Tax Planning for Attorneys in 2026: Year-End Strategies for Partners, Solo Lawyers and Of Counsel

Why attorneys face a tax bill that most planning ignores

Tax planning for attorneys is different from planning for almost any other high earner. Many lawyers are paid through a partnership draw, a 1099, or a mix of salary and bonus, and very little of it is withheld the way a W-2 paycheck is. At J&E Advisory Group, we see capable attorneys reach December without knowing what they owe, and by then most of the best options have closed.

The numbers explain why it matters. For 2026, the 35% federal bracket starts above $256,225 of taxable income for a single filer and $512,450 for a married couple filing jointly. The 37% bracket starts above $640,600 for single filers and $768,700 for joint filers. An attorney earning $400,000 to $900,000 is working at or near the top of the system.

It is late October. That leaves about two months to act on strategies that must be in place by December 31. This article walks through the ones we review most often with law firm partners, solo practitioners, of counsel attorneys and in-house counsel.

Strategy 1: Use every retirement plan available to you (2026 limits)

Retirement contributions are still the most dependable way to lower taxable income. Here are the 2026 limits:

• 401(k) employee deferral: $24,500.
• Catch-up contribution at age 50 or older: $8,000, for a total of $32,500.
• Higher catch-up at ages 60 to 63: $11,250.
• Traditional or Roth IRA: $7,500, plus $1,100 at age 50 or older.
• Total annual additions to a defined contribution plan (employee plus employer, not counting catch-up): $72,000.

If you own a firm or are a self-employed attorney, a solo 401(k) or a firm-sponsored profit sharing plan lets you contribute as both the employee and the employer. That is how you can approach the $72,000 total, which is far above what an employee-only plan allows.

Some of our clients ask whether they should add a cash balance plan, which is a type of defined benefit pension. The federal limit on the annual benefit from a defined benefit plan is $290,000 for 2026. Cash balance plans can allow much larger deductions than a 401(k), especially for partners over 45 with steady income. They also carry required annual contributions and administrative costs, so they suit a stable practice, not a lumpy one. We model the numbers before recommending one.

One change affects higher-paid employees. Starting in 2026, if your prior-year Social Security wages from your employer were above $150,000, your catch-up contributions to an employer plan generally must go in as Roth (after-tax) contributions. If you are 50 or older and an employee of a firm, check how your plan handles this. For more background, read our post on the new 401(k) catch-up rule: https://www.jeadvisorygroup.com/blogs/new-401-k-catch-up-rule-could-raise-taxes-for-older-high-earning-workers

Strategy 2: Understand the QBI deduction for law firm owners

The qualified business income (QBI) deduction lets owners of pass-through businesses, such as partnerships, S corporations and sole proprietorships, deduct up to 20% of their qualified business income. Law is a “specified service trade or business,” which means the deduction shrinks as your income rises.

For 2026, the threshold is $403,500 of taxable income for married couples filing jointly and $201,750 for other filers. The deduction phases out completely for specified service businesses once taxable income passes $553,500 for joint filers and $276,750 for others. Recent legislation widened this phase-in range, so a lawyer just above the old limit may get a partial deduction that was not available before.

Two practical points follow. First, retirement contributions and other deductions lower your taxable income, which can bring you back under the threshold or into the partial range. Second, the rules around W-2 wages paid and business property also matter for owners in the phase-in range. This is an area where the order of calculations changes the result, so it needs to be modeled before year-end.

Strategy 3: Plan around the SALT cap and state taxes

The deduction for state and local taxes (SALT) on Schedule A was capped at $10,000 for years. For 2025, the cap rose to $40,000 ($20,000 if married filing separately). It is reduced by 30% of the amount your modified adjusted gross income exceeds $500,000, and it will not fall below $10,000.

For a high-earning attorney, that means the larger cap may be partly or fully phased out. Many states also offer an elective pass-through entity tax for partnerships and S corporations, which can shift state income tax to the business level. Whether this helps depends on your state, your entity type and your income. We review it case by case, and we confirm the current rules for your state before recommending an election.

Strategy 4: Fix your estimated tax payments before the January deadline

If you are not fully withheld, you generally must pay tax during the year through estimated payments. The IRS says you can avoid the underpayment penalty if you owe less than $1,000 after withholding and credits, or if you pay at least 90% of the current year’s tax or 100% of the prior year’s tax, whichever is smaller. Higher income taxpayers face special rules, which are explained in the instructions for Form 1040-ES.

Partners often get a large distribution late in the year, and the last estimated payment is due in January. A year-end projection lets you decide whether to adjust your final payment, increase withholding on any W-2 income, or fund a retirement plan. Read more in our post on estimated taxes: https://www.jeadvisorygroup.com/blogs/estimated-taxes-are-a-pain-here-s-how-to-avoid-costly-penalties

Strategy 5: Watch the payroll taxes that hit high earners

Two payroll items matter at your income level. The Social Security tax applies only up to a wage base, which is $184,500 for 2026. Medicare tax has no cap. In addition, employers must withhold a 0.9% Additional Medicare Tax on wages above $200,000, and it is not matched by the employer.

If you are self-employed, the same taxes apply to your self-employment income, and the structure of your practice affects how much of your income is subject to them. Choosing between a partnership, an S corporation and other structures is a decision we revisit as income grows, because the right answer changes with it.

Strategy 6: Use the Roth strategies that still work at your income

Direct Roth IRA contributions phase out between $153,000 and $168,000 for single filers and between $242,000 and $252,000 for married couples filing jointly in 2026. Most attorneys earn above those ranges. Some use a backdoor Roth IRA, which means making a nondeductible IRA contribution and converting it. The conversion can be partly taxable if you hold other pre-tax IRA balances, so the details matter.

If you are 50 or older, a Roth component inside your employer plan may also be useful given the catch-up rule above. Roth strategies trade a tax bill now for tax-free growth later, and they work best when you compare them with your expected future bracket.

Common mistakes we see with attorneys

• Waiting for the partnership K-1 before planning. The K-1 often arrives after the year closes, and many options expire on December 31. Plan with a projection, not a final number.
• Forgetting state tax. Attorneys who practice in several states, or who moved during the year, can owe in more than one state.
• Treating a plan as a one-time decision. A retirement plan adopted for the wrong entity, or without testing, can create penalties and corrections later.
• Ignoring foreign accounts. Lawyers with family abroad, foreign investments or accounts in another country may have FBAR and other reporting duties. See our post on catching up on missed filings: https://www.jeadvisorygroup.com/blogs/missed-fbar-streamlined-filing-compliance-procedures
• Ignoring IRS notices. A notice has a response deadline. Read our guide: https://www.jeadvisorygroup.com/blogs/what-to-do-when-you-get-an-irs-letter

What to do next: a short year-end checklist

1. Run a projection of your 2026 income and tax before mid-November.

2. Compare your current plan contributions with the 2026 limits above.

3. Review whether a solo 401(k), profit sharing plan or cash balance plan fits your practice.

4. Check your estimated payments against your projection.

5. Review your entity structure and any state pass-through tax election.

6. Gather documents for foreign accounts, if any.

Frequently asked questions about tax planning for attorneys

What is the best tax planning strategy for attorneys?

There is no single best move. For most lawyers, the largest levers are maximizing retirement plan contributions, managing the QBI deduction, and keeping estimated taxes accurate. The right mix depends on whether you are a partner, a solo practitioner or an employee.

How much can a self-employed attorney put into a retirement plan in 2026?

The total annual additions limit for a defined contribution plan is $72,000 for 2026, not counting catch-up contributions for those 50 and older. A solo 401(k) lets you contribute as both employee and employer. Your actual limit depends on your net earnings.

Do lawyers qualify for the QBI deduction?

Yes, but law is a specified service business, so the deduction phases out as income rises. For 2026 the phase-out begins at $403,500 of taxable income for joint filers and $201,750 for other filers. It is fully phased out at $553,500 and $276,750.

Can attorneys deduct state and local taxes?

Yes, up to a cap. For 2025 the cap is $40,000, reduced for modified adjusted gross income above $500,000, and never below $10,000. Many high earners are partly or fully limited.

When are estimated taxes due for attorneys?

Estimated payments are made in four installments during the year, and the last one for 2026 falls in January 2027. The exact dates are listed in Form 1040-ES. Weekend or holiday dates move to the next business day.

What is a cash balance plan for lawyers?

It is a defined benefit pension that lets higher-earning owners deduct larger contributions than a 401(k) allows. It requires yearly funding and administration, so it fits stable income. We model it before recommending it.

Can attorneys contribute directly to a Roth IRA?

Only below the income limits. For 2026, direct contributions phase out between $153,000 and $168,000 for single filers and $242,000 to $252,000 for joint filers. Many attorneys use a backdoor Roth instead.

What if I have foreign accounts or received an IRS notice?

Both create deadlines of their own. Foreign accounts can trigger FBAR and FATCA reporting, and an IRS notice has a response date. J&E Advisory Group helps attorneys with planning, international reporting and IRS resolution in one place.

Does J&E Advisory Group work with attorneys outside Florida?

Yes. J&E Advisory Group is based in Miami and works with high-income professionals across the U.S. and internationally, in English and Spanish. We handle federal planning and coordinate with state rules.

Attorney tax planning works best when it runs all year, and the final weeks of the year are when decisions matter most. J&E Advisory Group, based in Miami, serves high-income earners across the U.S. and international taxpayers worldwide, from tax planning and FBAR reporting to foreign national tax preparation, complex international tax matters and IRS tax resolution, in English and Spanish.

Schedule a confidential consultation at: https://outlook.office.com/book/JEAdvisoryGroup@jeadvisorygroup.com/s/WTstmtX_2Uqcb1XsqTi49Q2?ismsaljsauthenabled

Or call (786) 622-2869.

Learn more about our tax planning and preparation services: https://www.jeadvisorygroup.com/tax-preparation-miami

This article is general information, not tax, legal or investment advice for your situation. Tax rules change and the right strategy depends on your facts, so consult a qualified advisor before acting. Figures reflect federal law as of October 2026, and state rules vary.

Sources

IRS, 2026 tax inflation adjustments: https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill

IRS, 2026 retirement plan limits: https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500

IRS Notice 2025-67: https://www.irs.gov/pub/irs-drop/n-25-67.pdf

IRS Revenue Procedure 2025-32: https://www.irs.gov/pub/irs-drop/rp-25-32.pdf

IRS, Topic no. 503, Deductible taxes: https://www.irs.gov/taxtopics/tc503

IRS, 2025 Instructions for Schedule A: https://www.irs.gov/instructions/i1040sca

IRS, Topic no. 306, Penalty for underpayment of estimated tax: https://www.irs.gov/taxtopics/tc306

IRS, Topic no. 751, Social Security and Medicare withholding rates: https://www.irs.gov/taxtopics/tc751