As former Senator Max Baucus once observed, “tax complexity itself is a kind of tax.” While this is the case every year, it is especially true in 2026 as many significant tax policy changes create new financial planning opportunities and challenges. For many investors, particularly those over the age of 50 with higher incomes, these changes require careful planning at the start of the year. Rather than viewing tax policy shifts as individual hurdles, informed investors can view them as opportunities to refine their strategies.
One of the most significant changes affecting retirement savers for tax year 2026 involves catch-up contributions. For years, employees aged 50 and older have been able to contribute beyond standard limits in order to boost their retirement savings. This is a valuable tool for individuals who may have started saving late, need to accelerate their path to retirement, or faced financial setbacks earlier in their careers.
Traditionally, investors have had flexibility in choosing between pre-tax and after-tax (Roth) options for these contributions. Starting in 2026, however, high earners face a new restriction. Employees with Federal Insurance Contributions Act (FICA) prior-year wages of $150,000 or more must now make all catch-up contributions as Roth contributions. This means that these funds are invested after taxes, but still have the potential to grow and could be withdrawn tax-free and penalty-free in retirement. While the standard catch-up amount has increased by $500 to $8,000 for those 50 and older (and the “super catch-up” for ages 60–63 remains at $11,250), the tax treatment of these dollars has shifted fundamentally. Please note that Roth contributions provide no immediate tax deduction (unlike pre-tax contributions) and that tax-free withdrawals are subject to certain conditions. It is important that you consult your team of advisors and CPAs when making decisions about Roth IRA contributions and retirement withdrawals.
This matters because high earners who previously relied on pre-tax catch-up contributions to lower their current tax bills may see a surprise increase in their taxable income. For example, a 55-year-old earning $150,000 who previously made a $7,500 pre-tax catch-up contribution would have reduced their taxable income by that full amount. Now, that same contribution provides no immediate tax relief. For those in their peak earning years, it is essential to evaluate how this change affects your broader tax planning strategy.
If you would like to discuss how these changes might affect you in 2026, don’t hesitate to reach out. We would be happy to help.
References
1. https://taxpolicycenter.org/briefing-book/what-are-itemized-deductions-and-who-claims-them
Content Disclosures
Olistico Wealth is an SEC-registered investment adviser, with its principal place of business in Tulsa, Oklahoma. Registration with the U.S. Securities and Exchange Commission does not imply a certain level of skill or training. Advisory services are offered only in jurisdictions where Olistico Wealth and its representatives are appropriately registered, exempt, or authorized to do so. For more information about our qualifications and registration, please refer to our Form ADV on the SEC’s Investment Adviser Public Disclosure website.
This article is for informational purposes only and and is based on information available as of August 1, 2025. It is not intended to provide specific legal, tax, or investment advice. Please consult with your tax advisor or attorney regarding your specific situation. Advisory services are offered through Olistico Wealth, a registered investment adviser.
