by Peter Wechsler
President & Co-Founder, Franklin Retirement Solutions
[email protected]
Whatever and however you celebrate, I hope you have had a happy and merry holidays!
At lunch on Monday, Alan—the company comptroller and my cousin—and I were reminiscing about the old neighborhood. Where the grocery stores were, who gave out green stamps and who gave out yellow stamps, and where all the good restaurants used to be. My staff—who weren’t around for any of these places—looked at us dumbfounded. They asked if the “P” in “GPS” stood for “Peter” given how many business locations I remembered.
None of those places are around anymore. The only place you find trading stamps today is in an antique shop. And if you need to know where places are, you ask Google.
Things change.
Speaking of change, with the holidays just about wrapped up we’re just days away from a new year. With that new year comes some significant changes to the tax code courtesy of Uncle Sam and Trump’s One Big Beautiful Bill Act (OBBBA). We’ve talked about them in this newsletter before, but as a reminder, here are the big things coming in 2026.
- Your standard deduction gets a 5% boost
If you take the standard deduction, you know it increases each year according to inflation. In 2024, the standard deductible for a married couple filing jointly was $29,200 and was slated to be $30,000 even for 2025. However, thanks to the OBBBA, the standard deduction was boosted by another 5% to make it $31,500. This applies to single, married filing separately, and head of households as well, which will be $15,750, $15,750, and $23,625, respectively, for 2026. - The senior deduction is boosted.
We’ve written about this since it was first announced, but seniors 65 and older may be eligible for a much larger deduction. You already know seniors 65 and older automatically get a boost to their standard deduction ($2,000 for singles and heads of households, $1,600 each for a couple married filing jointly), but starting in 2026 those over 65 are eligible for up a bonus deduction to $6,000 each.
You have to be over 65, single, head of household, or married filing jointly, and your income has to be below certain thresholds with your modified adjusted growth income (MAGI)—$75,000 for singles and heads of households, $150,000 for married filing jointly. If your income is above that threshold, it will taper at six cents on each dollar over. - The SALT deduction is higher.
So far, the first two dealt with folks taking the standard deduction, and if you itemize, you might be feeling left out. Never fear. From 2018 to last year, you could deduct a maximum of $10,000 in state and local taxes from your federal taxes. Starting in 2026 (your 2025 tax year), you may deduct up to $40,000 if you’re single, head of household, or married filing jointly or $20,000 each if you’re married filing separately. And just like the senior bonus deduction tapering if your income is high enough, your SALT deduction will reduce as well. If your MAGI is higher than $500,000… or $250,000 for married filing single… your SALT deduction will drop $.30 for every dollar over the threshold all the way back down to $10,000. - If your car was made in America, you can deduct the loan interest
If you took out a loan in 2025 on a new car, SUV, truck, or motorcycle, you can deduct up to $10,000 of interest. It has to weigh less than 14,000 pounds and must have been “assembled” in the U.S. If you want to find out where your car was assembled, check the NHTSA’s VIN decoder. If you’re noticing a pattern in this article, know that this too will phase out if your income is too high. This time if your MAGI is over $100,000 for singles or $200,000 for married filing jointly, this deduction is reduced $200 for every $1,000 over.
One nice thing about this particular deduction—your lender is required to give you a statement by end of January 2026 stating the amount of interest you paid on your loan in 2025. - Those age 60 to 63 get a higher catch-up limit to their employer-sponsored retirement accounts.
This is another one we’ve written about a couple of times, but it’s worth repeating. If you are between the ages of 60 and 63 and your workplace offers a 401(k), 403(b), or 457 retirement account, not only do you get a larger catch-up contribution limit by virtue of being over the age of 50, you are eligible for a “super” catch-up on top of that. The young folks can contribute up to $23,500 to their employer-sponsored retirement account, while those 50+ can contribute $31,000. The super catch-up contribution limit for folks 60-63 is $34,750.
One thing to keep in mind—if you are a high earner with FICA wages over $150,000, any catch-up contributions must be made to the Roth portion of your retirement account. This was mandated by 2022’s SECURE 2.0. If you are a high-earner and your employer doesn’t offer a Roth, you can’t do any catch-up contributions.
As this will be my final newsletter article for 2025, I want to take a moment to wish each and every one of you a happy new year. Here’s hoping 2026 will be a year full of happiness, good health, and prosperity, free from any political drama and distress.
Hey, I said “hope”.
Have a great weekend, stay safe and stay warm.
Peter