitted for these individuals.
  • For most plans, this requirement is effective January 1, 2026. Plans with non-calendar- fiscal years must comply beginning on the first day of their 2026 plan year.
  • Although the law was originally scheduled to take effect in 2024, the IRS delayed implementation by two years. Final mandatory catch-up regulations were issued on September 15, 2025. While the law itself remains effective in 2026, the IRS has provided limited transition relief during 2026, with full regulatory enforcement beginning in 2027.

Key clarifications:

  • The $150,000 income threshold is based on Box 3 W-2 wages, which represent wages subject to Social Security taxes.
  • Self-employed individuals with income but no W-2 wages are not subject to the mandatory Roth catch-up requirement, regardless of income level.
  • The rule applies to 401(k), 403(b), and governmental 457(b) plans.
  • It does not apply to non-governmental 457(b) plans, SIMPLE IRAs, or to Traditional or Roth IRA catch-up contributions.
  • New employees are not subject to the Roth catch-up mandate in their first year of employment, as they have no prior-year wages with their current employer. In some cases, they may also be exempt in their second year.

Example:

Emily is hired by ABC on July 1, 2026, with an annual salary of $200,000. Because she had no wages from this employer in 2025, she is not subject to the Roth catch-up requirement during 2026.

Assume the catch-up income threshold remains $150,000, and Emily earns $130,000 in 2026 due to a partial year of employment. Since the threshold is not prorated, Emily will also be exempt from the Roth catch-up requirement in 2027.

What if a plan does not offer Roth contributions?

Retirement plans are not required to offer Roth contributions. SECURE Act 2.0 does not change this. However, IRS guidance provides that if a plan does not permit Roth contributions:

  • Employees who are not subject to the Roth mandate may still make catch-up contributions.
  • Employees who are subject to the Roth mandate may not make any catch-up contributions at all, either pre-tax or Roth.

SIMPLE IRAs

  • The employee contribution limit has increased to $17,000, with a catch-up contribution of $4,000 for individuals 50 or older.
  • Under SECURE Act 2.0, participants in certain applicable SIMPLE plans may contribute a higher amount. For 2026, this higher limit is $18,100.
  • A different catch-up limit applies for employees 50 and over who participate in applicable SIMPLE plans.
  • Individuals who are aged 60, 61, 62, or 63 in 2026 may make an enhanced catch-up contribution of $5,250 instead of $4,000.

Traditional and Roth IRAs

  • The IRA contribution limit has increased to $7,500, a $500 increase from 2025.
  • SECURE Act 2.0 provides a cost-of-living adjustment for IRA catch-up contributions, increasing the catch-up amount to $1,100 for individuals 50 or older.

IRA Deduction Limits

Individuals who actively participate in an employer-sponsored retirement plan should be mindful that deductibility of Traditional IRA contributions may be limited or eliminated based on adjusted gross income.

  • For 2026, single filers begin to see their IRA deductions phased out once income exceeds $81,000.
  • For married filers where both spouses participate in a retirement plan, the phaseout begins at $129,000.
  • If only one spouse participates in a retirement plan, the phaseout begins at $242,000.

Roth IRA Contributions

Eligibility to contribute to a Roth IRA is based on income limits.

  • For 2026, Roth IRA phaseouts begin at $153,000 of adjusted gross income for single filers and $242,000 for married filers.
  • Compared to 2025, this allows single filers to earn $3,000 more and married filers to earn $6,000 more while remaining eligible for Roth contributions.

Changes in Tax Limits

Social Security

  • Approximately 71 million Americans will receive a 2.8% cost-of-living adjustment (COLA) to Social Security benefits for 2026, 0.3% higher than the 2025 COLA.
  • The Social Security wage base has increased to $184,500, meaning earnings above this level are not subject to the 6.2% Social Security payroll tax.
  • Earnings limits for those claiming benefits before Full Retirement Age have increased to $24,480, while individuals in their Full Retirement Age year may earn up to $65,160 before benefits are reduced.

Estate and Gift Tax

  • The annual gift tax exclusion remains $19,000 for 2026, allowing individuals to gift this amount to any number of recipients without filing a gift tax return.
  • With the passage of OBBBA on July 4, 2025, the higher federal estate and gift tax lifetime exemption was made permanent.
  • For 2026, the lifetime exemption has increased to $15,000,000, up from $13,990,000 in 2025. Married couples may shield up to $30,000,000 through portability.
  • Under OBBBA, this exemption will continue to receive inflation adjustments beyond 2026.

Medicare

  • The standard Medicare Part B premium has increased to $202.90 per month for 2026, an increase of $17.90 from 2025.
  • The Income-Related Monthly Adjustment Amount (IRMAA) thresholds have increased to $109,000 for single filers and $218,000 for married filers, based on 2024 income.
  • Income above these thresholds may result in surcharges on Medicare Part B and Part D premiums.

Tax Rates and Deductions

  • Federal marginal income tax rates continue to range from 10% to 37%, while long-term capital gains rates remain 0%, 15%, and 20%, with brackets adjusted for inflation.
  • Following the passage of OBBBA, standard deductions for 2026 are:
    • $16,100 for single filers
    • $32,200 for married filing jointly
    • $24,150 for head of household filers

Additional deductions apply for individuals 65 or older or who are blind:

  • $2,050 for single or head of household filers
  • $1,650 per eligible spouse for married filers ($3,300 if both spouses qualify)

OBBBA also created a new additional senior deduction for tax years 2025–2028. This deduction is available regardless of whether taxpayers itemize or take the standard deduction and is worth up to $6,000 per eligible taxpayer, subject to income phaseouts.

When combining the standard deduction, age-based deduction, and the additional senior deduction, total potential standard deductions in 2026 may reach:

  • $24,150 for single filers 65+
  • $32,200 for head of household filers 65+
  • $39,850 for married filers with one spouses aged 65+
  • $47,500 for married filers with both spouses aged 65+

Phaseouts for the additional senior deduction begin at $75,000 of modified adjusted gross income for single filers and $150,000 for married filers. The deduction is fully phased out at $175,000 for single filers and $250,000 for married filers.

Standard mileage rates for 2026 have also changed:

  • Business mileage increased to 72.5 cents per mile
  • Medical mileage decreased to 20.5 cents per mile
  • Charitable mileage remains 14 cents per mile

Health Savings Accounts (HSAs)

  • The minimum deductible for HSA-eligible plans has increased to $1,700 for individual coverage and $3,400 for family coverage.
  • Maximum out-of-pocket limits are now $8,500 for individual plans and $17,000 for family plans.
  • HSA contribution limits have increased to $4,400 for individual coverage and $8,750 for family coverage.
  • Individuals aged 55 or older may continue to make an additional $1,000 catch-up contribution.