IRS 2026 Tax Changes: 3 Loopholes to Save Thousands Before They Close

IRS 2026 Tax Changes: 3 Loopholes to Save Thousands Before They Close

Learn 3 legal tax loopholes you can still use before the 2026 IRS changes take effect.

Introduction

The IRS is preparing for one of the largest tax overhauls in decades, coming in 2026. For many Americans, the outcome means a possible tax increase—and fewer opportunities to legally cut back what you owe. But here's the silver lining: some golden loopholes remain wide open, and if you hurry, you might save thousands before they're gone.

Whether you're a high earner, business owner, or just looking to get wiser with your cash, knowing what's on the way in 2026 may mean the difference between a taxpayer's worst nightmare—or a life-changing windfall.

Here in this guide, we'll dissect what's changing, the three best tax-saving strategies still on the table, and exactly how you can deploy them before the IRS closes the door.

What's Changing in 2026?

Let's begin with the broad picture. The Tax Cuts and Jobs Act (TCJA), enacted in 2017, was set to expire at the close of 2025 unless Congress acts. What this means is that in 2026, numerous of the perks Americans have been benefiting from—such as reduced income tax rates and a doubled standard deduction—will revert to their pre-2018 level.

Some key changes anticipated in 2026 include:

Increased income tax rates in most brackets

Reduced standard deduction (to pre-TCJA levels)

Lower estate and gift tax exemptions

Limited deductions for pass-through businesses

Potential elimination of generous bonus depreciation

For millions, this means higher taxes and fewer deductions unless you act now.

Loophole #1: Max Out Roth Conversions Before Tax Rates Increase

One of the strongest (and legal) tax maneuvers out there today is the Roth conversion. This enables you to transfer funds from a traditional IRA or 401(k) to a Roth account—paying taxes upfront in return for tax-free growth and withdrawal later.

This is a big deal because, in 2026, tax rates on income are going up. Therefore, converting in 2024 or 2025 allows you to lock in today's lower rates to prevent paying more taxes in the future.

Assume you have $100,000 in a standard IRA. If you convert it in 2025 with today's 22% marginal tax rate, you pay $22,000. Wait until 2026, though, and when rates spike to 28%, you'll owe $28,000. That's a $6,000 difference—on one conversion alone.

And because Roth IRAs have no required minimum distributions (RMDs) and can be left tax-free to beneficiaries, the advantages last deep into retirement.

How to Take Advantage:

Discuss your present and future income with a tax advisor or financial planner.

Utilize "partial conversions" to steer clear of bumping into a higher bracket.

Convert progressively in 2024 and 2025 to reduce your tax burden.

The window is closing quickly. After 2026 arrives, the arithmetic changes—and the window gets smaller.

Loophole #2: Lock In the Existing Estate and Gift Tax Exemption

As 2024 law stands, the estate and gift tax exemption is at an all-time high—more than $13 million for each individual ($26 million for couples) this year. But after 2026, it's projected to decrease by about half.

That means high-net-worth families who wait until after sunset may see millions of dollars liable for a 40% federal estate tax. 

Currently, you can give large sums—either to beneficiaries or to trusts—without invoking gift taxes. And since the IRS has said it won't claw back gifts made under the current exemption even after the law changes, this is literally a "use it or lose it" deal.

Let's walk through it: you give $10 million in 2025, and the exclusion falls to $6 million in 2026. The IRS will still acknowledge the $10 million you donated tax-free. But if you wait a year and attempt to do the same thing in 2026, you might owe $1.6 million in tax.

Who Should Consider This:

Business owners who want to transfer a business

High-net-worth individuals with real estate holdings

Families using dynasty trusts or generation-skipping trusts

Even if you’re not in the ultra-wealthy category, this change could affect you if property or investments appreciate significantly in the next decade. It's better to plan now than regret later.

Loophole #3: Accelerate Business Deductions and Depreciation

If you're a small business owner, freelancer, or have an LLC, the IRS has provided a very generous break under the TCJA: 100% bonus depreciation for eligible purchases such as equipment, vehicles, and technology. 

This enables you to claim the full amount of eligible assets when they're put into service—instead of depreciating it over time.

But here's the caveat: this bonus depreciation is already disappearing. In 2023, it fell to 80%. In 2024, it's 60%, and in 2026, it could disappear entirely unless Congress extends it with new legislation.

And also expiring after 2025 is the 20% pass-through deduction for qualified business income (QBI). That deduction has been a tremendous advantage to business owners and could equal thousands of dollars in tax savings per year.

What to Do Now:

Make big business buys in 2024 or 2025 rather than waiting.

Discuss speeding up expenses and revenue recognition with your accountant.

Look into reviewing your business form (LLC versus S Corp) based on the sunsetting pass-through rules.

Acting smart before these provisions end could be the difference between a tax savings and lost opportunity.

The Bottom Line: 2025 Is the Final Countdown

The tax environment is changing—and 2025 could be your final opportunity to benefit from some of the strongest tax planning techniques in years.

From Roth conversions to estate planning to corporate deductions, the IRS is offering a temporary opportunity to save now before the door is closed. Once past 2025, these loopholes could be lost, or at least greatly restricted.

Waiting until 2026 will likely result in higher taxes, fewer options for flexibility, and fewer means of preserving your wealth.

You don't have to be a millionaire or tax guru to take action. You only need the proper advice, some planning—and a willingness to act while the door is still open.

Final Advice: Sit Down With a Tax Professional Now

There’s no one-size-fits-all tax strategy, especially with big changes looming. Your income, goals, age, and even your state of residence can all play a role in what moves make the most sense.

But one thing is certain: waiting will cost you.

The best thing you can do in 2024 or 2025? Meet with a tax planner or certified financial planner and discuss your alternatives. You might save thousands—or even millions—by acting now.

Time is money. And here, time is nearly expiring.