The Biden tax plan for retirement was largely a set of proposals that never became law. Congress did not enact the flat retirement tax credit, the Social Security payroll tax on wages above $400,000, the higher capital gains rate for millionaires, or the elimination of the step-up in basis for inherited assets. The One Big Beautiful Bill Act, signed on July 4, 2025, went the other direction and permanently extended the existing individual tax rates and preferential capital gains treatment. The retirement rules that actually shape planning in 2026 come from a different law: SECURE 2.0.
The Proposals That Did Not Pass
A Flat Credit Instead of the 401(k) Deduction
Under current law, a traditional 401(k) or IRA contribution reduces your taxable income at your marginal rate. Someone in the 37% bracket saves $37 per $100 contributed; someone in the 12% bracket saves $12. The Biden administration proposed replacing that deduction with a flat 26% refundable tax credit for every dollar contributed. A $5,000 IRA contribution would have generated a $1,300 credit regardless of income.
Congress did not take it up. The traditional deduction still works the way it always has. For 2026, the 401(k) elective deferral limit is $24,500 and the IRA contribution limit is $7,500.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
A Social Security Tax on Wages Above $400,000
Social Security’s 12.4% payroll tax, split between employer and employee, applies only up to a wage base limit. For 2026 that limit is $184,500.2Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates The Biden proposal would have created a gap between the wage base and $400,000 where no tax applied, then reimposed the 12.4% rate on earnings above $400,000.
The proposal did not pass. High earners still stop paying Social Security tax once wages cross the annual base, which is adjusted for inflation.3Social Security Administration. Contribution and Benefit Base
Higher Rates on Top Earners and Capital Gains
Two related proposals would have pushed the top marginal income tax rate from 37% back to 39.6% and taxed long-term capital gains and qualified dividends as ordinary income for taxpayers earning over $1 million. That second change would have roughly doubled the tax rate on investment gains for the highest earners.
Neither happened. The One Big Beautiful Bill Act permanently extended the individual tax rates from the 2017 law, keeping the top bracket at 37%, and preserved the 0%, 15%, and 20% long-term capital gains structure. Retirees drawing from taxable brokerage accounts or selling appreciated property in 2026 continue to pay the lower rates.
Ending the Step-Up in Basis
The step-up in basis lets heirs inherit assets valued at fair market value on the date of death rather than the original purchase price. The Biden administration proposed treating a transfer of appreciated assets at death as a taxable event, triggering capital gains tax immediately.
The rule survived. If a parent bought stock for $50,000 and it was worth $500,000 at death, the heir’s basis is $500,000. Selling for $510,000 produces $10,000 of taxable gain, not $460,000.4Internal Revenue Service. Gifts and Inheritances The same law that extended the individual rates also raised the federal estate tax exemption to $15 million per person with no sunset.
What Actually Governs Your Retirement in 2026
The changes that matter for retirement planning came from the SECURE 2.0 Act of 2022, and several of them take full effect in 2026.
Automatic Enrollment for Newer Plans
Any 401(k) or 403(b) plan established after December 29, 2022, must automatically enroll eligible employees starting January 1, 2025. The initial contribution rate has to fall between 3% and 10% of salary, with a 1% annual increase up to somewhere between 10% and 15%. Employees can opt out or change the rate. Businesses with 10 or fewer employees, companies less than three years old, and plans that existed before the law are exempt.5Internal Revenue Service. One, Big, Beautiful Bill Provisions
Required Minimum Distribution Ages
If you were born between 1951 and 1959, your required minimum distribution age is 73. If you were born in 1960 or later, you can wait until 75.6Library of Congress. Required Minimum Distribution (RMD) Rules for Original Owners of Retirement Accounts Your first RMD is due by April 1 of the year after you reach your RMD age, and every RMD after that by December 31. Delaying the first distribution into the following calendar year means taking two RMDs in one year, which can push you into a higher bracket.
Catch-Up Contributions After 50
Workers aged 50 and older can add a catch-up contribution to their 401(k) beyond the standard limit. For 2026, the standard catch-up is $8,000. Workers aged 60 through 63 get a larger super catch-up of $11,250 instead, which brings their maximum 401(k) deferral to $35,750.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 The IRA catch-up for those 50 and older is $1,100 in 2026, on top of the $7,500 base limit.
Mandatory Roth Catch-Up for High Earners
Starting in 2026, if you earned $150,000 or more in FICA-taxable wages in the prior year, your 401(k) catch-up contributions must go into a Roth account. Pre-tax catch-up deferrals are no longer allowed for these workers. The threshold is based on W-2 wages from the employer that sponsors the plan, so your 2025 earnings determine whether the rule applies to you in 2026. If your plan does not offer a Roth 401(k) option, you cannot make catch-up contributions at all until it does.
The Saver’s Credit Is Still There
The Saver’s Credit remains available for lower- and middle-income workers who contribute to a 401(k), IRA, or similar plan. It is worth 10%, 20%, or 50% of your contributions depending on adjusted gross income, applied to up to $2,000 in contributions per person or $4,000 for a joint filing couple. The maximum credit is $1,000 per person or $2,000 per couple.7Internal Revenue Service. Retirement Savings Contributions Credit (Saver’s Credit) For 2026, the credit phases out entirely at roughly $40,250 of AGI for single filers and $80,500 for joint filers. Rollovers do not count, and recent distributions from a retirement account reduce the credit.