As 2026 comes to an end, taxpayers should review important federal tax changes before entering the new year. Updated deductions, retirement contribution limits, and estate tax thresholds may affect individuals, families, investors, and business owners.
For high-income taxpayers and families with financial ties between the United States and Korea, understanding these changes can help make year-end tax planning more effective.
1. Higher Standard Deductions for 2027
The IRS has announced increased standard deductions for the 2027 tax year, which generally applies to returns filed in 2028.
- Married Filing Jointly: $33,200, up from $32,200
- Single Filers: $16,600, up from $16,100
- Head of Household: $24,925, up from $24,150
Taxpayers should compare the standard deduction with eligible itemized deductions to determine which provides the greater benefit.
2. Additional Tax Deductions to Review
Federal tax changes introduced additional deductions for eligible taxpayers, including certain tip income, overtime compensation, vehicle loan interest, and an additional deduction for qualifying individuals age 65 or older.
Beginning in 2026, eligible taxpayers who do not itemize may also deduct qualifying cash charitable contributions, up to $1,000 for individuals or $2,000 for married couples filing jointly.
These deductions have specific eligibility rules and income limitations, so not every taxpayer will qualify.
3. Retirement Contribution Limits Increase
For 2027, the employee contribution limit for most 401(k), 403(b), and governmental 457 plans increases to $25,500, compared with $24,500 in 2026.
The regular IRA contribution limit remains $7,500. Additional catch-up contributions may be available depending on age and plan type.
4. Estate and Gift Tax Updates
The federal estate tax basic exclusion increases from $15 million in 2026 to $15.48 million in 2027. The annual gift tax exclusion also increases from $19,000 to $20,000 per recipient.
These changes may affect family wealth transfers, lifetime gifting, and estate planning strategies. Families with assets in both countries should review potential U.S. and Korean tax obligations.
5. Review Foreign Accounts and Investment Income
Before filing season, taxpayers should organize records of stock transactions, RSUs, business distributions, and foreign income. Those with Korean financial accounts or overseas assets should also review applicable FBAR, Form 8938, and Form 3520 reporting requirements.
Prepare Early for the 2027 Tax Year
Year-end planning provides an opportunity to review deductions, retirement contributions, investment activity, and international reporting obligations. Organizing records before filing season can reduce errors and help taxpayers make more informed financial decisions.