Tax Shake-Up Ahead: Why Experts Say You Should Act Before Year-End
Financial planners are urging Americans to take immediate steps before December 31 to prepare for major tax code changes that will take effect in 2026. “Taking action before the end of this year can be a huge benefit to your financial health in 2026,” said Dan Snyder, director of financial planning at the American Institute of CPAs (AICPA). “There have been many changes in the tax and financial planning space this year and now is the time to educate yourself and make changes that can affect your tax bill before April 15, 2026.”
One of the most notable changes announced by the Trump administration is the discontinuation of IRS Direct File, the free electronic filing system created under Joe Biden. Officials confirmed earlier this month that the program will not return next year, arguing that private companies can better handle online tax services. Treasury Secretary and IRS Commissioner Scott Bessent explained at the White House, “It wasn’t used very much. And we think that the private sector can do a better job.” He added that there are “better alternatives” available.
The Direct File platform, despite its limited reach, had grown in popularity among taxpayers who praised its simplicity and cost-free approach. The Center for Taxpayer Rights obtained an internal report showing that 296,531 taxpayers successfully submitted returns for the 2025 filing season — more than double the 140,803 accepted through the system in 2024. The findings suggest that interest in a government-run filing option was increasing before its cancellation.
Republican lawmakers long criticized the initiative as an unnecessary government expense, arguing that free filing tools already exist, even if they are complicated to use. The private tax-preparation industry, which earns billions annually from software fees, also opposed the program’s expansion, lobbying heavily against it throughout Biden’s term.
Meanwhile, the Trump administration has introduced sweeping new provisions under the “One, Big, Beautiful Bill Act.” The legislation raises the standard deduction and adds a $6,000 bonus deduction for qualifying seniors, offering substantial relief for older taxpayers. However, it also reshapes the rules for charitable donations and itemized deductions, meaning many filers will need to reexamine their strategies before the year closes.
Snyder and the AICPA are advising filers to consider “bunching” — combining multiple years of charitable or medical expenses into one tax year — to determine if itemizing might yield greater savings than taking the standard deduction. According to the Tax Foundation, roughly 86 percent of taxpayers are expected to claim the standard deduction in 2026, which could make timing especially important.
Charitable giving will also face new restrictions. Beginning in 2026, taxpayers can take an above-the-line deduction of up to $1,000 for individuals or $2,000 for joint filers, even if they don’t itemize. Higher-income earners who do itemize will encounter new limits, including a requirement that only donations exceeding 0.5% of their adjusted gross income can be deducted. For many donors, making contributions before December 31 could help them avoid the stricter rules.
Another new provision allows Americans who purchased U.S.-assembled cars to deduct up to $10,000 in interest from their auto loans, though that benefit phases out for individuals earning above $100,000 or couples earning more than $200,000.
As the landscape grows more complex, Snyder cautioned that professional guidance is critical: “Taxpayers should work with a CPA or CPA personal financial specialist as soon as possible to craft a tax and personal finance strategy for 2026.”
{Matzav.com}
