Tax Strategies for High-Net-Worth Households in 2026

When your income and assets grow, the tax questions change. It's less about finding one more deduction and more about timing, structure and coordination: when to recognize income, which accounts hold which assets, and how wealth moves to the next generation.

The One Big Beautiful Bill Act, signed July 4, 2025, reshaped several of these rules. Here's an overview of the main strategies for tax year 2026 and what changed.

The estate and gift tax exemption is now $15 million

Before the new law, the lifetime estate and gift tax exemption was scheduled to drop sharply at the start of 2026. That didn't happen. The law raised the basic exclusion amount to $15,000,000 per person for 2026, and it will be adjusted for inflation from 2027 onward. The generation-skipping transfer (GST) tax exemption is also $15,000,000 for 2026.

For married couples, portability can matter as much as the exemption itself. When the first spouse dies, the executor can elect to pass any unused exemption to the surviving spouse by filing a timely Form 706 estate tax return, even if no estate tax is owed. Skipping that filing can forfeit the unused amount.

A higher exemption doesn't mean planning is over. Laws can change again, state estate taxes may apply at much lower levels, and income tax basis planning still matters for heirs.

Annual exclusion gifts

For 2026, you can give up to $19,000 per recipient without touching your lifetime exemption. A married couple who elect to split gifts can give $38,000 per recipient, though electing gift splitting requires filing a gift tax return. Gifts to a spouse who isn't a U.S. citizen have a separate 2026 annual exclusion of $194,000.

Say you have three children and four grandchildren. As a couple, you could move $266,000 out of your estate in 2026 ($38,000 times seven) without using any lifetime exemption. Repeated every year, that adds up. The exclusion resets each calendar year, so unused amounts don't carry forward.

Charitable giving: DAFs, QCDs and the new rules

Donor-advised funds. A donor-advised fund (DAF) is an account at a sponsoring charity. You get a deduction when you contribute, and you can recommend grants to charities over time. Contributing appreciated stock you've held more than a year is a common approach, and a DAF can help you "bunch" several years of giving into one tax year.

Bunching is more useful in 2026 because of a new rule: if you itemize, only the part of your charitable contributions above 0.5% of your AGI is deductible. With $1,000,000 of AGI, the first $5,000 of gifts produces no deduction.

Qualified charitable distributions. If you're 70½ or older, you can send up to $111,000 in 2026 directly from your IRA to an eligible charity. A QCD isn't included in your income and counts toward your required minimum distribution. Because it lowers your AGI rather than acting as an itemized deduction, it isn't affected by the 0.5% floor.

The new limits on deductions for high earners

SALT cap and phase-down. The deduction for state and local taxes rose to $40,000 for 2025 and $40,400 for 2026 ($20,200 if married filing separately). But it shrinks at higher incomes. For 2026, once modified AGI passes $505,000 ($252,500 married filing separately), the cap is reduced by 30% of the excess, though not below $10,000 ($5,000 married filing separately).

Say a married couple has $600,000 of modified AGI in 2026. That's $95,000 over the threshold, and 30% of that is $28,500. Their SALT cap drops from $40,400 to $11,900.

Limit on itemized deductions in the top bracket. Starting in 2026, if your taxable income reaches the 37% bracket (above $768,700 married filing jointly, $640,600 single or head of household, or $384,350 married filing separately), your itemized deductions are reduced by 5.4% (2/37) of the smaller of your total itemized deductions or the amount your taxable income exceeds that threshold. In practice, this means a dollar of itemized deductions saves top-bracket taxpayers about 35 cents rather than 37.

Roth conversions

A Roth conversion moves money from a traditional IRA or plan into a Roth IRA. You pay ordinary income tax on the taxable amount in the year you convert, and qualified withdrawals later are tax-free. There's no income limit on conversions.

Conversions tend to work best in lower-income years, such as after you retire but before RMDs or Social Security begin, or in a year with a business loss. They also shrink future RMDs, and Roth IRAs have no RMDs during the owner's lifetime. The trade-off is a higher tax bill now, which can also push you over the NIIT and SALT phase-down thresholds, so model the full effect first.

Asset location

Asset location means holding each investment in the type of account where it's taxed most efficiently. A common approach:

Taxable accounts: broad index funds and long-term holdings that benefit from lower capital gains rates
Tax-deferred accounts: investments that produce ordinary income, such as taxable bond interest
Roth accounts: assets you expect to grow the most, since that growth can come out tax-free

For the rates and thresholds involved, see understanding capital gains.

Trusts, at a high level

Trusts can help control how and when assets pass to heirs, provide for a spouse or children, protect assets, and in some cases remove future growth from your taxable estate. Common types include revocable living trusts, irrevocable trusts, and charitable remainder trusts. Each has very different tax and legal consequences, and the right choice depends on your family, your state's laws and your goals.

Trust planning is legal work. We strongly recommend working with an estate planning attorney to draft and fund any trust, and coordinating with your tax advisor so the income, gift and estate tax effects line up.

When to get professional help

At this level, the strategies interact. A Roth conversion changes your AGI, which affects your SALT cap, NIIT exposure and charitable floor. A large gift can trigger a filing requirement. A business sale can change everything at once. It's worth having a tax team that looks at the whole picture and works alongside your estate attorney and financial advisor.

If you own a business, our business tax solutions team can help with entity planning, owner compensation and multi-year tax projections. You can book an appointment to talk through your situation. For more ideas, see our year-end tax planning checklist and real estate tax benefits.

This article is general information, not tax, legal or investment advice for your situation.

Sources

General information, not tax advice. Tax rules change and depend on your situation. Figures are for tax year 2026 unless noted; confirm current amounts at IRS.gov or talk to a Stellar Tax professional before acting.