2026 Year-End Tax Planning: 15 Moves to Make Before December 31

As the year winds down, a few hours reviewing your tax situation can save you real money. Not every move here will apply to you — some are for itemizers, some are for retirees, some are specific to your income level. But there’s almost always something worth acting on before December 31.

One upfront note: the standard deduction for 2026 is $16,100 for single filers and $32,200 for married filing jointly. With the threshold that high, most people won’t itemize — which means several of the classic deductions (charitable donations, mortgage interest, medical expenses) won’t provide a direct federal tax benefit unless your total itemized deductions exceed the standard deduction. I’ve flagged where that distinction matters.

Here are 16 moves worth reviewing.

1. Max Out Your 401(k) Before December 31

The 2026 limit for 401(k) contributions is $24,500, up from $23,500 last year. If you’re 50 or older, you can add a catch-up contribution of $8,000 (for a total of $32,500). And if you’re aged 60, 61, 62, or 63, SECURE 2.0 created a “super catch-up” — your limit is $11,250 instead of $8,000, for a total of $35,750.

Pre-tax 401(k) contributions reduce your taxable income dollar for dollar. If you’re behind on contributions, now is the time to increase your payroll withholding before the December 31 cutoff. Unlike IRAs, you can’t fund a 401(k) after the year ends.

See the 2026 401(k) contribution limits post for the full breakdown including all catch-up tiers.

2. Fund an IRA — You Have Until April

Traditional IRA and Roth IRA contributions for 2026 can be made up to the April 15, 2027 deadline, so there’s less urgency here — but it’s still worth planning now. The 2026 limit is $7,500 (or $8,600 if you’re 50 or older, thanks to the SECURE 2.0 catch-up increase).

Whether a traditional IRA contribution is deductible depends on your income and whether you or your spouse have a workplace retirement plan. Roth IRA contributions phase out between $153,000–$168,000 for single filers and $242,000–$252,000 for married filing jointly. See the Roth IRA contribution and income limits post for the full phase-out rules, conversion options, and key retirement ages for 401(k), IRA, and Social Security that govern withdrawals.

3. Use Charitable Giving Strategically (QCDs for 70½+)

Charitable donations are deductible if you itemize — but most people don’t. One strategy that works regardless of whether you itemize: bunching two years of planned donations into a single year to push your itemized deductions above the standard deduction threshold for that year, then taking the standard deduction the next.

If you’re 70½ or older, a Qualified Charitable Distribution is one of the best moves in tax planning — and unlike a bunched donation, it doesn’t require itemizing at all. You can transfer up to $111,000 directly from your IRA to a qualified charity in 2026 (up from $108,000 last year). The distribution counts toward your Required Minimum Distribution and is excluded from your taxable income entirely — unlike a regular withdrawal followed by a charitable gift. For married couples, each spouse can do up to $111,000 from their own IRA, for a combined $222,000.

Keep receipts and documentation for all donations. Donations must be made by December 31.

4. Take Advantage of the Higher SALT Deduction

This is one of the biggest changes for itemizers in years. The One Big Beautiful Bill (OBBB), signed in July 2025, raised the state and local tax (SALT) deduction cap to $40,000 for 2025 and $40,400 for 2026 — up from the $10,000 cap that’s been in place since 2017.

The cap is per tax return, not per person. Married couples filing jointly share one $40,400 cap; married filing separately splits it to $20,200 each. There’s also an income phase-out: for joint and single filers, the cap begins reducing above $505,000 in MAGI for 2026 (reducing by 30 cents per dollar above the threshold, down to a $10,000 floor); for married filing separately, the phase-out starts at $252,500 MAGI with a $5,000 floor.

If your state income taxes plus property taxes combined were capped at $10,000 before, you may now be able to deduct significantly more. This makes itemizing more attractive for homeowners in high-tax states — worth running the math before year-end.

5. Review Medical and Health Expense Deductions

Medical expenses exceeding 7.5% of your adjusted gross income are deductible if you itemize. (Many older sources say 10% — that was a pre-TCJA rule. The threshold has been 7.5% since 2017 and remains there for 2026.)

In practice, most people don’t clear the threshold unless they had significant out-of-pocket costs during the year. But if you’re close, consider whether accelerating elective procedures or dental work into this calendar year would push you over.

Health insurance premiums you pay out of pocket (not pre-tax through an employer) also count toward the 7.5% floor. Self-employed individuals can deduct 100% of health insurance premiums as an above-the-line deduction, which is even better — it reduces AGI regardless of itemization.

6. Maximize Your HSA

If you have a high-deductible health plan (HDHP), an HSA offers a triple tax advantage: contributions are pre-tax, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. It’s the best tax account most people underuse.

The 2026 HSA contribution limit is $4,400 for self-only coverage and $8,750 for family coverage. If you’re 55 or older, you can add a $1,000 catch-up contribution. You have until April 15, 2027 to fund your HSA for the 2026 tax year — but you can start now. (The IRS has already released 2027 limits — see the Looking Ahead section below.)

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7. Tax-Loss Harvesting Before December 31

Year-end is the best time to review your investment portfolio for positions sitting at a loss. Selling those positions before December 31 lets you use the losses to offset capital gains you’ve already realized — and if your losses exceed your gains, up to $3,000 can be deducted against ordinary income, with any remaining losses carrying forward to future years.

One important rule: the 30-day wash-sale rule prevents you from claiming the loss if you buy the same (or substantially identical) security within 30 days before or after the sale. If you still want exposure to that asset class, you can buy a similar-but-not-identical fund immediately, and buy back the original after 31 days.

Example: Lisa realized $12,000 in capital gains selling a stock in March. In December, she has an ETF sitting at a $9,000 loss. By selling it, she offsets $9,000 of her gains, cutting her taxable capital gains to $3,000. She immediately reinvests in a comparable ETF to maintain her allocation.

8. Time Your Income and Deductions

The most flexible year-end lever is controlling when income hits and when deductions are claimed. If you expect to be in a lower tax bracket next year — say you’re retiring or have a major expense coming — it can make sense to defer income (bonus, freelance invoice) into January and pull deductions into December. Run the numbers against the current federal tax brackets before deciding which way to shift.

Conversely, if rates are going up or you expect higher income next year, accelerating income now can save taxes. This is particularly relevant for freelancers and business owners who have some control over invoicing timing.

Also worth checking: Alternative Minimum Tax (AMT) exposure. Some deductions that lower regular tax can trigger AMT. If your income is in the AMT range (generally $150,000+ for individuals), run an AMT calculation before making large deduction moves.

9. Dependent Care FSA and Child Care Credit

If your employer offers a Dependent Care Flexible Spending Account, you’re contributing pre-tax money to cover childcare costs. The maximum jumped to $7,500 per household for 2026 under the One Big Beautiful Bill — the first increase since 1986, up from $5,000. The cap is per household on a joint return, not per spouse; married filing separately is limited to $3,750 each. Unused funds typically expire at year-end (check your plan’s grace period), and most plans only let you raise your election mid-year after a qualifying life event — not simply because the annual limit went up — so if you want the higher amount, check with HR before your open enrollment window closes.

Even without an FSA, the Child and Dependent Care Credit is available for qualifying childcare expenses. The credit ranges from 20%–35% of up to $3,000 in expenses for one child or $6,000 for two or more, depending on your income.

See the Child Tax Credit guide for the current CTC amounts, which were also updated under OBBB.

10. American Opportunity Tax Credit (AOTC)

If you have a dependent in the first four years of college, the AOTC can provide a credit of up to $2,500 per student per year (100% of the first $2,000 in qualified expenses, then 25% of the next $2,000). Up to 40% ($1,000) is refundable.

Income limits for 2026: the full credit is available with MAGI up to $80,000 for single filers and $160,000 for married filing jointly. It phases out completely at $90,000 (single) and $180,000 (MFJ).

Make sure tuition payments for January 2027 semester classes (often due in December) are paid by December 31 — those expenses can count toward the 2026 credit.

11. Give Annual Gifts to Family

The annual gift tax exclusion for 2026 is $19,000 per recipient. That means you can give $19,000 to as many people as you want — children, grandchildren, anyone — without filing a gift tax return or using up any of your lifetime exemption. Married couples can combine for $38,000 per recipient.

For gifts to count in 2026, checks need to clear by December 31. Start early enough that nothing gets delayed by holiday mail or banking slowdowns.

This isn’t a tax deduction for the giver — but it’s a useful estate planning and wealth transfer tool if you’re trying to reduce a taxable estate over time.

12. Fund or Superfund a 529 Plan

A 529 education savings plan grows tax-free and withdrawals for qualified education expenses are tax-free. Many states also offer a state income tax deduction or credit for contributions — which does reduce your state taxes.

One 2026-eligible strategy: superfunding, which lets you contribute up to five years’ worth of gifts ($95,000 per beneficiary, or $190,000 for married couples) in a single year and elect to spread it across five years for gift tax purposes. No gift tax return needed on an annual $19,000 contribution.

SECURE 2.0 also created a new option: unused 529 funds can now be rolled into a Roth IRA for the beneficiary after 15 years (subject to annual IRA contribution limits and a $35,000 lifetime cap). This reduces the risk of overfunding.

13. Educator Expense Deduction ($350)

K-12 teachers, instructors, counselors, and aides can deduct up to $350 in out-of-pocket classroom expenses directly on their tax return for 2026 — no itemizing required, up from $300 last year under the One Big Beautiful Bill. If you’re a married educator filing jointly and both spouses qualify, the combined limit is $700.

Several tax firms are reading the new law as also allowing unreimbursed classroom expenses above that $350 to be claimed as an additional itemized deduction — the IRS hasn’t issued clarifying guidance on this second tier yet, so if your out-of-pocket costs run well above $350, it’s worth checking with a tax preparer before assuming you can claim the excess.

Qualifying expenses include books, supplies, computer equipment, COVID protective items, and professional development courses.

14. Mortgage Interest, Refinancing Points, and PMI

If you itemize, mortgage interest on a primary and secondary residence (up to $750,000 in loan principal) is still deductible. With the higher SALT cap in 2026, more homeowners may find it worthwhile to itemize rather than take the standard deduction.

If you refinanced your mortgage, the points you paid are deductible — but spread over the life of the loan rather than all at once. For a 30-year refinance, that’s 1/30th per year. Small amount annually, but don’t leave it on the table.

There’s also a restored deduction worth checking: the One Big Beautiful Bill permanently reinstated the mortgage insurance premium (PMI) deduction for premiums paid starting January 1, 2026, after it had lapsed. It covers conventional PMI, FHA mortgage insurance, VA funding fees, and USDA guarantee fees on a primary or one designated second home — but you must itemize, and it phases out steeply: the deduction starts reducing at $100,000 AGI ($50,000 married filing separately) and disappears entirely at $110,000 AGI ($55,000 MFS).

15. Federal Energy Credits Expired — Check Your State

The federal Energy Efficient Home Improvement Credit (Section 25C) expired on December 31, 2025. Under OBBB, what had been an enhanced 30% credit (up to $3,200/year) for heat pumps, insulation, windows, and HVAC was terminated before the 2026 tax year.

If you’re planning energy-efficient home improvements in 2026, there’s no federal tax credit waiting for you. However, many states offer their own energy incentive programs — rebates, credits, or property tax exemptions. Check your state energy office or the ENERGY STAR federal tax credit page for state-level programs.

Example: Mark replaced his furnace in February 2026. He expected to claim a federal credit based on guidance he’d read in 2024. The federal 25C credit no longer applies to 2026 installations — but his state offers a $500 rebate through its utility program, which he can still claim.

16. New OBBBA Senior Deduction ($6,000)

If you or your spouse turned 65 this year (or already are), don’t overlook the One Big Beautiful Bill’s new temporary deduction of up to $6,000 per qualifying senior ($12,000 for a married couple where both spouses qualify), available for 2025 through 2028. It’s available whether or not you itemize, and it stacks on top of the regular standard deduction and the existing extra standard deduction for age 65+.

It does phase out with income: for single filers it starts reducing above $75,000 MAGI and is gone entirely at $175,000; for married filing jointly, the range is $150,000 to $250,000. Factor this into your year-end withholding or estimated payment planning if you or your spouse crossed 65 this year — full details, including the phase-out math, are in my $6,000 senior deduction guide.

Common Issues to Watch Out For

A few patterns I see trip people up at year-end:

Assuming you’ll itemize when you won’t. Most people — even homeowners with a mortgage — don’t itemize because the standard deduction is so high. Run a quick estimate of your itemized deductions before assuming charitable gifts, PMI, or medical expenses will help you.

Assuming a QCD only helps if you itemize. It doesn’t. A Qualified Charitable Distribution is excluded from taxable income regardless of your filing method — it’s one of the few moves on this list that helps even the roughly 90% of filers who take the standard deduction.

Assuming the SALT cap is per person, not per return. A married couple filing jointly gets one $40,400 cap in 2026, not two. Married filing separately splits it to $20,200 each — run both scenarios before assuming MFS doubles your benefit.

Trying to bump up a Dependent Care FSA election mid-year for the new $7,500 limit. Most plans only allow a change after a qualifying life event (new child, daycare cost change, and similar). The higher annual limit alone usually isn’t enough to reopen your election outside open enrollment.

Missing the 401(k) contribution window. Payroll changes for December can be tricky — many employers have cutoffs for contribution changes in mid-December to ensure they process before December 31. Don’t wait until the last week.

Ignoring the wash-sale rule. Tax-loss harvesting is a legitimate strategy, but buying back the same fund within 30 days voids the loss. I get questions about this one every January when people discover their December trade doesn’t count.

Gifting appreciated stock instead of cash to charity. If you donate cash and also have appreciated stock, consider donating the stock instead. You avoid capital gains on the appreciation AND get the charitable deduction at the full current value.

Forgetting to update HSA investments. A lot of people fund an HSA and leave it in a cash position earning nearly nothing. Most HSA providers let you invest the balance once it clears a threshold ($1,000–$2,000). The triple tax advantage is only fully realized if the money is actually invested.

Looking Ahead: 2027

For 2027, the main things I’ll be watching:

HSA limits are already out. The IRS has confirmed 2027 HSA contribution limits at $4,500 for self-only coverage and $9,000 for family coverage (IRS Rev. Proc. 2026-24), both modest increases over 2026. If you’re on an HDHP, you can start planning your 2027 contribution increase now.

Retirement contribution limit adjustments — the IRS typically releases the following year’s 401(k)/IRA limits in October or November. Given that inflation has been running in the 2–3% range, modest increases to the $24,500 401(k) limit are likely (the IRS rounds to the nearest $500), though not guaranteed. The $7,500 IRA limit may also tick up.

SALT cap inflation indexing — the $40,400 cap for 2026 indexes at 1% annually through 2029 under OBBB, so expect approximately $40,800 for 2027.

QCD limits — also inflation-indexed; currently at $111,000 for 2026, likely to increase modestly.

Any new legislation — the 2027 federal budget process could bring additional changes, and the IRS has not yet issued clarifying guidance on the educator-expense itemized question noted in move #13. I’ll update this page when official figures and guidance are released.