The United States is set to see several significant tax changes in 2026, largely shaped by new IRS guidelines and the passage of the One Big Beautiful Bill Act (OBBBA), which will impact both federal and state-level benefit programs, offering new opportunities and adjustments for employers, employees, and retirees alike.
Federal Benefit Updates
For 2026, the IRS has announced higher standard deductions: $16,100 for single filers and $32,200 for married couples filing jointly. Retirement savings limits will also rise, with the 401(k) contribution cap increasing to $24,500 and the Roth IRA limit set at $7,500. According to the IRS, the Earned Income Tax Credit (EITC) will be slightly higher for all family sizes, with expanded phase-in and phase-out ranges to help more low- to moderate-income workers qualify.
Special State-Level Benefit Changes
Some states are introducing unique benefits that complement the new federal rules.
For example:
- California and New York are expanding tax credits for childcare and eldercare expenses, with California offering up to 35% of the federal Child and Dependent Care Tax Credit (CDCTC), and New York reimbursing up to 50% of the federal CDCTC amount for these expenses, subject to residency-based refundability.
- States like Colorado and Oregon are enhancing state-level retirement savings incentives, matching contributions for lower-income residents in new state-sponsored plans. These state programs are designed to complement federal changes and encourage retirement savings, with specific details available through state revenue or workforce agencies.
- Colorado’s SecureSavings Program is a Roth Individual Retirement Account (IRA), which means it uses post-tax payroll deductions to help employees save for the future. It is for Colorado workers whose employers do not offer a workplace retirement plan.
- OregonSaves is the state of Oregon’s retirement savings program that provides Oregonians with an easy and automatic way to save for the future. It is for Oregon workers whose employers do not offer a workplace retirement plan.
The OBBBA expands federal child and dependent care tax credits, increasing the maximum credit rate from 35% to 50%. These federal enhancements encourage states to build on these benefits and expand employer-provided childcare tax credits by also implementing state-level matching incentives.
Deductions and Credits
The OBBBA introduces several below-the-line deductions that apply nationwide:
- A temporary $6,000 deduction for seniors aged 65+ (phased out at higher income levels).
- Deductions for charitable contributions even for those who take the standard deduction, with new caps of $1,000 for single filers and $2,000 for married couples filing jointly.
- Additional deductions for workers who earn tips allow a dollar-for-dollar deduction for a designated amount of tips earned by workers where tipping is customary.
What Employers and Employees Should Know
Employers will need to update payroll and benefits systems to reflect the new contribution limits and state-specific incentives. Employees should review their withholding and retirement contributions to maximize the new benefit levels.
These changes reflect a broader effort to help Americans leverage federal and state tax and benefit programs, balancing federal guidelines with targeted state-level enhancements to support diverse employee needs in 2026.
If you’d like to see how Eppione can help you roll out/implement and communicate benefit changes quickly, contact us.
