Oil and gas executives are professionals with complex financial lives due to the intersection of high income, concentrated equity exposure, complex compensation packages and earnings that rely on the commodities markets. These are just a few factors that make financial planning for this group of investors very specific. For this year in particular, these investors need to be mindful of some tax-law changes as there is a narrow window to prepare to capture their benefits. Here are some specific areas these professionals should be monitoring, preferably with the help of a trusted financial professional, in 2026.
The State and Local Taxes (SALT) Deduction Limit
The majority of oil and gas executives easily exceed the previous $10,000 limit in the combination of property, state income and local taxes. While this increased deduction from $10,000 a year to $40,000 is beneficial now, it is set to expire in four years, which creates some financial planning urgency to maximize this opportunity. For people benefitting from this increased deduction, there can be extra incentive to accelerate their deductions, either by double paying their property taxes or grouping their charitable gifts into a donor-advised fund to take advantage of a likely higher itemized deduction.
Another factor of the increased deduction limit to be mindful of is that there is an income phase-out starting at $500,000; this is of importance for investors whose income is nearing that amount. Once they cross the $500,000 threshold, this benefit starts to get clawed back; it is reduced back to $10,000 a year at $600,000 in income.
Charitable Deductions
Starting next year, investors can receive an above-the-line deduction (in other words a deductible expense that’s subtracted from your gross income to get your adjusted gross income before any deductions are applied for charitable gifts up to $2,000 a year for married tax filers. Previously, to achieve a similar kind of benefit this could only be accomplished in an itemized deduction and therefore not lowering an investor’s income.
To benefit from the new above-the-line deduction opportunity, these charitable contributions must be made directly to a charity; donor-advised funds are not eligible for this.
While this doesn’t offer a groundbreaking tax savings, it could be an additional $740 for those in the 37% tax bracket and it’s relatively easy to take advantage of if proper planning is done. For these investors, this above-the-line deduction should be seen as a complement to more robust charitable giving strategies rather than a replacement to what they’re already doing.
Generally speaking, we at Brownlee Wealth Management recommend bundling charitable gifts in high-tax years by using appreciated stock to fund a donor-advised fund. This strategy is also beneficial in standard years when charitable contributions are not bunched together.
Estate Tax Exemption
This historically high exemption at $15 million per person provides clients with the chance to retain control over a substantial portion of their balance sheet while reducing their taxable estate through annual gifts to family members.
Generally speaking, estate planning strategies involve moving assets outside of your estate, but with that comes a loss of control over those assets. The increased exemption for high-net-worth families gives them a greater opportunity to retain control over larger portions of their assets.
This substantial exemption gives families the ability to wait and see what will happen in the future. This is one of the few times when not doing anything could be a beneficial plan.
What each of these opportunities has in common is timing and the need for strategic planning to benefit from them. While some may leverage this advice in each particular area, what truly is most beneficial is sequencing all tax and estate decisions to achieve the highest benefit across all opportunities.
