In this newsletter, you will find:

  • Individual tax benefits are expanding: Higher deductions, credits, HSA limits, and estate exemptions create new planning opportunities.
  • Year-end planning matters: Review income, deductions, investments, charitable giving, and retirement contributions before December 31.
  • Businesses can accelerate deductions: 100% bonus depreciation and higher Section 179 limits may create valuable tax savings.
  • Pass-through owners should plan: Review QBI, compensation, distributions, retirement funding, and estimated taxes before year-end.
  • State rules differ from federal rules: Maryland, Virginia, and D.C. taxpayers should account for important state-specific tax differences.

Federal Individual Income Tax Updates for 2026:

  • Standard deduction increases for 2026: Single and married filing separately (MFS)- $16,100; married filing jointly (MFJ) $32,200; head of household (HOH)-$24,150.
  • Federal income tax brackets remain indexed: The 2026 federal rate brackets remain 10%, 12%, 22%, 24%, 32%, 35%, and 37%, with indexed thresholds. For example, the 37% bracket begins above $640,600 for single filers and $768,700 for joint filers.
  • Adoption credit: Maximum adoption credit is $17,670 with a refundable portion of $5,120 (qualified expenses and income-based limitations apply).
  • Child tax credit: $2,200 per qualifying child; refundable portion is $1,700.
  • SALT deduction: Maximum $40,400 (MFS is $20,200). (Income-based limits apply).
  • Charitable deductions: Non-itemizers can claim an above-the-line deduction of $1,000, MFJ $2,000 beginning in 2026 for cash contributions. Itemizers now face a 0.5% of AGI floor.
  • Mortgage insurance and vehicle loan interest: Beginning in 2026, mortgage insurance premiums are treated as qualified residence interest. That means they are potentially deductible as part of qualified residence interest.
  • In 2026, there is also a temporary deduction for qualified passenger vehicle loan interest deduction up to $10,000 per year, subject to MAGI phaseout.
  • Dependent care: The employer-provided dependent care exclusion increases in 2026, and the child and dependent care credit % becomes more generous.
  • HSA changes: The HSA annual contribution limits are $4,400 self-only and $8,750 family, with a $1,000 catch-up at age 55 or older; HDHP thresholds rise to $1,700 self-only/$3,400 family deductibles and $8,500 self-only/$17,000 family out-of-pocket maximums expenses.
  • Estate/gift exemption: Increases to $15 million in 2026.
  • 199A deduction: There are wider phase-in ranges and thresholds based on filing status. (Thresholds: $403,500 MFJ/ $201,775 MFS/ $201,750 All other returns), and a new $400 minimum deduction for taxpayers with at least $1,000 of aggregate QBI from active qualified trades or businesses. The 20% deduction remains the same.

Tax Planning Strategies for Individual Taxpayers in 2026:

Now is the time that federal and state tax planning can provide you with a valuable opportunity to assess your current tax position before year-end. The most useful strategies are those that can change 2026 taxable income or improve after-tax cash flow before year-end.

  • Manage timing of income and deductions: If your marginal rate will differ between 2026 and 2027, you generally want to defer income into the lower-rate year and accelerate deductions into the higher-rate year.
  • Maximize IRA and retirement plan contributions: For 2026, traditional and Roth IRA contribution limits are generally $7,500 or $8,600 if age 50 or older ($1,100 catch-up). (Deductibility phases out if taxpayer or spouse is covered by a retirement plan at work).
  • Consider Roth conversions in lower-income years: Traditional IRA distributions are taxable as ordinary income. Qualified Roth IRA distributions are tax-free, and Roth IRAs are not subject to lifetime required minimum distributions (RMDs). A lower-income year can be a good time to convert traditional IRA amounts to a Roth IRA. Consult a tax advisor.
  • Harvest capital losses and manage gains: Taxpayers should review unrealized gains and losses before year-end. Realizing capital losses can offset capital gains. Long-term capital gains receive preferential rates, so hold appreciated assets long enough to qualify for long-term treatment.
  • Use charitable giving strategically: If you itemize, bunching charitable contributions into 2026 may increase the tax benefit. Charitable contributions are deductible only to the extent they exceed 0.5% of AGI, and cash contributions to qualifying charities are generally subject to a 60% of AGI limit. For taxpayers age 70½ or older, a qualified charitable distribution (QCD) from an IRA can exclude up to the applicable annual limit ($111,000 in 2026) from income if paid directly to a qualifying charity. A QCD also counts toward required minimum distributions and is often more efficient than taking the IRA distribution into income and then claiming a charitable deduction.

Planning Tips for Individuals

  • Verify withholding especially if any of the following have changed: income, dependents, deductions, or filing status.
  • Reach out to your broker at quarterly intervals to check for major investment income, capital gains/losses, dividends etc. which could affect your tax projection.
  • Compare itemizing versus taking the standard deduction, especially where state and local taxes, mortgage interest, medical expenses, and charitable contributions are significant.
  • Consider charitable giving strategies, including bunching deductions into one year when itemizing may be beneficial.
  • Review retirement contributions and required minimum distribution planning where applicable.
  • Maintain documentation for credits, adoption, education costs, childcare, dependents, state 529 plans, deductions and business use of property.
  • If you itemize your deductions, consider paying state and local taxes by December 31 to claim the deduction for 2026 since the SALT cap is $40,400 (modified adjusted gross income limitations do apply and can limit the SALT cap but not below $10,000).

Federal Business Income Tax Updates for 2026:

  • Bonus depreciation: 100% bonus depreciation.
  • Section 179: The maximum deduction is $2,560,000. (property subject to phase-out and taxable income limitation).
  • Domestic R&E: Domestic research costs are again immediately deductible; foreign R&E still must be amortized.
  • Business interest limitation: EBITDA-style calculation returned in 2025, making §163(j) more favorable.
  • Paid family and medical leave credit: Becomes permanent starting in 2026.
  • Employer childcare credit: The employer-provided childcare credit equals 40% of qualified childcare expenditures plus 10% of qualified resource and referral expenditures. Credit is capped at $500,000. The credit for eligible small businesses is 50% of qualified expenditures, capped at $600,000.
  • 1099 reporting: Forms 1099-MISC/NEC threshold increases to $2,000.
  • Cash method threshold: The inflation-adjusted gross receipts amount under §448(c) is $32,000,000.
  • Energy incentives: Several business energy credits are reduced, restricted, or terminated during 2026.

Tax Planning Strategies for Businesses in 2026:

Year-end planning for business taxpayers is driven mainly by the timing of deductions, and the most directly supported strategies center on depreciation, Section 179 expensing, accounting method choices, interest timing, and more.

  • Accelerate qualifying capital expenditures into the current year.
  • Maximize S expensing and bonus depreciation where it is more favorable than regular depreciation.
  • Review interest deductions, estimated taxes, and filing elections before year-end
  • Based on accounting method, determine if prepayment of certain expenses is beneficial.
  • Pass-through income: Sole proprietors, partners, LLC members, and S corporation shareholders should model QBI, reasonable compensation, owner distributions, and taxable income.
  • If the business has domestic research costs, consider immediate expensing under new §174A rather than amortization.

Planning considerations should focus on taxable income projections, quarterly tax payments, pass-through income, retirement plan funding, equipment purchases, and substantiation of deductions.
Planning Tips for Businesses

  • Consider if your income has changed materially since last year, forecast taxable income before year-end, and revise estimated tax payments.
  • Consider paying all state taxes by year-end to receive a deduction in the current year.
  • Consider planned equipment, vehicle, or other purchases before year-end.
  • Consider bonuses, retirement funding, and 199A QBI benefits for pass-thru entities.
  • Track business mileage, home office expenses, meals, travel, supplies, and professional fees contemporaneously.
  • Coordinate federal tax planning with state and local tax obligations, especially for pass-through owners operating in multiple jurisdictions.

State Income Tax Updates MD, VA, and DC (Individuals and Businesses):

      Maryland (Individuals)

  • Capital gains surtax: In 2025, Maryland adopted a 2% surtax on net capital gains for taxpayers with federal adjusted gross income above $350,000, subject to important exclusions and exceptions. This surtax continues in 2026.
  • Itemized deduction limitation: Maryland limits otherwise allowable itemized deductions for all higher-income taxpayers with federal adjusted gross income above $200,000. For MFS filers, the limitation applies at $100,000 federal adjusted gross income.


    Maryland (Business):

  • Non-conformity with federal: MD does not conform to federal bonus depreciation, and MD only allows a deduction for property elected under IRC §179 up to the lesser of $25,000 or the actual cost of the property for the year placed in servic


    Virginia (Business)

  • Business interest expense adjustment: Virginia reduced its additional state deduction for certain federally disallowed business interest expense under Sec 163(j) for taxable years 2025 and later.
  • Pass-through entity tax election: Virginia’s elective pass-through entity (PTE) tax remains an important planning tool for eligible pass-through businesses and owners seeking state tax deduction planning at the entity level.
  • Non-conformity with federal: Virginia does not conform to federal bonus depreciation, and for 2026 it also does not conform to the OBBBA increase in the federal §179 limits.


    District of Columbia (Individual and Business)

  • D.C. child tax credit: For the taxable year beginning January 1, 2026, the credit is $1,000 per qualifying child under age 18 as of December 31, 2025. (income limits apply)
  • Sales tax planning: D.C.’s general sales tax rate remains 6.0% through September 30, 2026, and is scheduled to increase to 7.0% beginning October 1, 2026.
  • Non-conformity with federal: D.C. does not conform to federal bonus depreciation and
    DC only allows a deduction for property elected under IRC §179 up to the lesser of $25,000 or the actual cost of the property for the year placed in service.

A Few Important Federal Tax Deadlines Approaching

DateAction ItemWho Should Watch
September 15, 2026Q3 2026 estimated tax payment due and extended partnership/S corporation returns due date.Quarterly taxpayers and pass-through entities on extension
October 15, 2026Extended individual and C corporation returns due date.Taxpayers who filed extensions
January 15, 2027Final 2026 estimated tax payment are dueIndividuals, self-employed taxpayers, and small business owners
February 2, 2027Forms W-2 and certain Forms 1099 due to recipients and agenciesEmployers and businesses paying contractors
March 16, 2027Partnership and S corporation return due and/or extension request.Partnerships, multi-member LLCs, and S corporations
April 15, 2027Individual returns, C corporation returns, extensions, IRA contribution deadline, and Q1 2026 estimated tax payment dueIndividuals, C corporations, and quarterly taxpayers

How Rubino Can Help

Tax planning is most valuable when it happens before year-end, while there is still time to act. Rubino works with individuals, business owners, and organizations to evaluate their complete tax picture, identify planning opportunities, and understand how federal, state, and local tax changes may affect them.

From income and deduction timing to retirement planning, estimated payments, pass-through taxation, business investments, and multistate considerations, our tax professionals can help you make informed decisions and plan with greater confidence.

Contact Rubino today to discuss your 2026 tax position and the year-end strategies that may be right for you or your business.

Disclaimer: This publication is provided for general informational purposes only and is not intended to constitute tax, legal, accounting, or investment advice. Tax laws and regulations are complex, subject to change, and may apply differently depending on your specific facts and circumstances. Please consult your tax, legal, accounting, or investment advisor before taking action.

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