Smart Tax Strategies for 2025–2026: What Every Retiree and Investor Needs to Know

Tax planning is not seasonal it’s year-round. From retirement accounts to annual tax law updates, understanding current 2025 and upcoming 2026 tax rules can have a big impact on how much you keep versus how much you pay. Here’s your updated breakdown of essential retirement and income tax changes that matter now.

For tax year 2025 (returns filed in early 2026), the federal standard deduction has increased significantly under recent legislation. Single taxpayers and those married filing separately can claim a $15,750 standard deduction. Married couples filing jointly have a $31,500 standard deduction, while heads of household have a $23,625 deduction. On top of that, taxpayers age 65 and older are eligible for an additional $2,000 extra standard deduction, and a temporary bonus senior deduction of $6,000 (available per eligible individual through 2028) applies if your income is within certain thresholds ($75,000 single, $150,000 married) — which can bring a combined standard deduction for older filers much higher. IRS+1

Federal income tax rates for 2025 remain at seven brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%). These rates apply across adjusted income thresholds updated for inflation. For example, the lowest bracket generally begins at $0 and the top rate continues over incomes above the highest threshold for your filing status. IRS

Retirement account contribution limits are also rising. For 2025, you can contribute up to $7,000 total across traditional and Roth IRAs or $8,000 if you are age 50 or older. For 2026, IRA limits increase slightly to $7,500 or $8,600 with catch-up. 401(k) deferral limits rise to $24,500 for 2026, up from $23,500 in 2025. Those age 50 and over can make additional catch-up contributions up to $8,000 in 2026. Employees age 60–63 may be eligible for even higher catch-up limits under SECURE 2.0 if their plan allows. IRS+1

Taxable Social Security benefits still hinge on provisional income, which includes half your Social Security benefit plus other income. Because thresholds like $25,000 for singles and $32,000 for couples have not been updated for decades, more retirees are finding a portion of their benefits taxable even when their spending or lifestyle hasn’t changed. Jackson

Estate and gift tax rules continue to provide sizable exemptions. For 2025, the lifetime estate and gift tax exemption is about $13.99 million per individual, and the annual gift exclusion is $19,000 per person ($38,000 for married couples). These amounts remain critical for legacy and wealth-transfer planning without triggering gift taxes. Kiplinger

Charitable giving remains one of the most powerful ways to reduce your tax bill. Strategies like bunching donations, using donor-advised funds, and leveraging Qualified Charitable Distributions (QCDs) which allow IRA owners age 70½ or older to donate up to $108,000 directly from an IRA tax-free can reduce taxable income while fulfilling philanthropic goals. Kiplinger

For business owners, year-end tax planning includes prepaying deductible expenses and leveraging Section 179 expensing and bonus depreciation when timing income. Retirement plan options like SEP IRAs, SIMPLE IRAs, or defined benefit plans can shelter income while reducing taxable liabilities. Kiplinger

Real estate investors also benefit from specific rules. Up to $25,000 of passive losses may be deductible against income if adjusted gross income is below certain levels. Those who qualify as real estate professionals can deduct real estate losses currently. Cost segregation studies accelerate depreciation deductions, and 1031 exchanges defer tax on gains when reinvesting into replacement properties. IRS

Finally, don’t overlook cryptocurrency tax implications. Any income received in crypto whether payment for services or mining rewards must be reported at fair market value in USD. Spending crypto can trigger capital gains if the asset has appreciated since you acquired it, so tracking basis is essential. IRS

Staying up to date with these 2025–2026 tax amounts and planning strategies helps you reduce taxable income, optimize retirement withdrawals, and make the most of every dollar you save and spend. Planning all year not just at tax time lets you take advantage of deductions, credits, and contribution limits while minimizing surprises and maximizing long-term financial health.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.