The 2025 tax law and the IRS's annual inflation adjustments changed several numbers that affect the returns you will file in early 2027. Here are the ones we expect to matter most for clients in Glendale and the Crescenta Valley.
Standard deduction
For 2026 the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household. Most households will still take it, but see the next item before you decide.
State and local tax (SALT) cap
The cap on deducting state income tax and property tax rose from $10,000 to $40,000 starting in 2025 and increases 1% a year through 2029. The higher cap phases down for higher incomes, but never below $10,000. California homeowners with significant property tax and state income tax may find that itemizing is worthwhile again.
1099 reporting threshold
For payments made in 2026, businesses generally need to file Form 1099-NEC or 1099-MISC only for payees who received $2,000 or more, up from $600. That cuts paperwork for many small businesses, but you should still collect a W-9 from every contractor.
Depreciation and expensing
100% bonus depreciation is permanent for qualifying property acquired after January 19, 2025, and the Section 179 limit for 2026 is $2.56 million. California does not follow federal bonus depreciation, so expect differences between your federal and state returns.
Estate and gift tax
The basic exclusion is $15 million per person for 2026, and the annual gift exclusion is $19,000 per recipient.
What to do now
If any of these apply to you, a year-end review before December 31 lets you act on them for 2026. Book a free consultation.
By Artin Shahmirzaian, EA. General information only; not advice for your specific situation.