Received in email. Not really a “strategy”. Just posted for information.
Wow, this is REALLY old news. The tax brackets are released in the October before the tax year, which allows people to start planning before the new year starts. Here’s the release for 2025 (Oct 22, 2024) IRS releases tax inflation adjustments for tax year 2025 | Internal Revenue Service and here’s the release for 2026 (Oct 9, 2025) IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill | Internal Revenue Service
That writer is doing a disservice to his readers by claiming that the brackets are newly released.
AJ
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In one respect, sure. But the person who sent it to me apparently didn’t know until they saw that article. Honestly, I didn’t know, either. In my defense, I don’t worry too much about brackets. They are what they are. Presently, I worry more about not hitting the cliff for ACA subsidies this year (and for the next two-plus years).
So, it did serve those people who didn’t know until they saw it. Now, if the info is incorrect, that’s really bad.
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You and me too, brother. That is a strategy.
We already did the HSA contributions we now qualify for.
I am right in thinking that reduces MAGI?
Did the traditional IRAs. Some to the solo 401k - will max it out. Can deduct half of self employment tax and cost of health insurance.
I think that’s all the deductions we can do - could be over $100k.
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Yes.
Assuming the TIRA is deductible all those things help. The solo 401(k) would be a max of $24,500 for the regular deferral plus, if you are allowed to make deductible catch-up contributions, another $8,000 ($11,250 for ages 60 - 63). But if your wage income was over $145k in 2025, all 401(k) catch-up contributions must go to a Roth account.
AJ
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Yes, my TIRA won’t likely be deductible, spouse should be. Catch up will be Roth.
The solo 401k max for 2026 is $72k. I won’t get to that, should get close and still stay comfortably below 400% FPL for a family of 5 ($150,600 in 2025).
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Some confusion over “wage income”. Does that apply to self-employment income, not reported as W2 income?
Bogleheads here saying self-employed income does not count, therefore I can do catch up into the tax-deferred 401k.
Roth requirement for 401(k) catch-up: applicable to self-employed, or not? - Bogleheads.org
My understanding from what I’ve seen online from many authors is that it’s based on W-2 income, but I haven’t been able to find documentation from the IRS that confirms this - which is why I said “wage income” instead of “W-2 income”. The link to the Federal Register that was provided in your link refers to “FICA wages” - which to me, would cover self-employment income because the self-employment tax is both the employer and employee side of FICA. That said, the link to the Fidelity FAQs in your link has this footnote when it refers to “FICA wages”
For this purpose, wages are those as defined in Section 3121(a) of the Internal Revenue Code, which are wages subject to FICA (Form W-2 Box 3 wages for Social Security taxation purposes). The final regulations allow employers the flexibility to also use FICA (Form W-2 Box 5 wages for Medicare) for the 2026 tax year.
so Fidelity seems to indicate that it’s just W-2 wages. But it doesn’t give any link to IRS documentation on this issue. So, it’s still not clear to me if it’s just W-2 income or also self-employment income that you pay self-employment tax on.
Sorry for being clear as mud.
AJ
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This seems to say self-employment income does not count:
Federal Register :: Catch-Up Contributions
“Accordingly, an individual who did not have any FICA wages from the employer sponsoring the plan for the preceding calendar year (for example, a partner who had only self-employment income…) would not be subject to the Roth catch-up requirement under the plan in the current year.”
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Thanks for finding that.
AJ