Tax Planning Just Became Non-Negotiable for Inheritors: What Changed in 2026
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Tax planning just went from "nice to have" to absolutely non-negotiable for inheritors.
Here's why:
Trump's One Big Beautiful Bill Act changed the game in 2026.
The $15M estate tax exemption is now "permanent."
The SALT cap jumped up to $40k, which is HUGE if you live in a high-tax state.
There are new floors on charitable deductions.
And once your income crosses $500K, phase-outs start kicking in that could cost you serious money if you're not planning ahead.
In this episode, I walk you through the biggest changes you need to understand and explain why you need to be thinking about taxes year-round, not just in April.
🗓️ Schedule a FREE call to talk more about how I can help you navigate a current or future inheritance.
Transcript:
Understanding 2026 Tax Changes: What Inheritors Need to Know
Hey, I'm Katherine and thanks for joining me at Heir Necessities, the podcast that turns complex financial topics into real talk for Gen X, Millennial, and Gen Z inheritors. Each episode of this podcast, I break down a different topic related to generational wealth and inheritance. My goal is that you can stop asking Google or ChatGPT what to do with your money and come here instead for real talk, real advice, and real solutions that you can start implementing in your life.
On this episode of Heir Necessities, we are diving into everyone's favorite topic, taxes. Specifically, we are talking about the huge tax changes that are now in place in 2026 that all current and future inheritors need to understand.
Before I dive in, if you are enjoying the Heir Necessities podcast and you want to support it and me out, I would be so appreciative if you could leave a review, even just stars, no text is necessary, Spotify, Apple Podcasts, it's hugely helpful to me and it helps me reach more inheritors like you.
Trump's One Big Beautiful Bill Act (OBBA): Overview and Impact
In the summer of 2025, Trump's One Big Beautiful Bill Act passed. If you hear people talking about OBBA or O-triple-B-A, that is what they're talking about.
There were a lot of changes contained in OBBA, but the bill also made permanent a whole bunch of provisions that were set to sunset in 2026. And that's where we're gonna start.
Estate Tax Exemption Changes: From Temporary to “Permanent”
The Tax Cuts and Jobs Act in 2019 made some significant tax changes. It expanded the tax brackets, which effectively lowered tax rates. It increased the standard deduction.
And if you have wealthy parents, this is one you were definitely paying attention to. It significantly increased the estate tax cap. So in 2026, a federally taxable estate for an individual has to be more than 15 million and for a married couple, it has to be more than 30 million.
That increased the estate tax exemption though, along with those lower individual tax rates and the increased standard deduction were all set to expire in 2026. So had OBBA not passed, the estate tax cap would have gone from 14 point some million back down to six million, which is significant because now you have a whole ton more people, possibly including your parents, who didn't have a federally taxable estate for six, seven years. And now in 2026, they do.
Thankfully or not thankfully, depending on how you view taxation schemes, it's not something that we need to worry about. That 15 million for an individual, 30 million for a married couple, estate tax exemption is now permanent. It's gonna continue at that level and it's going to continue increasing for inflation.
Obviously permanent is a relative term. If you had a Democratic president and a Democratic Congress that came in, they could very easily and probably would lower that threshold. But for now, it's here to stay, along with the lower tax rates, higher spread of tax brackets, and also the increased standard deduction.
So the first change you need to know about in OBBA is actually that a lot of things aren't changing at all, and that is probably to your benefit.
SALT Cap Increase: State and Local Tax Deduction Changes for 2026
The next thing that did change is something that is extremely important if you live in a state that charges income tax. There is something called the SALT cap, the State and Local Tax Deduction Cap.
Prior to 2019, you could deduct your state paid income taxes from your federal tax liability. So in effect, your state income taxes that you paid reduced the amount of tax that you owed at the federal level. In 2019, they capped the amount of state and local taxes that you could deduct at $10,000.
And so if you have someone who lives in a state like Oregon who's paying $30,000 in state income tax and has a $15,000 property tax bill, their itemized deductions would have been $45,000, which is significantly higher than the standard deduction for a married couple. But the SALT cap was at $10,000. So they couldn't deduct that $45,000 anymore.
They could only deduct $10,000 of it. The SALT cap has been increased now to $40,000. So for that same couple who pays $45,000 in combined state income and property taxes, they can now deduct $40,000 of those state income and property taxes, which is significantly higher than the standard deduction.
How the Higher SALT Cap Affects Itemized Deductions
And it also means that they're itemizing taxes, so there are other potential deductions that they could take. This is a big change if you have expensive property taxes, if you live in a state with income tax, and if you have other miscellaneous itemized deductions that you don't take because they didn't previously total over the standard deduction.
So if you haven't been itemizing your taxes, but you live in a state with income tax, your taxes might be itemized this year to take advantage of that higher state and local income tax deduction. With that being said, this SALT deduction is set to phase out. So it's only in existence for 2025 through 2029, which aligns well with a certain president's term.
So you might see that SALT deduction come into play as early as April, 2026, because it will be there when you file your 2025 taxes. That increased cap was put into place when the law was passed. So that's one of the few changes that goes into effect for the 2025 tax year, as opposed to in the 2026 tax year that we just entered.
Charitable Deduction Floor: New 0.5% AGI Requirement
The third OBBA change that I want to call out is that there's now a 0.5% floor on charitable deductions.
Previously, say you made a $50,000 charitable gift, you would have been able to deduct the full amount of that gift subject to AGI limits at the top end. So depending on what your AGI limit is and how you made the gift and who you made the gift to, you would have been able to deduct most or a large percentage of that gift, starting with the first dollar that you gave away. Starting in 2026, there is a floor on those gifts.
So say you made $500,000 last year and you gave away $50,000. The first 0.5% of your AGI, so $2,500, is not deductible. So your $50,000 charitable gift is no longer fully deductible.
You can only deduct $47,500.
Impact of Charitable Deduction Changes on Different Gift Sizes
If you're making huge gifts, depending on the size of your AGI, it may or may not matter. But this is important if you're making smaller gifts or if you're itemizing and you expect to be able to deduct the full value of your charitable gifts. Starting in 2026, you can't.
It's probably not going to make a huge difference on your final tax liability owed just because 0.5% of AGI is usually not a huge number, but it is a change that a lot of people won't be expecting. On the flip side of that, people who aren't itemizing their taxes this year can now take a $1,000 deduction if they're single or $2,000 if they're married for charitable gifts.
The deductibility of charitable gifts for non-itemizers has gone back and forth, but in 2026, even if you don't itemize your taxes, if you give up to $1,000 to charity as a single person or $2,000 as married, filing jointly, you can deduct those amounts from your tax bill. Hopefully this encourages more people to make some donations to charity in 2026.
Major Tax Changes Affecting High-Net-Worth Inheritors
So these are the major changes that I see affecting my clients.
And they are a reason why tax planning has become so important. Because remember that SALT cap I talked about, how important it is, how much it can save you in your taxes if you live in a state with really high income taxes? Well, that deduction starts to phase out when your income crosses over $500,000.
And so when you're a current or future inheritor, you have a high net worth, and there are years where your taxable income can get really high, it's possible that by your taxable income increasing over $500,000, you are ending up paying significantly more in taxes because you're phasing yourself out of a lot of these deductions, which is why tax planning is so essential and why it's something that I really prioritize with my clients at Sunnybranch Wealth.
Year-Round Tax Planning Strategies for Inheritors
In January of this year, I'm getting out tax letters to all of my clients and doing the last round of end of year tax planning that we started in December of 2025.
My clients will also get mid-year tax planning where we review their returns, look at how their cash flow is stacking up this year and make some plans, strategic distributions, sales, whatever it is, with the intention of minimizing gains, taking advantage of losses, whatever it is, and then also end of year tax planning, where we look in October and November at how the year is wrapping up and see what we can do before the calendar year changes.
With the changes in OBBA and the fact that a lot of these changes are going to sunset and the fact that tax law just seems to be ping-ponging back and forth over the past several years, tax planning has become more and more important. And if that's something that you're not getting from your financial advisor, I think you should be asking them why.
Connect With Katherine Fox at Sunnybranch Wealth
If you have any questions about anything I talked about, want to chat more, you can always reach out to me at katherine@sunnybranchwealth.com. You can find me on Instagram at SunnybranchWealth.
And if you'd rather just follow me here on Heir Necessities, I'll catch you on the next episode.
Let’s take the next step together
Understanding how to manage, invest, grow, and/or give away multi-million dollar inheritance isn’t easy. Inheritors can encounter a wide variety of different situations requiring knowledge and finesse to manage. If you need more help, reach out to Katherine Fox, CFP® and CAP®, financial planner for inheritors, to learn how Sunnybranch can help you evaluate your financial situation and build a plan for your financial future.
