Heading into 2026, the first full calendar year under the tax law signed in July 2025, Agemy Financial Strategies published a planning guide for building what it calls a tax-smart portfolio. The timing lines up with two moving pieces: the IRS's newly indexed 2026 brackets and deductions, and retirement account contribution limits that rose again for the year. Together they reshape how much affluent households can shelter from tax and where those dollars should sit.
What changed
The IRS raised the 2026 elective deferral limit for 401(k), 403(b) and most 457 plans to $24,500, up from $23,500 in 2025, with the standard catch-up for savers 50 and older rising to $8,000. Savers age 60 to 63 keep access to a larger catch-up of $11,250 under a SECURE 2.0 provision aimed at the final stretch before retirement. The IRA contribution limit rose to $7,500, with a $1,100 catch-up for those 50 and up. Standard deductions for 2026 also increased, to $16,100 for single filers, $32,200 for married couples filing jointly and $24,150 for heads of household, while long-term capital gains rates stay at 0%, 15% and 20% with income brackets adjusted for inflation.
Who is affected
Dual-income households with access to workplace plans get the clearest benefit from the higher deferral limits, since maxing out a 401(k) at $24,500 rather than $23,500 shelters an additional $1,000 of ordinary income per spouse before any other planning. The guide's asset-location and harvesting strategies target investors with both taxable brokerage accounts and tax-advantaged retirement accounts who have flexibility in deciding which holdings sit where. Employees or founders with a concentrated position in a single stock, common after an IPO, acquisition or long tenure at one employer, are called out separately, since a sudden liquidity event or a stock's run-up can create a much larger capital-gains bill than a diversified portfolio would.
The after-tax math
Example: an investor holding municipal bonds and REIT shares who moves the REIT (taxed at ordinary income rates on distributions) into an IRA and keeps stock index funds, which are more tax-efficient to hold in a taxable account, changes nothing about the underlying allocation but can meaningfully raise after-tax terminal wealth over a multi-decade horizon. On harvesting, an investor who sells a losing position and replaces it with a similar but not identical fund can realize up to $3,000 of the loss against ordinary income each year, with any excess carried forward, without triggering the wash-sale rule that would disallow the loss if an identical security were repurchased within 30 days.
| Account type | Tax treatment | Better fit for |
|---|---|---|
| Taxable brokerage | Capital gains and qualified dividend rates | Index funds, individual stocks held long-term |
| Traditional IRA/401(k) | Ordinary income on withdrawal | Bonds, REITs, high-turnover funds |
| Roth IRA/401(k) | Tax-free qualified withdrawals | Highest expected-growth assets |
Moves to discuss with your advisor
- Whether maxing out the higher 2026 deferral and catch-up limits, including the age 60-63 enhanced catch-up, changes this year's take-home pay planning.
- Whether current holdings are placed in the account type that minimizes the tax drag on each asset class.
- For concentrated stock, whether a structured selling plan or a charitable gift of appreciated shares reduces the tax bill relative to selling in one transaction.
- How RMDs, once they begin at 73, interact with Social Security claiming age to avoid pushing both into a higher bracket in the same year.
What to watch
State-level rules add complexity on top of the federal changes. Connecticut's estate tax exemption stands at $13.1 million for 2026, well above the federal threshold in dollar terms but still a planning point for residents with large illiquid holdings, while Colorado's flat 4.4% income tax applies uniformly regardless of bracket. Agemy's full 2026 guide frames these as a mid-year checkpoint rather than a one-time exercise, since contribution room, harvesting opportunities and concentrated-stock exposure all change as the year progresses.
Beginning in 2026, another wrinkle affects high earners specifically: anyone who made more than $150,000 in wages from a given employer in 2025 must direct any 401(k) catch-up contribution at that employer into a Roth account rather than pre-tax. That shifts the tax bill on catch-up savings to the current year instead of retirement, which changes the math on how much of the higher $8,000 (or $11,250) catch-up limit a high-earning saver actually wants to use, since the contribution no longer reduces this year's taxable income.
Sources
- First reported 2026 Tax Planning: Building a Tax-Smart Portfolio — Agemy Financial Strategies
- 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 — IRS
- Retirement topics - Catch-up contributions — IRS
After TAX is an independent publication. Articles are general information, not tax, legal or investment advice. Consult a licensed professional about your situation.
