Now That You're Done With Your Taxes, Here's What to Know for 2026 - Saunders, WSJ

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Standard deduction or itemized?

Determine whether you’ll choose the standard deduction or itemize on Schedule A, because that affects other moves.

Pay attention: Last year’s tax changes reversed a trend that saw filers opting for the standard deduction when lawmakers expanded the itemized deduction for state and local taxes (SALT) to $40,000. About 20 million filers are expected to itemize for 2025, up from 16.3 million for 2024, according to the Tax Foundation.

Filers taking the standard deduction subtract one overall amount from income. For 2026, that’s $16,100 for single filers and $32,200 for married joint filers. Taxpayers ages 65 and older get an additional sum, which this year is $2,050 for singles and $1,650 for each spouse who is 65 or older. Note: The $6,000 senior deduction enacted last summer is a separate provision, and eligible filers can claim it through tax year 2028 whether or not they itemize. Filers who itemize can deduct a variety of expenses, including mortgage interest, charitable contributions, medical costs and SALT—which is $40,400 for 2026. If you’re going this route, look for ways to maximize these deductions, especially charitable donations (discussed below).

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Get ready for Trump accounts https://trumpaccounts.gov/ (I was told that this site appears to have been designed by a 5th grader)

U.S. citizens born from 2025 through 2028 are eligible for a $1,000 contribution to a Trump savings account by the government, and some children under age 18 could qualify for gifts from billionaires and others to such accounts. Employers and individuals like grandparents also can contribute to them, but the total allowed annually (beyond government and charitable contributions) is $5,000 a year.

The funds will grow tax-deferred and be penalty-free of federal taxes at withdrawal when the children are eligible for retirement at age 59½. They can also be converted to Roth IRAs when the child turns 18, although tax will be owed on the conversion. In addition, the cost basis of after-tax contributions must be tracked to avoid overpaying tax on conversions or withdrawals, says Tim Steffen, a CPA who is director of advanced planning at Baird.

Trump accounts go live in July, and key points remain unclear. While they must be invested in U.S. stock funds with annual investment fees of 0.10% or less, account-maintenance and advisory fees that could severely dent small accounts aren’t known. People making contributions might also have to file gift-tax returns and subtract that amount from their gift- and estate-tax exemption. (This will likely be fixed.) Suggestion: Sign up eligible children now, and look for government guidance.

Do more with 529 plan funds

Beginning in 2026, savers with 529 education-savings accounts can use tax-free withdrawals of up to $20,000 for K-12 expenses, which is double the prior limit of $10,000.

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