The Year Is More Than Half Over — Here’s What’s Still Fixable

The Health Insurance Credit Trap That Didn’t Exist Last Year

If you buy coverage through the Marketplace, two things changed for 2026 and they compound each other. The 400% federal poverty level eligibility ceiling is back, so a household that lands above roughly $62,600 for a single person or $128,600 for a family of four loses the entire premium tax credit — not a reduced credit, the whole thing. And the cap that used to limit how much excess advance credit you had to repay was repealed outright, so repayment is now unlimited at every income level.

The practical effect: a year-end Roth conversion, a capital gain, an S corporation distribution, or a better-than-expected fourth quarter can now trigger a five-figure surprise on your return. If you are enrolled in Marketplace coverage, tell us before you make a move that changes your income, and update the Marketplace when your estimate shifts.

Source: IRS Publication 505 (2026)

Tips and Overtime: The Grace Period Is Over

The deductions for qualified tips (up to $25,000) and qualified overtime (up to $12,500, or $25,000 filing jointly) started with 2025 returns, but 2025 was a transition year — the IRS waived reporting penalties and didn’t update the forms. That relief applied to tax year 2025 only.

For 2026, the reporting is real. Forms W-2 now carry Box 12 code TP for cash tips, Box 12 code TT for qualified overtime, and a new Box 14b for the Treasury Tipped Occupation Code. Final regulations defining which occupations qualify took effect in June. If you run a restaurant, salon, delivery operation, or any business paying tips or FLSA overtime, your payroll system needs to be capturing this now — not in January.

Source: 2026 Instructions for Forms W-2 and W-3 · Notice 2025-62

Trump Accounts Opened for Funding Last Month

Contributions to the new Trump Accounts became possible on July 4, 2026. The annual limit is $5,000 per child, employers can contribute up to $2,500 tax-free to an employee’s child’s account, and children born from 2025 through 2028 are eligible for a $1,000 federal contribution deposited directly into the account.

The question we get most is about grandparents, and there is now an answer: Revenue Procedure 2026-25 provides a safe harbor treating qualifying contributions as completed present-interest gifts eligible for the annual exclusion, with no Form 709 required if the conditions are met. Worth a conversation if extended family wants to help fund an account.

Source: IRS Trump Accounts · Rev. Proc. 2026-25

Charitable Giving Now Has a Floor — and a Reason to Bunch

Two changes land this year. If you don’t itemize, you can now deduct up to $1,000 ($2,000 jointly) in cash gifts to public charities — a real benefit for the majority of taxpayers who take the standard deduction. If you do itemize, your charitable deduction only counts to the extent it exceeds 0.5% of your AGI.

That floor is why timing matters more than it used to. Spreading modest gifts evenly across years can now mean losing the deduction on the first slice every single year, and amounts lost to the floor are not generally carried forward. Concentrating two or three years of giving into one year — or using a donor-advised fund for the itemizing year — often clears the floor with room to spare. Note that gifts to donor-advised funds don’t qualify for the non-itemizer deduction, so the two strategies serve different taxpayers.

Source: IRS Publication 505 (2026)

High Earners: Your Catch-Up Contributions May Have to Be Roth

If you earned more than $150,000 in FICA wages from your employer in 2025, your 2026 catch-up contributions to that employer’s plan generally must be designated as Roth. This is not optional, and it changes the math — you lose the current-year deduction on the catch-up portion in exchange for tax-free growth.

For 2026 the elective deferral limit is $24,500, the age-50 catch-up is $8,000, and participants who turn 60 through 63 this year may be eligible for $11,250 instead. If you are in that age band and your plan offers the higher limit, this is the window to make sure payroll is withholding enough to capture it before December.

Source: Notice 2025-67

The Saver’s Credit Now, a Better Deal in 2027

The Saver’s Credit is one of the most overlooked benefits in the code — up to $1,000 per person ($2,000 jointly) for retirement contributions, available in 2026 at AGI up to $40,250 single, $60,375 head of household, and $80,500 joint. It is nonrefundable, so it only helps if you have tax liability, which is exactly why it needs to be planned rather than discovered.

Starting with tax year 2027 it is replaced by the Saver’s Match: a 50% government match on up to $2,000 of contributions, paid directly into your retirement account rather than as a refund. If your income is near the phase-out edge, there may be value in how you sequence contributions across 2026 and 2027.

Source: Notice 2025-67

Mid-Year Planning Is Where the Savings Actually Live

Entity structure, retirement plan selection, timing of income and deductions, Roth conversion capacity, estimated payments — these are August decisions. By the time a return is in front of us, most of them have already been made by default.

If your income is up, your business changed shape, you sold something, or you are simply carrying a nagging sense that your withholding is wrong, a mid-year review is the cheapest hour you’ll spend on taxes this year.

Before You Buy the Equipment, Run the Numbers

For 2026 the Section 179 limit is $2,560,000 with a phase-out beginning at $4,090,000 in purchases, and 100% bonus depreciation is now permanent for property acquired after January 19, 2025. Heavy SUVs remain capped at $32,000 under Section 179.

Which is exactly why the deduction shouldn’t drive the decision. A large write-off in a low-income year can waste deductions you’d rather have next year at a higher rate, and financed equipment produces a deduction now against cash payments for years. The right question is not “can I deduct it” but is this the year the deduction is worth the most. Talk to us before signing, not after.

Source: Rev. Proc. 2025-32 · IRS Publication 946

The Excess Business Loss Threshold Went Down This Year

The excess business loss limitation was made permanent, and the inflation indexing was re-based — which means the 2026 threshold is $256,000 ($512,000 joint), lower than 2025’s figure. Business owners who were counting on a rising threshold to absorb a loss year should recheck their projections.

Losses above the threshold aren’t gone; they convert to a net operating loss carryforward. But the cash flow and estimated payment implications this year are real.

Source: Rev. Proc. 2025-32

Your 1099 Thresholds Changed — Both Directions

For payments made in 2026, the Form 1099-NEC and 1099-MISC filing threshold rose from $600 to $2,000, indexed going forward. Fewer forms to issue in January, but only if your accounting system is flagging the new threshold rather than the old one.

Separately, and easy to confuse: the Form 1099-K third-party payment threshold reverted to more than $20,000 and more than 200 transactions. If you sell through online platforms, you may stop receiving forms you’d grown used to — which does not change what you owe on that income.

S Corporation Compensation Deserves a Second Look This Year

Reasonable compensation is not a number you set once at formation. It should move with revenue, your role in the business, and what comparable positions pay — and the IRS continues to treat understated officer wages as a priority issue.

There’s a new wrinkle for 2026: the QBI deduction phase-in range widened to $75,000 ($150,000 joint), and there’s a new minimum deduction of $400 for taxpayers with at least $1,000 of active qualified business income. Because W-2 wages feed directly into the QBI calculation, the salary-versus-distribution split interacts with the deduction differently than it did last year. Worth modeling before year-end payroll is locked in.

Source: Rev. Proc. 2025-32

Booming, Flat, or Slowing — Each Calls for a Different Plan

A strong year raises questions about accelerating deductions, funding a retirement plan, and whether your entity structure still fits. A slow year raises different ones: preserving loss deductions, revisiting estimated payments, and timing income into a year where it’s taxed less.

The mistake is running the same playbook regardless. If your 2026 looks materially different from your 2025, the plan should look different too.

Retirement Plans You Can Still Set Up for 2026

A SEP-IRA can be established and funded as late as your extended return due date, so that door stays open well into 2027. A solo 401(k) is different — employee deferral elections generally have to be in place by December 31, even though the dollars can be deposited later.

That distinction catches people every year. If a solo 401(k) is the right vehicle for you, the paperwork needs to happen in the fall, not at filing time. For 2026 the defined contribution limit is $72,000.

Source: IRS Publication 560

Source: IRS Publication 509, Tax Calendars · FinCEN BOI