In 2025 we saw a wave of tax and retirement law changes primarily resulting from the One Big Beautiful Bill Act (OBBBA) and SECURE Act 2.0. As we kick off 2026, there are some provisions going into place this year that taxpayers should have on their radar. We break down 5 tax and retirement law changes taking effect in 2026 to help you avoid surprises.
1. Tax Deductions for Employer-Provided Meals
Prior to 2026, employers could deduct 100% of expenses for the following while excluding it from employee pay:
- Employer-operated eating facility, such as a cafeteria, including food, beverages, overhead, and labor
- Meals provided to employees for the convenience of the employer
Starting in 2026, this deduction reduces to 0% while still maintaining exclusion from employee pay. Two exceptions include establishments that sell food & beverages to customers as well as providing meals to employees, such as restaurants, and certain businesses in the fishing industry. If you don’t meet one of these exclusions and regularly feed your team, you could be facing an unexpected tax hike and cash flow concern.
Meals with clients, customers, business associates, etc. and meals while traveling for business remain 50% deductible. Employee social events, such as a holiday party, remain 100% deductible.
2. Changes to Depreciation in Delaware – S Corporations and Partnerships
The OBBBA reinstated 100% bonus depreciation for most fixed assets. Delaware has decoupled from this and maintains the rules set in place prior to OBBBA. This puts 2026 bonus depreciation at 20%. C Corporations were subject to the decoupling starting in 2025. S Corporations and partnerships are subject starting January 1, 2026.
The good news is that Delaware still conforms to Federal Section 179 rules, which will allow for immediate expensing of many fixed assets purchased by small businesses in 2026 and beyond. Keep in mind that the rules around Section 179 are more limiting than bonus depreciation.
3. 401(k) Catch-Up Contributions for High Earners Must be Roth
Employees who earned more than $150,000 of FICA wages in 2025 will be required to make catch-up contributions to their 401(k) plans through Roth 401(k) accounts. These employees will no longer see the current taxable income reduction for their contributions but will enjoy the tax savings when the money is taken out of the Roth in retirement. If employers don’t offer a Roth option, employees should look into Roth IRA or backdoor Roth conversion options.
For 2026, taxpayers 50 or older can make additional contributions of $8,000 to their 401(k) over the $24,500 standard contribution limit. For taxpayers age 60-63, the additional contribution limit increases to $11,250.
Employers who have not yet adopted a Roth option in their plan are encouraged to do so quickly to avoid potential backlash from employees.
4. Changes to Charitable Giving Deductions
There are changes affecting both taxpayers that typically include charitable giving in their itemized deductions and those that typically take the standard deductions but still give to charity.
For taxpayers that typically take the standard deduction, a new deduction of up to $2,000 of charitable giving for married filing joint filers ($1,000 for all others) is available starting in 2026. This deduction is in addition to the standard deduction.
For taxpayers that typically itemize deductions, there is a new 0.5% of income floor on charitable deductions. This means that your charitable deduction is reduced by 0.5% of your income. If you earn $200,000, the first $1,000 of giving will not be deductible. C Corporations are subject to a 1% floor. If you’re in the top tax bracket of 37%, your total itemized deductions is capped at a tax benefit of 35%, therefore reducing the benefit of charitable giving.
Qualified charitable distributions (QCDs) are a workaround for individuals age 70 ½ or older. QCDs directly from an IRA to a qualified charity are excluded from taxable income and count toward RMDs. They are not subject to the new rules. The QCD limit for 2026 is $110,000 per taxpayer.
5. Limit on Gambling Losses
The surge in online gambling and sports betting has not gone unnoticed by the government. Starting in 2026, the deduction for gambling losses against gambling winnings is reduced to 90% from 100%. Under this provision, all gambling winners will be required to include at least 10% in taxable income. This impacts professional gamblers who report their winnings on Schedule C as well.
This has faced a lot of backlash and several bills have been introduced to reverse this, but as of now, the new rule is in effect.
What This Means for 2026 Planning
The headline-grabbing tax changes from 2025 remain in effect through 2026 – new senior deduction, exclusions for eligible tip and overtime income, auto loan interest deduction, 100% bonus depreciation, etc. With a full year to strategize, taxpayers are better positioned to utilize these tax benefits along with both the tried-and-true and creative tax planning strategies RiversEdge Advisors guides its clients on.
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