The new year brings several changes that could affect how Americans save for retirement and how some retirement-related tax strategies play out, according to a retirement roundup by Morningstar shared through the Associated Press.
One of the biggest changes for people saving in employer plans involves catch-up contributions for older, higher-income workers under the retirement legislation known as Secure 2.0. The rules start in 2026 for high-income earners with $150,000 or more in FICA income in the prior year who are over 50, requiring those catch-up contributions to go to the Roth option rather than traditional tax-deferred contributions.
For 2026, the roundup says 401(k) investors under 50 can contribute $24,500 to their company plans, and that investors over 50 can contribute $24,500 plus $8,000 in catch-up contributions, for a total of $32,500. It also says people ages 60 to 63 can make “super-catch-up” contributions of $11,250 on top of the $24,500 baseline.
The Secure 2.0 change can also intersect with how some people’s 401(k) plans are set up. The roundup says that some 401(k) plans may not include a Roth option, and in that case participants should consider making a full IRA contribution in addition to their baseline 401(k) contributions. It lists 2026 IRA contribution limits of $8,600 for people over 50 and $7,500 for those under 50, and it says that if someone can invest beyond the IRA limit, the overage should go to a taxable brokerage account.
The roundup also addresses what to do if a saver’s goal is to keep making traditional, tax-deferred 401(k) contributions rather than Roth. It says Secure 2.0 forces higher-income older workers into Roth at least with the catch-up portion of their contributions, and it lays out a approach where workers contribute the base 401(k) limit of $24,500 to the traditional option while directing catch-up contributions to Roth.
Another change highlighted for retirement savers involves higher state and local tax, or SALT, deduction amounts tied to the One Big Beautiful Bill Act. The roundup says the SALT deduction cap increases from $10,000 to $40,000 starting in 2025 and is set to revert to $10,000 in 2030. It also says the deductible amount phases out for higher-income taxpayers with modified adjusted gross incomes above $500,000.
Because SALT deductibility can affect after-tax planning, the roundup suggests that higher-income earners close to the $500,000 modified adjusted gross income threshold should consider ways to come in under that level. It says those earners might favor contributions to traditional tax-deferred retirement plans rather than Roth or max out health savings accounts, and it says qualifying for the higher SALT deduction might argue against strategies that increase income—giving the example of converting traditional IRAs to Roth.
Even with those potential tradeoffs, the roundup says savers should not dismiss longer-term strategies. It says Roth contributions or converting IRAs might still make sense long-term even if they reduce SALT deductibility.
The roundup’s third highlighted change is a “senior deduction” available through 2028 for people 65 and up. It says the deduction is $6,000 and is available whether a filer itemizes or not, and it doubles to $12,000 for married couples filing jointly if both spouses are 65. For non-itemizers, it says the deduction stacks on top of the standard deduction, and it provides example 2026 totals of $16,100 for single filers using the standard deduction and $24,150 for single filers over 65.
For married filers, the roundup provides example totals of $32,200 for married couples filing jointly and $47,500 for married couples over 65 filing jointly. It says income limits apply and that the deduction is reduced for single filers with modified adjusted gross incomes over $75,000 and for married couples filing jointly with MAGI over $150,000. It says the deduction goes away entirely for singles with MAGI over $175,000 and for married couples filing jointly with MAGI of $250,000 or more.
The roundup also cautions that some early retirees may try to keep MAGI down to qualify for the full senior deduction, but says those efforts should be balanced with other strategies, including converting traditional IRA balances to Roth. The article was provided to The Associated Press by Morningstar.