Key Takeaways
- Most year-end moves need action by December 31; IRA and HSA money can wait until April 15.
- Starting in 2026, non-itemizers can deduct up to $1,000 in cash gifts to charity, $2,000 joint.
- The gift exclusion is $19,000 per person in 2026 and $20,000 in 2027.
- QCDs let retirees 70½ and older send up to $111,000 to charity without raising taxable income.
As year-end approaches, many of us are thinking about the holiday season. But one thing to keep in mind from a money perspective is taxes! Not fun, but important to take action before year-end to avoid a nasty tax bill or a lower refund when you file next year. This list should help you prioritize what to focus on.
Most of these fifteen tax moves have a December 31 deadline. A few, like individual retirement account (IRA) and Health Savings Account (HSA) contributions, can wait until April 15, 2027. My guide to lowering your tax bill sorts out which deadline applies to what.
The number that decides half of this list is the standard deduction: $16,100 single, $32,200 joint for 2026. Most people won’t itemize above that, but non-itemizers now get a small charity deduction of their own.
Retirement Accounts
1. Finish Your 401(k) Through the Last Paycheck
The 2026 limit is $24,500. Add $8,000 if you’re 50 or older, or $11,250 instead if you’re 60 to 63 (the SECURE 2.0 “super catch-up”), for a top total of $35,750.
A 401(k) only takes money through payroll, so there’s no April grace period. Many employers lock December payroll changes by mid-month. Call HR now. Not on December 20, when it’s likely to be too late to make payroll changes.
Full tiers and rules for employer-sponsored retirement plans and the 2027 contribution limits can be found on my 401(k) and IRA limits page.
2. Plan Your IRA, Even Though April Is the Deadline
You can fund a 2026 traditional or Roth IRA until April 15, 2027. The 2026 limit is $7,500, or $8,600 at 50 and up.
Roth eligibility phases out between $153,000 and $168,000 of modified adjusted gross income (MAGI) for single filers, and $242,000 to $252,000 for joint filers. Whether a traditional IRA is deductible depends on income and on whether you or your spouse have a plan at work.
My take: if money is tight, get the full 401(k) match first. That’s free money. Then put what’s left into the IRA.
Charity, Gifts and Family
3. Give to Charity, Itemizing or Not
Starting with 2026, the One Big Beautiful Bill Act (OBBBA) lets standard-deduction filers deduct up to $1,000 in cash gifts ($2,000 joint). It has to be cash to an operating charity. Donor-advised funds and gifts of stock don’t qualify.
Itemizers got a new floor instead: only giving above 0.5% of AGI counts. At $120,000 of AGI, the first $600 is lost. Small, but it adds up.
Bunching two years of gifts into one still helps clear both the floor and the standard deduction. The details are in my charitable deduction guide.
Gifts have to be made by December 31. A check counts when you mail it; a credit card gift counts when you charge it.
4. Use a QCD If You’re 70½ or Older
A Qualified Charitable Distribution (QCD) sends IRA money straight to a charity, up to $111,000 per person for 2026. It counts toward your required minimum distribution and never shows up in your taxable income.
For retirees it’s the best charity move on this list, hands down. It works without itemizing and isn’t capped at $1,000. A married couple can each do their own, $222,000 combined. If you’re already taking required minimum distributions and giving to charity anyway, I’d do this before writing a single check.
5. Make Your Annual Family Gifts: $19,000 Now, $20,000 in January
The 2026 gift tax exclusion is $19,000 per person you give to, $38,000 from a couple. It’s going to rise to $20,000 for 2027.
So a December gift and a January gift to the same grandchild can total $39,000 within a few weeks, with no gift tax return. Checks need to clear by December 31 to count for 2026. If you were planning a bigger gift anyway, splitting it across New Year’s is the easy way to use both years’ limits.
A 529 college plan can take five years of gifts at once: $95,000 in 2026, or $100,000 if you wait until January. My 529 plan guide covers the timing, the state deductions and the Roth rollover.
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Health Accounts and Medical Costs
6. Top Up Your HSA
If you have a high-deductible health plan (HDHP), the 2026 HSA limit is $4,400 self-only, $8,750 family, plus $1,000 at 55 or older. You have until April 15, 2027 to make contributions.
Money in, growth and qualified withdrawals are all tax-free. My one recommendation: invest the funds in your HSA (index funds are fine!). Plenty of people leave an HSA sitting in cash at almost no interest – which is just losing value over time given current inflation levels.
7. Spend Down a Health FSA
A health Flexible Spending Account (FSA) is mostly use-it-or-lose-it. The 2026 limit is $3,400, and plans can let up to $680 carry over. If you have both, spend the FSA first, since it expires and the HSA doesn’t. That only works with a limited-purpose (dental and vision) FSA, though. A regular health FSA, even your spouse’s, blocks HSA contributions.
Some plans give you until March 15. Others end flat on December 31, so book the eye exam now if yours is one of them.
8. See If Medical Bills Clear 7.5% of AGI
Tax filers who itemize can deduct medical costs above 7.5% of AGI. At $70,000 of AGI, that’s the part over $5,250.
Few people clear it. But if a big surgery or dental bill already came this year, pulling a planned procedure into December can push you over.
Premiums you pay yourself (not pre-tax through work) count toward the 7.5%. Self-employed? You can deduct 100% of your health premiums above the line instead.
Investments, Income and Credits
9. Harvest Losses Before December 31
Selling losers lets you offset gains you’ve already taken, plus up to $3,000 of ordinary income. Anything left carries forward. My tax-loss harvesting process walks through it step by step if you want to see more detailed examples.
Watch the wash-sale rule. It’s strict. Buying the same or a nearly identical fund within 30 days before or after the sale wipes out the loss. Note that the wash sale rule applies proportionally. Only the portion of the loss associated with the repurchased shares is disallowed, while the loss on the remaining (un-repurchased) shares can be claimed.
Example: Dana took $12,000 of gains in March. In December an ETF of hers is down $9,000, so she sells it and buys a similar, not identical, fund. Her taxable gain drops to $3,000.
10. Push or Pull Income Across January 1
If 2027 will be a lower-income year (retiring, a sabbatical, a layoff), push a bonus or freelance invoice into January and pull deductions into December. I’d only bother if the bracket difference is real. Moving $5,000 between two years in the same bracket saves you nothing.
Expecting higher income next year? Do the reverse. Check where you land on the federal tax brackets first.
The Alternative Minimum Tax (AMT)? It rarely hits middle incomes now. The 2026 exemption is $90,100 single and $140,200 joint, and it only starts phasing out above $500,000 ($1,000,000 joint).
Big incentive stock option exercises are the usual exception.
11. Raise Your Dependent Care FSA for 2027
The Dependent Care FSA limit is $7,500 per household starting in 2026, up from $5,000, the first increase since 1986. It’s $3,750 if you’re married filing separately.
You usually can’t raise this year’s election just because the limit went up. You’d need a qualifying life event.
Open enrollment is your chance. Set 2027 at the full $7,500 if your child care bill is that high. It’s one of the easiest raises you’ll get all year, so don’t click past that screen.
The child and dependent care credit got bigger too. Starting in 2026 it can cover up to 50% of $3,000 in costs for one child ($6,000 for two or more), with the rate stepping down as income rises.
12. Pay Spring Tuition in December
The American Opportunity Tax Credit (AOTC) is worth up to $2,500 per student for the first four years of college. That’s 100% of the first $2,000 of costs and 25% of the next $2,000, and up to $1,000 is refundable.
The full credit goes to MAGI up to $80,000 single or $160,000 joint, gone at $90,000 and $180,000. Spring 2027 tuition billed and paid by December 31 can count toward your 2026 credit. It’s an easy one to miss over the holidays, so check the school’s billing date now.
Deductions for Teachers, Homeowners and Seniors
13. Teachers: $350 Above the Line, Plus an Itemized Deduction
K-12 teachers, counselors and aides can deduct up to $350 of classroom costs for 2026 without itemizing ($700 if both spouses teach). The amount went up from $300 with inflation, and it stays $350 for 2027.
OBBBA also brought back an itemized deduction for unreimbursed classroom costs above that, starting in 2026. IRS Publication 505 now lists both. Spend well past $350 and itemize? Keep the receipts.
14. Homeowners: Mortgage Interest, Points and the PMI Comeback
Itemizers can deduct mortgage interest on up to $750,000 of loan principal. Points on a refinance get spread over the loan, 1/30 a year on a 30-year loan.
The private mortgage insurance (PMI) deduction is back for premiums paid from January 1, 2026. It covers conventional PMI, FHA insurance, VA funding fees and USDA guarantee fees. It phases out fast: it starts shrinking at $100,000 of AGI and is gone at $110,000 ($50,000 and $55,000 if married filing separately).
The state and local tax (SALT) cap is $40,400 per return for 2026, starting to phase down above $505,000 of MAGI. In a high-tax state, that bigger cap is often what makes itemizing worth it again.
15. Seniors: The $6,000 Deduction (and the Energy Credit That Ended)
If you’re 65 or older, OBBBA’s senior deduction is worth up to $6,000 per person ($12,000 if both spouses qualify) for 2025 through 2028. You don’t have to itemize, and it stacks on the regular extra deduction for age.
It phases out between $75,000 and $175,000 of MAGI single, or $150,000 to $250,000 joint. If you turned 65 this year, adjust your withholding or fourth-quarter estimate so it doesn’t all come back as a refund. This one’s new, so it’s the deduction I’d double-check first on your return.
And one move that’s gone: the federal energy-efficient home improvement credit (Section 25C) ended December 31, 2025. A heat pump installed in 2026 gets no federal credit, so check your state or utility for a rebate.
Year-End Mistakes I See Most
Counting on itemizing when you won’t. With a $32,200 joint standard deduction, plenty of homeowners still don’t clear it. Run the number before giving extra to charity for the deduction.
Assuming the SALT cap is per person. It’s per return. A married couple shares one $40,400 cap, and filing separately splits it to $20,200 each.
Giving cash when you have winners. If you itemize, donating appreciated stock skips the capital gains and still gets you the full value. Non-itemizers are different: the new $1,000 deduction only takes cash.
Missing the payroll cutoff. The 401(k) and Dependent Care FSA both run through payroll. Miss December’s cutoff and that year is closed.
What’s Already Set for 2027 (and What Isn’t)
Most 2027 numbers are official now, which makes planning next year easier than usual:
| Item | 2026 | 2027 |
|---|---|---|
| Standard deduction, single / joint | $16,100 / $32,200 | $16,600 / $33,200 |
| Gift tax exclusion | $19,000 | $20,000 |
| HSA, self-only / family | $4,400 / $8,750 | $4,500 / $9,000 |
| Health FSA | $3,400 | $3,500 |
| SALT cap | $40,400 | $40,804 |
The standard deduction, gift and FSA numbers come from Rev. Proc. 2026-35, the HSA limits from Rev. Proc. 2026-24. The SALT cap grows 1% a year under the law itself, and its phase-out starts at $510,050 of MAGI in 2027.
Still missing: the 2027 401(k), IRA and QCD limits, which come in the IRS retirement notice expected in mid-November. I’ll add them here when it’s out.
Looking further out, 2028 is the last year of the $6,000 senior deduction under current law. The higher SALT cap runs through 2029 before dropping back to $10,000. Both are worth watching if Congress takes up another tax bill.
