2026 Tax Strategy Guide: New OBBBA Strategies for Huntsville High-Earners
The Super Bowl is officially in the rearview mirror, which for most people means one thing: the high-stakes season of tax filing has arrived. In the latest episode of the Capital Stewards Podcast, we dive into our annual tax guide to help you navigate the complexities of the 2025 tax year and, more importantly, set the stage for long-term savings in 2026 and beyond.
Whether you’re a Huntsville executive or a small business owner, the "One Big Beautiful Bill Act" (OBBBA) passed last summer has shifted the landscape. While some strategies will help you move the dial on your current return, the real "juice" lies in long-term planning.
As a Fee-Only financial advisor in Huntsville, my goal is to help you move beyond the annual "deduction hunt" and toward a long-term strategy that protects your wealth from unnecessary tax erosion. Unlike brokers who may be incentivized by product sales, a Fee-Only fiduciary focuses solely on your total financial picture. During tax season, this means looking at how your investments, business structure, and retirement accounts work together to lower your lifetime tax bill—not just your 2025 return.
Local Impacts: Alabama and Georgia Tax Relief
If you live or work in the Tennessee Valley, there is good news on the state level:
Alabama Tax Cuts: The state is doubling the retirement income exemption from $6,000 to $12,000.
Georgia Residents: For those commuting across the line, Georgia is continuing to cut tax rates from previous years.
Tennessee Residents: Our clients in Tennessee still enjoy no state income tax, making federal strategy the primary focus.
The Big Shift: Planning vs. Hunting
For years, taxpayers have treated March as an annual "hunt for deductions". However, the combination of the 2017 tax cuts and the new OBBBA has made this approach far less fruitful. By increasing the standard deduction and removing many itemized options, the tax code has been simplified—meaning the best way to minimize what you owe is through long-term structural choices.
Effective tax planning is a "long-term game" focused on three pillars:
Investment Accounts: Choosing between ROTH, Traditional IRAs, and 401ks.
Business Structure: Properly utilizing S-Corps or Partnerships.
Income Management: Controlling the acceleration or deferral of your income.
2025 Tax Year: What’s New on Your Current Return?
While long-term planning is king, there are several "marginal" opportunities that could reduce your 2025 tax bill right now.
Higher Standard Deductions
For the 2025 tax year (the one you are filing in early 2026), the standard deduction has risen to:
Married Couples: $31,500.
Single Filers: $15,750.
The "Enhanced Senior Deduction"
If you are over 65, the OBBBA introduced a significant benefit: an additional deduction of up to $6,000 per person ($12,000 for couples). This full deduction applies if your income is under $75,000 (individual) or $150,000 (joint) and phases out as income approaches $175,000 or $250,000, respectively. This highlights the value of managing your taxable income in retirement—if you can pull from ROTH or taxable assets to stay under these thresholds, you can unlock major savings.
The OBBBA "Big Three" Deductions
The OBBBA also introduced targeted deductions for specific groups of workers and consumers:
No Tax on Tips: Workers in "customary" service industries (like hotels and restaurants) can now deduct tip income, provided it is reported on a 1099 or W-2. This phases out for couples around $300,000 in income.
No Tax on Overtime: Eligible workers can deduct up to $12,500 ($25,000 for couples) of the overtime portion of their pay. Note: This only applies to the extra pay earned (e.g., the $10 "time-and-a-half" premium), not the base hourly rate.
Car Loan Interest: You can now write off up to $10,000 in interest on loans for new vehicles—but only if they were assembled in the U.S.. Always confirm the final assembly point with the dealer, as brand name alone doesn't guarantee eligibility.
Strategic Wins: Looking Toward 2026 and Beyond
Long-term tax efficiency isn't about what you do in April; it's about the moves you make year-round.
The HSA "Trifecta"
We recommend Health Savings Accounts (HSAs) for nearly everyone. They offer a rare triple tax benefit: contributions are tax-deductible, growth is tax-free, and distributions for healthcare are tax-free. A key 2026 update: you can now use HSA funds to pay for subscription-based primary care (concierge medicine).
Retirement Account Allocation
You should not "set and forget" your retirement contributions. The goal is to fund ROTH accounts when your income is relatively low and Traditional accounts during high-income years when the deduction is most valuable. For business owners, you can often contribute as both employer and employee, potentially deferring over $60,000 in income.
Trump Accounts for Children
New for 2025, parents can open "Trump Accounts" for their children. If you had a baby in 2025, the federal government will provide an initial $1,000 seed contribution. These accounts grow tax-deferred. However, be cautious about making additional contributions yourself; since these are made with after-tax dollars and withdrawals are taxed as ordinary income, you could inadvertently pay tax twice.
Take the Next Step
Tax planning is more than a calculation; it’s a component of your broader financial stewardship. Managing business income, harvesting tax losses, and bunching charitable donations can add up to hundreds of thousands of dollars in savings over a lifetime.