A novel phaseout in the 2025 tax law that involves the additional state and local tax (SALT) deduction may boost the appeal of deferring salary and bonuses via nonqualified deferred compensation (NQDC) plans.

For participants in nonqualified deferred compensation plans, the fourth quarter of the year is the most common period for electing salary deferrals in the year ahead. If you expect your total taxes to remain mostly unchanged or perhaps be higher in 2026, it makes sense to continue or increase deferrals for 2026. Other considerations include the contribution limits for qualified retirement plans in the following year, as this FAQ explains.