Before the Year Ends: Tax Planning Moves Worth Considering for 2026

As 2026 draws to a close, now is an ideal time to review your finances and consider strategies that may help reduce your tax liability.

While tax filing season is still several months away, many valuable planning opportunities must be addressed before December 31. Taking action now may provide more flexibility and help avoid surprises when preparing your 2026 tax returns.

At DBMCPA, we encourage our clients to take a proactive approach to year-end tax planning. Here are several areas worth reviewing before the end of the year.

1. Review Retirement Contributions

Retirement contributions remain one of the most effective ways to save for the future while potentially receiving tax benefits today.

For 2026, the employee contribution limit for most 401(k) plans is $24,500. Individuals age 50 or older may qualify for additional catch-up contributions ($8,000), with higher catch-up limits for participants ages 60 through 63 ($11,250).

If you haven’t reached your annual contribution limit, consider whether increasing contributions before December 31 makes sense for your financial situation.

Traditional IRA contributions may also provide tax benefits, depending on income and participation in an employer-sponsored retirement plan. Unlike many employer-plan contributions, eligible IRA contributions for 2026 can generally be made until the April 2027 tax filing deadline.

2. Take Advantage of Charitable Giving Opportunities

Charitable contributions may offer tax benefits while supporting organizations and causes that matter to you.

Beginning in 2026, taxpayers who claim the standard deduction may qualify for a new federal deduction of up to $1,000 in eligible cash charitable contributions, or $2,000 for married couples filing jointly.

For taxpayers who itemize, charitable donations may also provide tax advantages, subject to applicable limitations. Donating appreciated securities rather than cash may be another strategy worth exploring.

Remember to keep receipts and supporting documentation for charitable contributions.

3. Review Investment Gains and Losses

Year-end is a good time to evaluate investment portfolios and consider whether selling investments at a loss could offset realized capital gains.

This strategy, commonly called tax-loss harvesting, may help reduce taxable investment income. Capital losses exceeding capital gains may also offset a limited amount of ordinary income, with unused losses generally carried forward.

However, the IRS wash-sale rules can limit deductions when substantially identical securities are purchased within a specified period before or after a sale.

Investment decisions should always consider overall financial goals rather than tax savings alone.

4. Don’t Overlook Required Minimum Distributions

Individuals who are required to take minimum distributions from retirement accounts should confirm that they have satisfied their 2026 obligations.

Required minimum distributions (RMDs) generally apply to traditional IRAs and certain employer-sponsored retirement accounts beginning at the applicable age, although special rules and exceptions may apply.

Missing an RMD can result in additional taxes, making it important to verify the required amount and applicable deadline.

5. Business Owners: Evaluate Year-End Expenses

Business owners may have additional tax planning opportunities before December 31.

Potential strategies include reviewing equipment purchases, evaluating the timing of deductible expenses, and considering available depreciation deductions.

Recent federal tax law changes have expanded certain business deductions, making it particularly important to review planned capital investments with a tax advisor.

Business owners should also evaluate estimated tax payments, payroll-related reporting, and retirement plan contributions.

6. Check Your Tax Withholding and Estimated Payments

Changes in income, investment activity, business profits, or other financial circumstances can affect your overall tax liability.

Reviewing your withholding and estimated tax payments before year-end can help determine whether adjustments are appropriate.

The fourth-quarter federal estimated tax payment for the 2026 tax year is generally due January 15, 2027.

Make Year-End Planning a Priority

Tax planning isn’t just about reducing this year’s tax bill. It’s also about making decisions that support your longer-term financial goals.

Whether you’re preparing for retirement, managing a business, making charitable contributions, or reviewing investments, thoughtful planning before year-end can make a meaningful difference.

At DBMCPA, we’re here to help you navigate changing tax laws and identify planning opportunities that make sense for your circumstances. If you have questions about your 2026 tax situation or would like to discuss year-end planning strategies, we encourage you to contact our office before December 31.