What the Election Does and Doesn’t Change

The 2025 tax legislation (the One Big Beautiful Bill Act) made many of the individual rate provisions from the 2017 Tax Cuts and Jobs Act permanent and added new provisions for 2026. Several longstanding tax benefits, such as residential energy credits, electric vehicle (EV) credits and the Work Opportunity Tax Credit (WOTC) for hiring disadvantaged workers, are no longer on the books. 



“Permanent” means there is no scheduled expiration. It does not mean the rules can never be changed by a future Congress. Our suggested approach is to:

1. Plan around enacted law. Make decisions that make sense under the rules as they stand today.
2. Watch proposals with real legislative text. We will model them separately if and when they become concrete.
3. Avoid irreversible moves based on predictions. Political forecasts are not a sound basis for selling a business, restructuring ownership, or making other large unplanned asset purchases.

Year-End Planning Opportunities

Individuals and Families

• Income timing. Because rates are not scheduled to change at year-end, the question is whether shifting income or deductions between 2026 and 2027 improves your combined federal and state result, not whether you can beat an expected rate change.
• Review your withholdings to make sure they equal or exceed your 2025 withholdings, especially if you anticipate higher income in 2026. Based upon your taxable income, they might need to be at least 110% of 2025 tax.
• Review your investment portfolio. Depending on your situation, you may decide to “harvest” capital losses to offset gains, especially high-taxed short-term gains, or realize capital gains that will be partially or wholly absorbed by losses.

However, watch out for the “wash sale rule.” If you sell securities at a loss and reacquire substantially identical securities within 30 days of the sale, the tax loss is disallowed. One way to avoid this adverse result is to wait at least 31 days to reacquire substantially identical securities.

• State and local tax (SALT) deduction. For 2026, the federal SALT deduction cap is generally $40,400, reduced for higher-income taxpayers and lower for married individuals filing separately. Whether you itemize, and how much income you recognize, can affect the benefit.
• Charitable giving. Beginning in 2026, new rules apply to charitable deductions, including a floor on itemized giving and a limited deduction for non-itemizers. Bunching gifts into a single year or using appreciated securities or a donor-advised fund may be worth reviewing.
• Consider a qualified charitable distribution (QCD). If you are age 70½ or older, you can transfer up to $111,000 of IRA funds directly to charity in 2026, free of tax (but not deductible). Plus, SECURE 2.0 authorizes a one-time transfer of up to $55,000 to a charitable remainder trust (CRT) or charitable gift annuity (CGA) as part of a QCD.
• Eligible Accounts: QCDs can be made from traditional IRAs, inherited IRAs, active/inactive SEP IRAs, and inactive SIMPLE IRAs. Workplace plans like 401(k)s are not eligible directly and must be rolled over into an IRA first.
• Retirement and investment accounts. Confirm contributions, required minimum distributions, and any Roth conversion decisions before December 31. If you have funded a Roth IRA, confirm you do not exceed the allowable income level for contributions. While you have up until the due date of your return to recharacterize these contributions, doing so earlier could allow a conversion sooner.

Business Owners

• Qualified business income (QBI) deduction. The 20% pass-through deduction under Section 199A was made permanent. Eligibility still depends on taxable income, the type of business, W-2 wages, and property, so year-end income and compensation decisions matter.
• Bonus depreciation. Eligible property acquired after January 19, 2025 can qualify for 100% bonus depreciation. The purchase should make business sense on its own, the property must be placed in service in the year you intend to deduct it, and state conformity should be checked. MA for example, does not recognize bonus depreciation.
• Delay bonuses to 2027 if your business is a calendar-year accrual-basis company. The bonuses generally are deductible on its 2026 return as long as they are paid by March 15, 2027. Bonuses received by employees in 2026 are taxable in 2026. Caveat: This technique does not apply to bonuses paid to majority owners of a C corporation or certain owners of an S corporation or a personal service corporation.
• Entity structure and owner compensation. A year-end review of reasonable compensation, distributions, and basis can prevent surprises at filing time.

Estate and Gift Planning

The federal estate and gift tax exemption is $15 million per person for 2026, and it is indexed for inflation going forward. This is a good time to confirm that wills, trusts, and beneficiary designations still reflect your wishes. Annual exclusion for gifts remains at $19,000 per done and should be made by December 31. Massachusetts has its own, much lower estate tax threshold, so state-level planning remains important even when no federal tax is expected.

A Massachusetts Opportunity for Pass-Through Owners

If you own an interest in a partnership, LLC, or S corporation doing business in Massachusetts, a separate state-level analysis may be more valuable than any federal election headline. Massachusetts offers two elective entity-level excise regimes:

• Chapter 63D: an elective 5% entity-level excise.
• Chapter 63E: an elective 4% excise on qualifying distributive income above the applicable surtax threshold, effective for tax years beginning on or after January 1, 2026.
• An eligible entity may elect either or both.
• Qualified members generally receive credits equal to 90% of their attributable excise.

Whether an election is worthwhile depends on a combined federal and state calculation, and it is not beneficial for every owner. These changes were enacted before the election and are unaffected by its outcome. If you own a pass-through entity, please contact us before year-end so we can model the result for you.

Next Steps

Year-end is the last chance to act on many of these items, so we recommend scheduling a planning conversation with your tax adviser before December. You should have a current estimate of your 2026 income, any planned asset sales or major purchases, and your expected charitable giving available. He or she should review your situation under current law and let you know promptly if proposed legislation begins to affect your plan.

This 2026 Year-End Tax article is based on the prevailing federal tax laws, rules and regulations. Of course, it is subject to change, especially if additional tax legislation is enacted by Congress before the end of the year.

Finally, please remember that this article is intended to serve only as a general guideline. Your personal circumstances will likely require careful examination. You should schedule a meeting with your advisor to assist with all your tax-planning needs.