Every year brings important financial considerations — contributions to accounts and deductions to make before deadlines. As an investment professional, I’m always pushing my clients to be more tax aware because in many cases, how much you pay in taxes affects your bottom line more than the stocks or bonds you own.
This year, the tax landscape is changing due to the One Big Beautiful Bill Act, which, in addition to sweeping changes across almost every aspect of government, overhauls the tax system. It extends and enhances the 2017 Tax Cuts and Jobs Act (TCJA) provisions, providing tax relief that prevents scheduled increases in rates and deductions post-2025.
For employees earning $75,000–$225,000 — often considered upper middle class — this translates to an estimated annual tax savings of $1,500–$4,500 depending on filing status, family size, location, and income sources such as overtime or tips. These gains come from lower rates, higher deductions and targeted credits, though phaseouts begin to reduce benefits toward the upper end of the bracket.
Major tax and financial shifts ahead
Before getting into an itemized list of considerations, here are the big changes coming for 2026 that should be on your radar.
Tax brackets stay the same for now. Lower income tax rates and higher standard deductions from the 2017 tax cuts are now permanent. This averts a 20%–30% tax increase compared to pre-TCJA rates. In 2025, the standard deduction rises to $15,750 for single filers and $31,500 for married couples filing jointly.
SALT deduction cap quadruples. The state and local tax deduction cap jumps from $10,000 to $40,000 in 2025, with annual increases through 2029. This expanded cap means these burdens are deductible against your federal taxes, potentially generating significant savings for officers in higher-tax states.
No tax on overtime. This is especially important for law enforcement. While “no tax on overtime” doesn’t represent the full picture of the tax policy, the policy likely lowers your tax burden by offering an above-the-line deduction up to $12,500 for single filers and $25,000 for joint filers, which phases out for incomes above $150,000 single $300,000 joint. The estimated savings are expected to be $1,400-$2,500/year.
New help for families. The Child Tax Credit increases to $2,200 and adjusts annually for inflation. Families with one or two kids may see $1,000–$4,400 per year. For example, a family earning $150,000 filing jointly with two children would receive the full $4,400. Every baby born between 2025 and 2028 receives a $1,000 “Trump Account” from the IRS to start saving for the future.
Student loan overhaul. Repayment plans like SAVE and PAYE are being discontinued. PLUS loan caps are coming. The Grad PLUS program ends July 1, 2026. If you have a child in college or preparing to enroll, the way you pay for school will be markedly different next year.
529 plans become more flexible. Funds can now be used for K–12 tuition (up to $20,000), educational therapies and other expanded purposes.
Temporary perks, disappearing credits. New deductions apply to tipped income, overtime and U.S.-made car loans.
What officers should review before December 31
As December 31 approaches, what do these changes mean for law enforcement officers? Here are a few things to consider for your financial future.
Utilize Roth IRAs. Roth IRAs, with taxes paid upfront, are advantageous during lower-tax periods. Using a Roth IRA is essentially a bet that taxes are lower now than they will be when you withdraw the money. Given that we’re in historically low-tax conditions, this may be a strong time to open or contribute to a Roth IRA or convert a traditional IRA to a Roth.
Set a meeting to discuss how SALT deductions could change your tax landscape. An additional $30,000 of potential deductions in 2026 could drastically alter how you consider your tax toxicity in the year ahead and may open up avenues to receive new sources of income. Talk with a tax professional about how these deductions could shape your planning.
Year-round financial habits that matter
And regardless of the year, some financial habits always matter.
Retirement contributions. Make sure to contribute to employer-sponsored plans and IRAs to advantage your year-end tax bill. Roth IRAs won’t lower your tax burden now but can reduce your future tax exposure.
529 contributions. Some states offer tax benefits for contributing to a 529 plan. Check your state’s 529 website to understand how you can save for education while reducing your tax burden.
Gifting. This year, individuals can gift up to $19,000 without incurring gift taxes. If you plan to pass money to loved ones, gifting may help reduce estate taxes later.
Read more from Craig Ferrantino
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