2026 Retirement Catch-Up Contributions: Key Changes You Need to Know

Beginning in 2026, a significant update to retirement catch-up contribution rules will take effect under the SECURE 2.0 Act. The change impacts higher-income employees age 50 and older who contribute to employer-sponsored retirement plans such as 401(k), 403(b), and 457(b) plans.

For 2026, eligible participants age 50 and over may contribute $8,000 in catch-up contributions above the $24,500 standard plan limit, bringing the total to $32,500. Participants ages 60 to 63 are eligible for an enhanced catch-up amount of $11,250, increasing their total possible contribution to $35,750.

Prior to 2026, catch-up contributions could be made on a pretax basis (reducing current taxable income) or as Roth contributions (after-tax, with generally tax-free qualified distributions). However, beginning January 1, 2026, SECURE 2.0 requires that certain high-income participants make catch-up contributions exclusively as Roth contributions.

The mandatory Roth catch-up rule applies to employees whose 2025 Social Security wages exceed $150,000, as reported in Box 3 of Form W-2. This income threshold will be adjusted annually for inflation. Although the provision was originally scheduled to begin in 2024, the IRS delayed implementation until 2026.

If your income exceeds the threshold, you will no longer be able to make pretax catch-up contributions. Roth catch-up contributions will increase your taxable income in 2026, which may affect tax credits, deductions subject to income limits, phaseouts, and potentially your federal tax bracket.

Retirement plans that did not offer a Roth option in 2025 were required to either add one for 2026 or eliminate catch-up contributions for higher-income participants. If your plan does not offer a Roth option and you exceed the income limit, you will not be eligible to make catch-up contributions. Some employers may implement a deemed Roth election, automatically classifying catch-up contributions as Roth unless you opt out.

The 2026 high-income 401(k) Roth catch-up requirement represents an important retirement tax planning shift. Reviewing your contribution strategy now can help you manage taxable income, preserve tax efficiency, and align your retirement savings approach with the new SECURE 2.0 rules.

R&D Tax Relief Restored: Immediate Expense Deductions Are Back for Businesses

If your business conducts research or product development, the 2025 tax law update—commonly referred to as the One Big Beautiful Bill Act (OBBBA)—creates a valuable tax-saving opportunity. The new legislation restores the ability to immediately deduct domestic research and experimental (R&E) expenses, reversing a major provision under the Tax Cuts and Jobs Act (TCJA).

Under prior law, businesses were required to capitalize and amortize U.S.-based R&E expenses over five years and foreign research expenses over 15 years. Beginning with eligible 2025 expenses, companies can once again fully deduct domestic R&E costs in the year they are incurred. This immediate research expense deduction can significantly reduce taxable income and improve business cash flow.

The law also introduces planning opportunities for previously capitalized R&E costs. Businesses that amortized domestic research expenses in 2022, 2023, and/or 2024 may be able to accelerate the remaining deductions instead of continuing the five-year amortization schedule.

Small businesses—generally those with average annual gross receipts of $31 million or less over the prior three years—may apply the rule retroactively. If eligible, they can file amended tax returns for 2022, 2023, and/or 2024 to claim immediate deductions for domestic R&E expenses that were previously amortized. This may generate tax refunds for those years. Amended returns must be filed by July 4, 2026.

Businesses of any size that began amortizing R&E expenses in earlier years can deduct the remaining unamortized balance entirely on their 2025 return or split the deduction between 2025 and 2026. This acceleration strategy allows companies to recover tax benefits more quickly.

The reinstated immediate deduction also strengthens the incentive to conduct research activities within the United States. While domestic R&E previously benefited from shorter amortization periods compared to foreign research, the contrast between a full immediate deduction and a 15-year amortization period for foreign activities further increases the tax advantages of onshoring research operations.

In addition to the R&E deduction, businesses should evaluate eligibility for the federal research credit for increasing research activities. A deduction reduces taxable income, while a tax credit directly reduces tax liability dollar-for-dollar and is often more valuable. However, fewer types of expenses qualify for the credit than for the deduction, and the same costs cannot generate a double tax benefit.

The 2025 domestic R&D tax relief provisions present meaningful planning opportunities as businesses prepare their 2025 tax returns and look ahead to 2026. Careful review of prior-year filings and current research expenditures can help maximize available tax savings under the new OBBBA rules.

IRS Enhances Digital Asset Reporting with Introduction of Form 1099-DA

If you buy, sell, or trade digital assets—including cryptocurrency and certain nonfungible tokens (NFTs)—new IRS reporting requirements will significantly affect how your transactions are reported and reviewed. Although these rules do not change digital asset tax treatment, they increase transparency and IRS scrutiny through expanded third-party reporting. The updated digital asset tax reporting rules begin applying to transactions in 2025, with additional requirements taking effect in 2026.

For federal tax purposes, digital assets are treated as property, not currency. A taxable event occurs when you sell, exchange, or otherwise dispose of a digital asset. You must report a capital gain or loss equal to the difference between your cost basis (generally the amount you paid) and the amount received upon disposal. Assets held more than one year typically generate long-term capital gain or loss, while assets held one year or less produce short-term results taxed at ordinary income rates. Accurate cryptocurrency cost basis tracking remains essential.

To strengthen compliance, the IRS introduced Form 1099-DA, Digital Asset Proceeds From Broker Transactions. Beginning January 1, 2025, brokers—including many cryptocurrency exchanges—must report gross proceeds from digital asset sales. Starting January 1, 2026, brokers must also report adjusted basis information for certain transactions.

Investors will likely receive Form 1099-DA beginning with the 2025 tax year, and the IRS will receive the same data, increasing the likelihood that reporting mismatches could trigger notices. Detailed recordkeeping is critical, especially for acquisition costs and transaction history. Some decentralized finance (DeFi) platforms and foreign brokers are not required to issue Form 1099-DA, but you remain responsible for accurately reporting all taxable digital asset activity. Proactive tax planning and careful documentation will be increasingly important as enforcement expands in 2025 and 2026.

Avoid Unexpected AMT Surprises: Plan Ahead with Confidence

The Alternative Minimum Tax (AMT) applies when your tentative minimum tax exceeds your regular federal income tax liability. Certain income events—such as large long-term capital gains, significant dividend income, or exercising incentive stock options (ISOs)—can increase your exposure.

The 2025 tax legislation, known as the One Big Beautiful Bill Act, makes higher AMT exemption amounts permanent. However, beginning in 2026, those exemptions will phase out at twice the previous rate for higher-income taxpayers. This accelerated phaseout may subject more individuals to the AMT, particularly those with fluctuating or investment-driven income.

The law also increased the state and local tax (SALT) deduction limit under the regular tax system. Because state and local taxes remain nondeductible for AMT purposes, the larger SALT deduction may unintentionally increase AMT exposure for some taxpayers.

If you anticipate significant gains, stock option exercises, or high state tax payments, proactive AMT planning is critical to help manage potential tax liability under the new 2026 rules.

2025 IRA Contribution Deadline Approaching: Don’t Miss Out

It’s not too late to make a 2025 IRA contribution and strengthen your tax-advantaged retirement strategy. You have until April 15, 2026, to contribute to either a traditional IRA or a Roth IRA for the 2025 tax year. This extended deadline also applies to eligible catch-up contributions for individuals age 50 and older, allowing additional retirement savings beyond standard limits.

Taking advantage of the IRA contribution deadline can help reduce taxable income (for traditional IRAs, if eligible) or build tax-free retirement income through a Roth IRA.

Be sure to clearly designate your contribution as applying to the 2025 tax year. Contributions made between January 1 and April 15 can be allocated to either the prior year or the current year. Proper year designation is essential to ensure accurate IRS reporting and to maximize the intended tax benefits.

Strategic retirement contribution planning now can enhance long-term wealth accumulation.

Starting a Business? Get the Tax Essentials Right from Day One

If you’re planning to launch a new venture, understanding your federal business tax requirements is essential before opening your doors. IRS Publication 583, Starting a Business and Keeping Records, outlines key startup tax compliance guidelines.

Your chosen business structure—such as a sole proprietorship, partnership, limited liability company (LLC), or corporation—determines which tax forms you must file and which taxes apply, including income tax, self-employment tax, payroll tax, and excise tax.

You may also need an Employer Identification Number (EIN) and must follow proper business recordkeeping requirements to remain compliant.

Conduct a March quarter-end financial review and cash flow assessment

March is the ideal time to perform a structured quarter-end financial review before entering Q2. A proactive review helps small business owners identify cash flow gaps, control expenses, and make informed tax and payroll decisions.

Start by reviewing your profit and loss statement, balance sheet, and cash flow statement for January through March. Compare actual performance against your budget and prior-year results. Look for trends in revenue growth, gross margin, operating expenses, and net income. Even small variances can signal larger operational issues if left unaddressed.

Next, assess accounts receivable and accounts payable. Identify overdue invoices, evaluate customer payment patterns, and consider whether follow-ups or revised credit terms are necessary. At the same time, review upcoming vendor obligations and recurring expenses to prevent unnecessary cash strain.

Payroll costs should also be evaluated to ensure proper tax withholdings, benefit allocations, and compliance with federal and state requirements. Additionally, review estimated tax payments to avoid penalties and surprises later in the year.

Finally, update your 8–12 week cash flow forecast. Forecasting short-term liquidity allows you to anticipate funding needs, manage working capital efficiently, and make strategic investment decisions with confidence.

Strong financial oversight now sets the foundation for a successful second quarter.