Lower Your Tax Bill For 2027

Thanks to the One Big Beautiful Bill Act (OBBBA), 2027 planning can largely follow your 2026 tax plan, with a few adjustments and timely options.

WORTH YOUR SALT

Take full advantage of the higher state and local tax (SALT) deduction, up to $40,400 in 2026, through 2029, when it's scheduled to return to $10,000. The cap phases down once your modified adjusted gross income (MAGI) exceeds $505,000 ($252,500 for married filing separately). At a MAGI of $612,730 or higher ($306,365 for married filing separately), the cap drops back to $10,000 in 2030.

OLD STANDBYS

Contribute the maximum allowed to tax-deferred employer retirement plans, IRAs, and Health Savings Accounts (HSAs). However, if you earned more than $150,000 in wages in 2026, your 2027 catch-up contributions to 401(k), 403(b), and governmental 457(b) plans must be made to a Roth account. HSAs remain among the most tax-efficient accounts available. Contributions are above-the-line deductions, growth is taxfree, and withdrawals for qualified medical expenses are also tax-free.

WHILE YOU CAN

Through 2028, you can deduct up to $10,000 in interest paid on a qualified car loan for a new vehicle assembled in the United States. You must purchase the vehicle between January 1, 2025, and December 31, 2028. The deduction phases out beginning at $100,000 MAGI for single filers and $200,000 for married filing jointly.

The 2028 expiration date also applies to the additional deduction of up to $6,000 per person age 65+. This deduction phases out at $75,000 MAGI for single filers and at $150,000 for married filing jointly.

BE AWARE

Charitable contributions are now deductible only to the extent they exceed 0.5% of your adjusted gross income (AGI). For example, a taxpayer with $300,000 in AGI receives no deduction for the first $1,500 of charitable giving. If you're in the 37% tax bracket, you'll receive only a 35% tax benefit from itemized deductions (including charitable contributions). You can no longer deduct miscellaneous investment fees, unreimbursed employee expenses, or personal tax preparation costs. Before implementing your 2027 tax plan, talk with your tax advisor.