New year brings big changes for retirement planning

Published: Thursday, January 8, 2026 at 3:00 pm

New Retirement Planning Changes Take Effect in the New Year

The new year brings significant changes to retirement planning, impacting both current savers and retirees. These changes stem from the Secure 2.0 retirement legislation and the One Big Beautiful Bill Act (OBBBA), introducing new considerations for financial planning.

One key change affects high-income earners over 50 participating in 401(k) or similar company retirement plans. Starting this year, those with $150,000 or more in FICA income in the prior year must direct their catch-up contributions to the Roth option within their plans. For 2026, those under 50 can contribute $24,500 to their company plans, plus $8,000 in catch-up contributions if they are over 50, for a total of $32,500. Individuals aged 60 to 63 can make super-catch-up contributions of $11,250 on top of the $24,500.

Another notable change is the increase in the state and local tax (SALT) deduction. Thanks to OBBBA, taxpayers can now deduct a higher amount of state and local taxes, with the cap increasing from $10,000 to $40,000 starting in 2025. This increase will revert to $10,000 in 2030. However, the amount of SALT deductible phases out for higher-income taxpayers with modified adjusted gross incomes over $500,000.

Additionally, individuals aged 65 and older can take advantage of a new $6,000 deduction through 2028. This deduction is available regardless of whether they itemize or not and doubles to $12,000 for married couples filing jointly, assuming both are 65. Income limits apply, with the deduction reduced for single filers with modified adjusted gross incomes over $75,000 and married couples filing jointly with MAGI over $150,000. The deduction is eliminated entirely for singles with MAGI over $175,000 and married couples filing jointly with MAGI of $250,000 or more.

BNN's Perspective:

These changes highlight the need for careful financial planning, particularly for those nearing or in retirement. While the Roth catch-up contribution requirement may seem restrictive for some, it could be beneficial for long-term tax planning. The increased SALT deduction offers a potential tax break, but it's crucial for high-income earners to consider how it interacts with other financial strategies. The new senior deduction provides a welcome benefit for older Americans, but it's essential to understand the income limitations. Consulting with a financial advisor is recommended to navigate these changes and tailor a retirement plan to individual circumstances.

Keywords: retirement planning, Secure 2.0, OBBBA, Roth contributions, 401(k), catch-up contributions, SALT deduction, senior deduction, tax planning, retirement savings, high-income earners, IRA, modified adjusted gross income, retirement legislation

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