Most tax-saving moves for 2026 must be made by December 31, and this is the first full year of several changes from the 2025 tax law. Here are nine items to review with your BKM advisor before year-end.
1. Top off retirement contributions
Workplace plan deferrals must go through payroll by December 31. The 2026 limit is $24,500, or $32,500 at age 50+ and $35,750 at ages 60–63. IRA contributions are limited to $7,500 ($8,600 at 50+) and can be made until April 15, 2027. New this year: if you earned more than $150,000 in FICA wages in 2025, catch-up contributions must go in as Roth, which reduces this year's deduction.
2. Harvest losses, or gains
Trades must be placed by December 31. Realized losses offset gains plus up to $3,000 of ordinary income; just avoid buying back the same security within 30 days. In a lower-income year, long-term gains are taxed at 0% if taxable income stays at or below $98,900 for joint filers ($49,450 single). Also check for year-end mutual fund distributions before buying.
3. Consider a partial Roth conversion
A conversion counts for 2026 only if completed by December 31, and it can't be undone. Converting just enough to fill your current bracket can lower lifetime taxes, especially between retirement and the start of required distributions. The extra income can raise Medicare premiums two years later and reduce the new senior deduction.
4. Plan charitable gifts around the new rules
Starting this year, people who take the standard deduction can deduct up to $1,000 of cash gifts ($2,000 joint), though gifts to donor-advised funds don't qualify. Itemizers can deduct only gifts above 0.5% of AGI, and those in the 37% bracket save at most 35 cents per dollar deducted. Bunching several years of gifts into one year and giving appreciated stock can soften these limits. Allow extra time for transfers to complete.
5. Take RMDs and consider QCDs
If you're 73 or older, take your 2026 required minimum distribution by December 31 (a first-ever RMD can wait until April 1, 2027) to avoid a penalty of up to 25%. If you're 70½ or older, a qualified charitable distribution (QCD) sends up to $111,000 from your IRA directly to charity. It counts toward your RMD, stays out of taxable income, and sidesteps the new charitable limits.
6. Make the most of the new deductions
- State and local taxes (SALT): The cap is $40,400 for 2026 but phases down above $505,000 of modified AGI, reaching $10,000 at about $606,000.1 If you're near that range, the timing of income and tax payments matters.
- Seniors: Each person 65 or older gets an extra $6,000 deduction through 2028, phasing out above $75,000 of modified AGI ($150,000 joint).
- Tips, overtime, and car loan interest: These are newly deductible within limits, mainly helping working family members.
7. Use your benefits
Spend down health FSA balances; some plans carry over up to $680. HSA limits for 2026 are $4,400 self-only and $8,750 family, and you can contribute until April 15, 2027. The dependent care FSA limit is now $7,500, up from $5,000. For open enrollment, HSA limits rise to $4,500 and $9,000 in 2027.
8. Make annual gifts
You can give $19,000 per person ($38,000 per couple) in 2026 without using any of your lifetime exemption, which is now $15 million per person. Gifts must be completed by December 31. 529 plans and the new Trump Accounts for children, which accept up to $5,000 a year, are good options.
9. Check withholding and estimates
To avoid an underpayment penalty, pay at least 90% of this year's tax or 100% of last year's (110% if your 2025 AGI was over $150,000). The final 2026 estimated payment is due January 15, 2027. Extra withholding in December counts as paid evenly through the year, making it a good way to close a gap.
How BKM can help
These decisions interact. A Roth conversion, for example, can change your SALT deduction, senior deduction, and Medicare premiums. Seeing the full picture before December 31 is where the savings are.
BKM provides full-service tax planning, preparation, and filing, plus advanced tax forecasting, alongside our financial planning and investment management. For our wealth management clients, full-service tax planning is often included in our services, so there's typically no additional charge.
Already have an accountant you like? Keep them. Send us your 2025 tax return and we'll run a forecast and planning analysis to share with you and your preparer. Contact your BKM advisor to get started.
This article is for general information only and is not tax or legal advice. Please consult your tax professional before acting.