Major Tax Change Coming in 2026 — What High Earners Must Do Now

Core Insights - High earners are facing potential tax increases after 2025 due to the expiration of major provisions of the Tax Cuts and Jobs Act, which could lead to higher marginal income tax rates, lower estate and gift tax exemptions, and changes in deductions [1] Group 1: Tax Planning Strategies - Maximizing deductions through lumping charitable gifts is advised, as deductions apply only after contributions exceed 0.5% of adjusted gross income (AGI), with a maximum deduction of 35% of AGI for gifts [3][4] - High-income families are encouraged to consider lumping charitable gifts or using donor-advised funds (DAFs) to capture larger deductions in 2025 while maintaining flexibility in distributing funds to charities [4] - Shifting income into 2025 is recommended to lock in lower tax rates, with strategies including receiving year-end bonuses in December instead of January and sending invoices earlier for business owners [6][8] Group 2: Roth Conversions - Partial Roth conversions are suggested to reduce future tax burdens and lock in current tax rates, allowing for tax-free growth and withdrawals later [7][9] - A methodical approach to Roth conversions includes estimating 2025 income, selecting a maximum tax bracket, and converting only enough to stay within that bracket by year-end [9]