A U.S. senator once said, “Tax complexity itself is a kind of tax.” It’s true. Tax laws change frequently and often require thoughtful planning to navigate effectively.
As we approach year-end, now is an ideal time to review your tax situation and evaluate year-end tax planning strategies that may help reduce your lifetime tax burden, maximize tax-advantaged savings opportunities, and support your long-term financial goals.
Following the passage of the One Big Beautiful Bill Act (OBBBA), several important tax provisions were extended, modified, or newly introduced. Understanding what has changed and how those changes may affect your situation can help you make more informed year-end tax planning decisions before December 31, 2026.
What’s New for 2026?
Higher Retirement Contribution Limits
The IRS increased contribution limits for many retirement accounts in 2026, creating additional opportunities to save on a tax-advantaged basis.
For 2026:
- 401(k), 403(b), and governmental 457 plan contribution limit: $24,500
- Catch-up contribution (age 50+): $8,000
- Enhanced catch-up contribution (ages 60-63): $11,250
- IRA contribution limit: $7,500
- IRA catch-up contribution (age 50+): $1,100
For individuals in their peak earning years, maximizing retirement contributions remains one of the most effective ways to reduce current taxable income while building long-term wealth.
Itemized Deductions for High-Income Earners
For taxpayers in the 37% tax bracket who itemize deductions, their deductions will no longer provide their full tax benefit. Beginning this year, the benefit of those deductions is effectively reduced so that each dollar provides a tax benefit of approximately 35 cents rather than 37 cents.
The state and local tax (SALT) deduction continues to be one of the most discussed tax provisions following OBBBA. Although it went into effect in 2025, many taxpayers may now qualify for larger deductions than were previously available under the historic $10,000 limitation, although income-related restrictions may reduce the benefit for higher-income households. As a result, it may be important to pay close attention to year-end income planning, as additional income could reduce the value of this deduction through the applicable phase-out rules for higher-income taxpayers.
New Charitable Deduction Rules
Charitable deductions become deductible only after exceeding 0.5% of adjusted gross income (AGI).
As a result, some taxpayers may benefit from concentrating multiple years of charitable giving into a single tax year as part of a broader charitable tax planning strategy. This strategy, commonly referred to as “bunching,” may help maximize deductions while maintaining a consistent charitable giving plan.
Taxpayers who do not itemize deductions may still be eligible to deduct up to $1,000 of charitable cash ($2,000 for married couples filing jointly). This provision may allow individuals who claim the standard deduction to receive tax benefits from charitable giving without needing to itemize.
Roth Catch-Up Contribution Changes
If you made more than $150,000 in 2025, you may be required to make catch-up contributions on a Roth basis rather than a pre-tax basis.
If you regularly make catch-up contributions through an employer-sponsored retirement plan, consider reviewing how your employer has implemented these rules and whether adjustments to your retirement savings strategy are appropriate. Because Roth catch-up contributions are made with after-tax dollars, this change could increase your current-year tax liability while creating additional tax-free income in retirement. Evaluating whether to increase overall savings, adjust withholding, or revisit your long-term tax diversification strategy may be worthwhile.
Higher Estate Tax Exemption
For individuals focused on legacy and estate planning, the federal estate and gift tax exemption increased to $15 million per person in 2026, up from $13.99 million in 2025. While many families will not be directly affected by federal estate taxes, this change may create additional planning opportunities for high-net-worth households.
Increased Standard Deduction
The standard deduction increased again for 2026:
- Married Filing Jointly: $32,200
- Over 65 and/or blind: an additional $1,650
- Single: $16,100
- Over 65 and/or blind is an additional $2,050
- Head of Household: $24,150
- Over 65 and/or blind: an additional $2,050
The continued increase in the standard deduction means many taxpayers may receive substantial tax benefits without itemizing deductions.
Tax Moves to Consider Before December 31
Develop a Year-End Tax Projection
One of the most valuable year-end tax planning exercises is preparing a tax projection. A projection can help identify planning opportunities, estimate potential tax liabilities, improve cash-flow planning, and reduce the likelihood of unexpected tax surprises when your return is filed. Even though final numbers won’t be known until year-end, meaningful planning opportunities often emerge long before December 31.
Consider Whether Additional Income Makes Sense
While most taxpayers focus on reducing taxes today, there are situations where intentionally recognizing income now may reduce taxes over your lifetime. This may be particularly beneficial for individuals who expect to be in a higher tax bracket in the future, anticipate larger Required Minimum Distributions (RMDs), or expect beneficiaries to inherit retirement assets that may be subject to future taxation.
Roth Conversions
A Roth conversion moves assets from a pre-tax retirement account into a Roth IRA, with taxes paid on the converted amount today. Future qualified withdrawals are tax-free, and Roth IRAs are not subject to required minimum distributions during the owner’s lifetime. In some situations, Roth conversions may also help reduce future tax liabilities for both account owners and beneficiaries who inherit retirement assets.
Tax-Gain Harvesting
Tax-gain harvesting may allow some investors to realize long-term capital gains while paying little or no federal capital gains tax, depending on their individual circumstances. This strategy can increase the cost basis of appreciated investments and potentially reduce future tax liabilities.
Consider Deferring Income
Conversely, taxpayers experiencing unusually high income this year may benefit from certain tax-deferral strategies.
Examples include:
- Maximizing pre-tax retirement plan contributions
- Increasing retirement plan savings from year-end bonuses
- Establishing retirement plans for business owners
- Utilizing deferred compensation arrangements when available
- Structuring installment sales when selling a business or investment property
Don’t Forget Required Minimum Distributions
Individuals subject to required minimum distributions (RMDs) should ensure those distributions are completed before year-end to avoid potential penalties and support effective retirement tax planning.
For charitably inclined individuals age 70½ or older, Qualified Charitable Distributions (QCDs) remain a powerful planning tool. A QCD allows funds to transfer directly from an IRA to a qualified charity, potentially satisfying some or all of an RMD while excluding the distribution from taxable income.
Review Charitable Giving and Tax Planning Opportunities
For taxpayers who regularly support charitable organizations, donor-advised funds (DAFs) remain one of the most tax-efficient charitable giving and tax planning tools available.
Contributing appreciated securities provides two potential benefits:
- A charitable deduction equal to the fair market value of the donated asset, subject to applicable limitations
- Avoidance of capital gains tax on appreciated assets that are donated
Because of the new charitable deduction rules, donor-advised funds and charitable bunching strategies may become even more valuable for certain households.
Family and Legacy Planning Opportunities
Gifting to Family Members
Lifetime gifting continues to be an effective estate and tax planning strategy and may allow families to transfer wealth in a tax-efficient manner while reducing future estate-tax exposure.
For 2026, individuals may gift up to $19,000 per recipient without utilizing any portion of their lifetime gift and estate tax exemption. Married couples may effectively gift $38,000 per recipient through gift-splitting. [irs.gov]
If intergenerational wealth transfer is one of your goals, year-end can be a good time to review gifting opportunities with your financial advisor and tax professional.
529 Plans
529 plans remain one of the most effective vehicles for funding future educational expenses. Assets grow tax-deferred, qualified withdrawals are tax-free, and many states continue to offer state tax incentives for contributions.
In some situations, families may also take advantage of special gifting rules that allow up to five years of annual exclusion gifts to be front-loaded into a 529 plan.
Read more about the importance of 529 plans in our Insight: What are 529 Plans and Why are they important?
Trump Accounts
A new planning opportunity introduced under OBBBA is the Trump Account. Beginning in 2026, eligible children may have a Trump Account established on their behalf. Contributions are generally limited to $5,000 annually, and eligible children born between January 1, 2025, and December 31, 2028, may qualify for a $1,000 federal contribution if enrolled. Employers may also contribute up to $2,500 annually under applicable rules, which is excluded from the employee’s gross income.
While 529 plans often remain the preferred tool for education-specific goals, Trump Accounts may provide families with an additional tax-advantaged vehicle for long-term savings and wealth accumulation.
If you’d like to learn more about Trump Accounts, you can check out our insight: What is a Trump Account?
Opportunities Available Until April 15
Health Savings Account Contributions
HSAs continue to offer several potentially valuable tax benefits and remain an important component of many tax planning and healthcare savings strategies.
For 2026:
- Individual contribution limit: $4,400
- Family contribution limit: $8,750
- Catch-up contribution (age 55+): $1,000
HSAs offer a unique triple-tax advantage:
- Contributions are tax-deductible.
- Investment growth is tax-free.
- Qualified healthcare withdrawals are tax-free.
Where available, payroll contributions also provide payroll tax savings.
If you’d like to learn more about HSAs, you can check out our insight: What are Health Savings Accounts?
Traditional IRA and Roth IRA Contributions
Taxpayers generally have until the tax filing deadline to fund Traditional IRA and Roth IRA contributions for the prior year. For 2026, the IRA contribution limit is $7,500, with an additional $1,100 catch-up contribution available to individuals age 50 and older.
For individuals whose income exceeds direct Roth IRA contribution limits, a Backdoor Roth IRA strategy may continue to provide an effective way to create future tax-free growth.
Final Thoughts on 2026 Year-End Tax Planning
Effective year-end tax planning is not just about reducing taxes this year. It is also about making decisions that support your broader financial goals and may help reduce taxes over your lifetime.
By working with your financial advisor and tax professional, you can help reduce the “mental tax” that often comes with navigating an increasingly complex tax landscape.
If you or someone you know would like assistance evaluating year-end tax planning opportunities and avoiding unnecessary surprises, we encourage you to reach out to your advisor or schedule an initial conversation with us here.
Sources:
- https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
- https://www.congress.gov/crs_external_products/IN/PDF/IN12686/IN12686.1.pdf
- https://trumpaccounts.gov/
- https://www.fidelity.com/learning-center/personal-finance/charitable-giving-tax-changes
