New Year, New Tax Rules: What You Need to Know About IRS Changes

ARTICLE | January 21, 2026

The start of a new year typically brings fresh opportunities and resolutions. For taxpayers and business owners, 2026 also brings significant regulatory changes that will affect how you plan, save, and report your finances. 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.

With the passage of the One Big Beautiful Bill Act in mid-2025, much of the uncertainty surrounding expiring provisions from the Tax Cuts and Jobs Act has been resolved. Federal tax rules are now largely settled, at least for the next few years. However, several new provisions and inflation adjustments deserve your attention. Understanding these changes now can help you avoid surprises during next year’s filing season and position you to take full advantage of available tax benefits.

Inflation Adjustments Provide Modest Relief

Each year, the IRS adjusts tax brackets, deduction amounts, and various thresholds to account for inflation. For the 2026 tax year (which you’ll report on returns filed in 2027), the standard deduction increases to $16,100 for single filers and $32,200 for married couples filing jointly. Tax bracket thresholds have also been adjusted upward, helping taxpayers keep more income out of higher tax rates, though the top marginal rate remains at 37%.

These changes affect more than just your annual filing. They have practical implications for withholding estimation, year-end deduction planning, and quarterly estimated payments. If you haven’t reviewed your withholdings lately, now is an excellent time to ensure you’re neither overpaying throughout the year nor setting yourself up for an unexpected tax bill.

Retirement Catch-Up Contributions Get a Roth Mandate

One of the most significant changes for retirement savers and employers comes from the SECURE 2.0 Act. Starting with plan years beginning after December 31, 2025, high-earning participants (those with prior-year wages above approximately $150,000) age 50 or older must make catch-up contributions to their 401(k), 403(b), or governmental 457(b) plans on a Roth (after-tax) basis instead of pre-tax.

This doesn’t eliminate catch-up contributions or change age-based eligibility. Workers can still make catch-ups starting the year they turn 50, and plans may still offer higher “super catch-up” limits for participants ages 60 through 63. The change only affects how these contributions are taxed for higher earners. For employers, this means updating payroll systems and plan documents to accommodate the new requirements. If your plan doesn’t currently offer a designated Roth option and you have affected participants, you’ll need to add this feature or risk being unable to accept those participants’ catch-up contributions.

Reporting Thresholds Rise for Small Payments

Starting January 1, 2026, the reporting threshold for Form 1099-MISC and 1099-NEC increases to $2,000, up from $600. This change will ease compliance burdens for many small businesses and reduce the volume of informational returns. However, it’s crucial to remember that while reporting requirements have changed, the law still requires taxpayers to report all taxable income, even if they don’t receive a 1099 form. This shift emphasizes the importance of maintaining accurate records of all income sources, regardless of whether third-party reporting occurs.

New Remittance Tax Takes Effect

Under the One Big Beautiful Bill, a 1% excise tax now applies to certain electronic remittance transfers to foreign countries. These transfers, often made by individuals sending money to family members abroad, are subject to this new tax for personal, family, or household purposes. Financial institutions and remittance providers will be responsible for collecting, depositing, and reporting this tax to the IRS. If you regularly send international money transfers, consider consulting with a tax advisor to understand your compliance obligations and explore potential planning strategies.

Additional Benefits for Seniors

From 2025 through 2028, taxpayers age 65 and older can claim an extra deduction of up to $6,000, even if they don’t itemize. Couples where both spouses qualify could deduct up to $12,000. This deduction phases out starting at $75,000 of income for singles and $150,000 for joint filers. For many retirees, this provision could significantly lower taxable income during these years.

Early Planning Is Essential

Given the scope of these changes, early planning is more important than ever. Individual taxpayers should review withholdings and estimated payments in light of higher standard deductions and bracket changes, adjust retirement contributions considering the new Roth catch-up rules, and ensure they’re tracking all income sources regardless of 1099 reporting thresholds.

Employers and plan sponsors need to update payroll and human resources systems to reflect SECURE 2.0 requirements, communicate retirement plan changes and eligibility thresholds to employees, and ensure accurate reporting and withholding systems for new compliance requirements. Businesses should assess how reporting threshold increases affect accounts payable and vendor management while adjusting internal tax reporting practices to align with updated IRS filing thresholds.

Partner with Experienced Advisors

At Insero Advisors, we understand that navigating tax law changes can feel overwhelming. Our team of tax professionals stays current on all regulatory updates so you don’t have to. We bring more than 50 years of experience helping businesses and individuals plan strategically, identify opportunities, and maintain compliance. When you work with Insero, you gain access to a whole team of state, federal, and international tax expertise dedicated to understanding your unique situation and delivering solutions tailored to your needs.

If you have questions about how any of these updates affect your specific situation or want to develop a proactive tax strategy for the year ahead, we invite you to contact our team. Early planning today can help you reduce surprises during the next filing cycle and position you to take full advantage of every available tax benefit.