5 Major IRS Changes Taking Effect in 2026 You Need to Know

Article | January 09, 2026

Authored by Your Firm LLC

Happy 2026! Let's take a look at the practical considerations the new year brings. The IRS and Congress have enacted tax law changes and regulatory updates that take effect this month and will impact individual taxpayers, employers, retirement plan sponsors, and businesses of all sizes. From tax filing to retirement planning, here are a few key things you should know about what's new this year:

1. Inflation adjustments and key tax amounts

The IRS makes yearly adjustments to tax rates, deduction amounts, and thresholds to account for the effects of inflation. For the 2026 tax year (reflected on the returns you'll file in 2027), notable changes include these items:

• Standard deduction increases: The standard deduction for 2026 increases to $16,100 for single filers and $32,200 for married couples filing jointly.
• Tax bracket thresholds: Adjusted income brackets help taxpayers keep more income out of higher tax rates, though the top marginal rate remains 37%.
• Alternative minimum tax (AMT) exemptions: AMT exemption amounts are also updated, potentially reducing AMT exposure for many taxpayers.
• Other adjustments: Limits for benefits like healthcare flexible spending accounts, foreign earned income exclusion, and gift tax exclusions have also been increased to offset inflation. Find details here.

These changes all have an impact on various aspects of tax planning, including withholding estimation, year-end deduction planning, and quarterly estimated payments. At Your Firm, our Tax Services team stays at the forefront of these annual adjustments, helping clients across the Mid-Atlantic region understand exactly how inflation-related changes affect their specific situations.

"Tax planning involves much more than filling forms," says Jamie Miller, CPA and Partner at Your Firm. "These annual inflation adjustments create real opportunities for our clients. We work with individuals and businesses throughout the year to adjust their tax strategies, not just at year-end. Understanding how these threshold changes impact withholding, estimated payments, and deduction planning can mean significant savings."

Need help navigating these changes? Our team of over 80 CPAs and tax specialists can provide the strategic tax planning and compliance services you need to optimize your tax outcomes.

2. Mandatory Roth catch-up rules for retirement plans

One of the most impactful regulatory developments for employers and retirement plan participants is the SECURE 2.0 Act catch-up contribution rules. Here's a synopsis of changes beginning in 2026:

Most of the SECURE 2.0 catch-up rules stay the same (age 50+ catch-ups and the higher "super" catch-ups at ages 60-63), but high-earning participants will generally be required to make their catch-up contributions on a Roth (after-tax) basis instead of pre-tax. The key change is how catch-ups are taxed for certain workers, not whether catch-ups are allowed.

Starting with plan years beginning after December 31, 2025, any participant age 50 or older who had prior-year FICA wages above an indexed threshold (around $150,000 for 2026) with the same employer must make all 401(k), 403(b), or governmental 457(b) catch-up contributions under Roth rules. This applies to age-50+ and age 60-63 "super" catch-up contributions in 401(k), 403(b), and governmental 457(b) plans, but not to SIMPLE IRAs or to special "service-based" 403(b) and 457(b) catch-ups.

Effect on employers and plan design

If a plan does not offer a designated Roth option and has participants who would be subject to the Roth-only rule, the plan will effectively be unable to accept those participants' catch-up contributions unless the sponsor adds a Roth feature.

What doesn't change in 2026

Age-based eligibility remains: workers can still make catch-ups starting the year they turn 50, and plans may still offer higher "super catch-up" limits for ages 60-63, subject to annual IRS dollar limits. Participants under the wage threshold may continue to choose pre-tax or Roth catch-ups (if the plan allows both), just as before; the new rule only forces Roth treatment for the higher-earning group.

Your Firm's Retirement Plan Administration and Consulting practice helps employers navigate these complex changes. Our team, which includes consultants with specialized credentials, can assist with updating payroll systems, revising plan documents, and communicating changes to participants. We also offer co-fiduciary services to help plan sponsors fulfill their responsibilities while minimizing compliance risks.

3. Higher reporting thresholds for miscellaneous forms

As part of broader tax reform, the IRS has increased reporting thresholds for certain informational returns. Starting January 1, Form 1099-MISC and 1099-NEC reporting thresholds will increase to $2,000 (up from $600). This means fewer small payments will trigger reporting requirements, easing compliance for many small businesses and payors.

"While this change reduces the reporting burden for businesses, it's important to remember that the law still requires taxpayers to report all taxable income, even if they don't receive a 1099 form," notes Jamie Miller. "We're helping our clients understand how this threshold change affects their accounts payable processes and vendor management, and ensuring their internal systems remain compliant."

At Your Firm, we understand that compliance changes like these require practical adjustments to your accounting systems. Our Outsourced Accounting and Business Advisory teams can help you update your processes to align with the new thresholds while maintaining accurate financial records.

4. New 1% remittance tax on certain transfers

Under new legislation called the "One Big Beautiful Bill," a 1% excise tax will apply to certain remittance transfers to foreign countries starting January 1. A remittance transfer is an electronic money transfer, often by migrant workers, from their country of residence to family or individuals in another country. These are also commonly referred to as international money transfers or international wires.

This excise tax is assessed on electronic transfers of funds for personal, family, or household purposes. Financial institutions and remittance providers will be responsible for collecting, depositing, and reporting this tax to the IRS. Businesses and individuals who regularly send remittances will be wise to consult professional tax advisors to understand compliance obligations and potential planning strategies.

Your Firm's International Tax team, which includes specialists in cross-border tax issues, can help you navigate the complexities of this new remittance tax and develop compliance strategies that align with your specific situation.

5. Planning tactics for individuals and businesses

For individual taxpayers:

• Review your tax withholdings and estimated payments in light of the higher standard deductions and tax bracket changes taking effect in 2026.
• Adjust your retirement contributions, considering Roth catch-up rules.
• Track all your income sources, even if they're not reported on a 1099, to account for increased 1099 reporting thresholds.

For employers and plan sponsors:

• Update payroll and human resources systems to reflect Roth catch-up rules and other SECURE 2.0 requirements.
• Communicate retirement plan changes and eligibility thresholds to employees.
• Ensure accurate reporting and withholding systems for remittance tax and other new compliance requirements.

For Businesses:

• Assess how 1099 reporting threshold increases affect accounts payable and vendor management.
• Adjust your internal tax reporting practices to align with updated IRS filing thresholds.

As a Top 100 certified public accounting and consulting firm, Your Firm provides comprehensive, customized solutions through our team of industry-focused experts. Whether you need strategic tax planning, retirement plan consulting, or business advisory services, we're here to help you move forward with confidence.

6. Get a jump on 2026 filings

Because these changes and regulatory updates will affect the tax preparation process and timelines, the IRS is encouraging taxpayers to get an early start on preparing for the 2026 filing season. (After taking care of 2025, of course.)

"Knowing how 2026 changes will impact you and planning accordingly will reduce surprises during the next filing cycle," says Jamie Miller. "We encourage our clients to reach out after this year's April filing deadline to plan and prepare early for next year. Proactive planning is one of the most valuable things you can do for your financial well-being."

Your Firm serves a diverse client base of mid-market companies, nonprofits, government entities, and high-net-worth individuals across Virginia, Maryland, Washington D.C., and North Carolina. With 13 offices throughout the Mid-Atlantic and specialized expertise in industries ranging from construction and real estate to government contracting and financial services, we're positioned to provide both local knowledge and sophisticated solutions.

Nothing is permanent, except change

The IRS changes effective January 2026 bring a mix of inflation adjustments, structural tax law reforms, and regulatory updates that will impact both individuals and businesses. Given the scope of these changes - including mandatory Roth catch-up contributions, higher informational reporting thresholds, and a new remittance tax - early planning is essential.

At Your Firm, we position ourselves as a proactive partner that combines deep regional and industry insight with broad expertise, guiding clients through change and complexity to achieve their goals. Our mission is to provide exceptional guidance and partnership that empowers our clients to move forward with confidence.

Partnering with our team can help you navigate these updates, identify opportunities, and stay compliant. If you have questions about how any of these updates affect your specific situation, reach out to us. We're here to be your trusted advisor - providing the comprehensive, high-quality financial solutions you need to prosper in 2026 and beyond.