The One Big Beautiful Bill Act

January 13, 2026

What you need to know!

The One Big Beautiful Bill Act and Financial Planning

The One Big Beautiful Bill Act was signed into law summer 2025 in a move to preserve key elements of the Tax Cuts and Jobs Act (TCJA) from 2017.

Provisions of the bill either permanently or temporarily extend aspects of the tax code which likely affect YOU and brings numerous financial planning implications and opportunities for us to consider.

Key Financial Planning Provisions of the OBBA:

Individual federal income tax rates: Permanently extends, with inflation adjustments, starting in 2026.

Standard deductions: Makes permanent the increased standard deduction, adjusted annually for inflation. For 2026, the standard deduction is $16,100 for individual filers, $32,200 for joint filers and $24,150 for head of household.

New permanent charitable deduction: Beginning in 2026, those who claim the standard deduction can claim an additional deduction of up to $1,000 for single filers or $2,000 for married filing jointly for charitable contributions of cash.

Enhanced standard deduction for seniors: Adds a $6,000 deduction for each individual senior who is age 65 or older through 2028. The senior deduction begins to phase out when the taxpayer’s income (MAGI) exceeds $75,000 for single and $150,000 for joint filers.

Frequently Asked Question: What happens if my income goes over the phase out amount?

If your income goes over the threshold amount, the $6,000 deduction reduces by $0.06 for every $1 of income that exceeds the threshold.

Auto Loan Interest: Taxpayers can deduct up to $10,000 of interest on a car loan used to purchase a personal vehicle. The car must be purchased (not leased) between 2025 and 2028 and final assembly must have occurred in the United States.

Cap on itemized deductions: The value of itemized deductions is capped at 35% for taxpayers in the highest tax bracket.

SALT (state and local taxes) deduction: Increases the cap from $10,000 to $40,000 increasing 1% annually through 2029, phasing out at $500,000 of modified adjusted gross income (MAGI) before returning to $10,000.

Alternative minimum tax (AMT): Permanently extends the increased individual AMT exemption amounts and reverts the exemption phaseout thresholds to 2018 levels ($500,000 single and $1 million joint filers), indexed for inflation thereafter.

Increased estate and gift tax exemption: Permanently extends the estate and lifetime gift tax exemption to $15 million single and $30 million joint filers starting in 2026 and indexed for inflation.

Frequently asked question: how much can I gift to family members or friends in 2026 without paying taxes?

The annual gift tax exclusion amount is $19,000 per person in 2026. If you gift more than $19,000 to any single person, you should file a gift tax return and the additional amount will simply reduce your lifetime gift tax exemption amount.

There are many more provisions of the One Big Beautiful Bill Act that affects younger families such as the permanent child tax credit, the Trump savings account, an expanded definition of qualified expenses for 529 plans and many more.

Contact Amy at amy.kelly@prudential.com if you want to discuss any of these provisions in greater detail.

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What is the Surviving Spouse Tax Penalty?

May 28, 2026

What is the Surviving Spouse Tax Penalty? (this blog is intended for those over age 65. There are many additional rules for younger individuals) The Surviving Spouse Tax Penalty, also referred to as the Survivor’s Tax Penalty or Survivor’s Penalty or Widow’s Penalty is simply an increase in income taxes for a surviving spouse who files as single filer vs. married filing jointly after the death of a spouse. When do I have to pay the Surviving Spouse Tax Penalty? This tax penalty isn’t necessarily a specific tax a surviving spouse pays, it is merely an increase in taxes as noted above. What specifically causes the tax penalty or the increase in taxes for a surviving spouse? When one spouse in a married couple passes away, the amount of income usually doesn’t significantly reduce (assuming the couple is retired). Retirement income usually rolls over to the surviving spouse. This includes but is not limited to IRA income, joint pensions or annuities, along with other non-earned income. Social Security income reduces so the surviving spouse receives 100% of the higher benefit. The increase in income taxes for a surviving spouse occurs for typically the following reasons : · The tax brackets for married filing jointly are more favorable for 2 individuals filing together than for an individual filing as a single taxpayer. For example, if a married couple has $250,000 of total taxable income, they pay taxes at the 24% marginal tax rate vs. a single filer paying taxes at the 32% marginal rate for $250,000 income.

2025 Income Taxes are Filed, Now What?

April 12, 2026

You just filed your income taxes. Now what? You filed your income taxes for 2025. Don’t put those returns away just yet. There is important information you need to know to plan for 2026: What was your Adjusted Gross Income for 2025? If you are still working, consider these strategies for this year’s IRA / Roth IRA contributions: Do you expect your income to be similar this year and if so, were you under $240,000 (married filing jointly) or $153,000 (single) last year and expect to be under that amount for this year to make a Roth IRA contribution for yourself and your spouse? If yes, now may be a great time to make your contribution since the market has been so volatile so far this year. Make your contribution now and hopefully the market will go up from here. If your Adjusted Gross Income was too high to make Roth contributions, you may be eligible to make “back-door” Roth contributions. You can do this as long as you don’t already have an IRA account. If you are still working and making 401k catch up contributions, check your AGI, if it exceeded $150,000 for 2026, your catch-up contributions must be made as Roth 401k contributions. This means, your taxes could increase for 2026 because your catch-up contributions are no longer pre-tax. Do you have a Health Savings Account (HSA) and did you maximize your contribution and income tax deduction for 2025? If you did, excellent work! If not, set up your budget now so you can make the maximum deductible contribution for 2026. Did you know your HSA account is the best savings account to have (in my opinion), because an HSA is the only account Uncle Sam never taxes (as long as you use the account for qualified medical expenses)!! Did you itemize or take the standard deduction? If you took the standard deduction last year and expect to again this year, you may want to take advantage of the EXTRA $2,000 charitable deduction for charitable contributions of cash. Are you still working and age 60? The SECURE 2.0 Act provides an additional 401k catch-up contribution of $11,250 for those ages 60-63. Are you retired and age 65 or over? Was your Adjusted Gross Income over $150,000 (married filing jointly) or $75,000 (single)? If so, you likely part of your extra standard deduction amount for seniors of $6,000 per person. This deduction is prorated, so even if you exceeded the Adjusted Gross Income threshold, you may have received a portion of the additional standard deduction amount. If your income was higher and you lost all or a portion of the deduction, perhaps look at income tax planning for this year to lower your AGI. Was line 15 on your tax return $0 or a negative number? If so, you may have missed a HUGE opportunity to do a Roth conversion. Consider planning to not miss out on this income tax planning opportunity again this year. Please reach out to Amy directly with any questions at amy.kelly@prudential.com . Content in this material is for general information only and not intended to provide specific individualized tax, legal advice, or recommendations for any individual. We suggest that you discuss your specific situation with a qualified tax or legal advisor .

Mega Backdoor Roth Strategy for saving for retirement

The Mega Backdoor Roth Strategy

February 16, 2026

This is a Roth savings strategy for higher income earners who have the ability to save above and beyond their 401k/403b employee contributions limits of $24,500 (or $32,500 if over age 50 in 2026). However, keep in mind the maximum combined employee and employer contribution limit for 2026 is $72,000. This means you are limited as to the amount of after-tax contributions you can make annually. Pros: - Able to direct funds to Roth if you cannot make direct Roth IRA contributions due to income phase-out ranges (phase-out starts at $81,000 of income as single filer and $129,000 for married filing jointly). Logistically you make after-tax 401k contributions that are then converted to Roth within the retirement plan or rolled out to a Roth IRA. - Able to direct funds to Roth if you cannot make back-door Roth IRA contributions (non-deductible IRA contributions converted to Roth). If you already have money in any IRA and make non-deductible IRA contributions with the intent to convert to Roth, you will pay tax on all or part of your current IRA balances. Cons: - Your employer retirement plan must allow for after-tax contributions. - Your employer retirement plan must allow Roth contributions to convert within the plan. - If you make the after-tax 401k/403b contributions, you must then remember to convert to Roth within the retirement plan or rollover to an outside Roth IRA for the growth on the after-tax contributions to be characterized as Roth. - You must be eligible to rollover after-tax contributions out of your 401k, typically in-service 401k rollovers are permitted at age 59 ½ - You are still limited in the amount of after-tax contributions you can make by the $72,000 maximum combined employee and employer contribution annual limit. Mega backdoor Roths are still typically a great strategy for those who have excess funds to save and/or need to catch up on their retirement planning savings. Please reach out to Amy directly with any questions at amy.kelly@prudential.com . Content in this material is for general information only and not intended to provide specific individualized tax, legal advice, or recommendations for any individual. We suggest that you discuss your specific situation with a qualified tax or legal advisor. A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.