Key US Policy Updates for 2025-2026
1. 401(k) & IRA Contribution Limits Rise
The IRS has increased the annual contribution limit for 401(k) plans from $23,500 to $24,500 and for Individual Retirement Accounts (IRAs) from $6,500 to $7,500 for the 2026 tax year. These adjustments reflect inflation indexing under recent tax law changes.(stayexempt.irs.gov)
2. Tax Year 2026 Inflation Adjusted Amounts Fixed by OBBBA
Under the One, Big, Beautiful Bill Act, more than 60 tax provisions (including standard deductions, tax brackets, credits) have been adjusted for inflation as of 2026. For example, the standard deductions have been permanently increased.(irs.gov)
3. Form 1099-K Filing Threshold Reverts to $20,000
The threshold at which payment processors must issue Form 1099-K to payees has reverted to $20,000, under the One, Big, Beautiful Bill. This is particularly relevant for small online sellers, gig economy workers, and those receiving payments through digital platforms.(irs.gov)
Who Needs To Take Action
- Self-employed individuals or side hustlers receiving payments via apps or platforms: ensure income over $20,000 from transactions via third parties is being captured and reported correctly.
- Retirement savers: adjust contributions if you can afford more — increasing IRA/401(k) contributions may reduce taxable income.
- Employers & payroll providers: understand changes in thresholds, credits, and ensure systems comply with new reporting rules.
Practical Scenarios & Planning Tips
| Scenario | Action Plan |
|---|---|
| Jane runs an Etsy shop with $25,000 in brisk sales | Under the $20,000 threshold, Jane will receive a 1099-K and must reconcile those amounts on her Schedule C. Keep clean records of any fees or refunds to avoid overstatement. |
| Mike contributes to IRA and 401(k) | Mike can now contribute up to $24,500 to 401(k) and $7,500 to IRA for 2026. Maximize employer matches. Review catch-up options if age qualifies. |
Compliance Concerns & Tips
- Documentation: Keep records of digital payments, refunds, sales platforms, software tools that separate personal vs business.
- Retirement limitations: If company plans have special catch-up rules (SECURE 2.0), ensure compliance, especially with new income caps.
- Use IRS tools and fact sheets: For example, the IRS issued Fact Sheet 2025-08 on Form 1099-K changes; though thresholds revert, platforms/reporting may lag.(irs.gov)
Actionable Steps Before Dec 2025
- Update accounting/software to capture 1099-K income properly.
- Review retirement account contribution levels with employer/payroll teams.
- Consult with tax professional if multiple taxable income sources exist.
- Begin tracking expenses and income for any side businesses to ensure proper deductions.
- Stay alert for final IRS guidance (for example on tipped occupations) to comply correctly.