Tax Tips for the End of the Year

Most year-end tax content shows up in late November, which is roughly the moment it stops being useful. By then your open enrollment window has closed, your charitable strategy is whatever you happened to do, and your only remaining move is writing a check.

It's August. You have four months and real options. That's the whole reason I'm publishing this now.

2026 is also a year where the rules genuinely moved. The One Big Beautiful Bill Act changed how charitable deductions work, raised the SALT cap, and reshaped a few things that were stable for years. Some of those changes take effect for the first time on this year's return. A plan built on 2024 assumptions will miss them.

What Actually Changed for 2026

Four changes matter most, and three of them are new this year.

Charitable giving works differently now. If you don't itemize, you can deduct up to $1,000 in cash gifts to qualifying charities ($2,000 if married filing jointly), on top of your standard deduction. That's the first time a deduction like this has existed since 2021. If you do itemize, there's a new catch going the other direction: only charitable contributions above 0.5% of your adjusted gross income are deductible.

High earners have a new Roth catch-up requirement. Starting in 2026, if your prior-year wages from the employer sponsoring your plan exceeded $150,000, any catch-up contributions you make have to go in as Roth. Same money, different tax treatment, and it changes the math on whether maxing out still makes sense for you.

The SALT cap is much higher. $40,400 for 2026, up from $10,000. It phases down for higher incomes, so whether you benefit depends on where your MAGI lands.

The dependent care FSA limit jumped. $7,500 for 2026, up from $5,000, where it had been stuck for decades. If you're paying for childcare or adult daycare, this is worth revisiting at open enrollment.

Retirement Account Moves

This is where the largest dollars usually are, and most of it closes on December 31.

Know your 2026 limits

• 401(k), 403(b), most 457 plans: $24,500 in employee deferrals
• Catch-up, age 50 and older: an additional $8,000, for $32,500 total
• Enhanced catch-up, ages 60 to 63: $11,250 instead of $8,000
• Traditional and Roth IRAs combined: $7,500, plus $1,100 catch-up at 50 and older

Two different deadlines here, and people mix them up constantly. Contributions through your employer's plan generally have to be made by December 31, because they come out of paychecks. IRA contributions for 2026 can be made until the April 2027 filing deadline.

Check whether the Roth catch-up rule applies to you

If you earned more than $150,000 in wages from your plan sponsor in 2025 and you're making catch-up contributions in 2026, those contributions must be Roth. You lose the current-year deduction on that portion and get tax-free qualified withdrawals later instead. Worth knowing before December, not after.

Take your RMD

Required minimum distributions start at 73 if you were born between 1951 and 1959, and at 75 if you were born in 1960 or later. The deadline is December 31 for most people, with an exception for your first RMD year.

The penalty for missing one is 25% of the shortfall, down from the old 50%. If you catch and correct it within a two-year window, it drops to 10%. Still an expensive way to learn a deadline.

Consider a QCD if you're 70½ or older and charitably inclined

A qualified charitable distribution moves money straight from your IRA to a charity without it hitting your income. The 2026 limit is $111,000 per person. Because it never shows up in AGI, it sidesteps the new 0.5% floor entirely, and it can satisfy your RMD. For retirees who give and take the standard deduction, this is often the most tax-efficient way to donate.

Charitable Giving Under the New Rules

This section got more complicated, so it's worth slowing down.

If you take the standard deduction

You now get up to $1,000 in cash charitable deductions ($2,000 married filing jointly) on top of your standard deduction. Cash gifts to qualifying public charities only. Donor-advised funds don't count. These amounts are fixed and don't adjust for inflation.

If you itemize

Only the portion of your giving above 0.5% of AGI is deductible. Here's a hypothetical to show the mechanics: suppose your AGI is $200,000 and you give $5,000. The floor is $1,000, so $4,000 is deductible. This is an illustration only, and your situation will differ.

The practical effect is that spreading modest gifts across several years now costs you a floor each year. Concentrating two or three years of giving into one, sometimes called bunching, clears the floor once instead of repeatedly. Whether that fits your situation depends on your income, your other deductions, and your giving habits, which is exactly the kind of thing worth modeling before December.

One more wrinkle for top earners: if you're in the 37% bracket, the value of your itemized deductions is now capped at 35 cents per dollar.

Investment Moves Worth Reviewing

Tax considerations shouldn't drive your investment decisions. But once you've decided to make a move, timing it well is free money.

Harvest losses against gains

If you've realized capital gains this year, selling positions at a loss can offset them. Losses beyond your gains can offset up to $3,000 of ordinary income ($1,500 if married filing separately), and anything left over carries forward indefinitely.

Watch the wash sale rule. Buying the same or a substantially identical security within 30 days before or after the sale disallows the loss.

Check whether you're in the 0% capital gains bracket

For 2026, long-term capital gains are taxed at 0% if your taxable income is $49,450 or less filing single, or $98,900 or less married filing jointly. This catches people off guard in specific years: a gap between jobs, an early retirement year before Social Security starts, a year with large deductions. If you land there, realizing gains deliberately can reset your cost basis at no federal tax cost.

Look at Roth conversions in low-income years

The same logic applies in reverse. A year when your income dips is a year when converting traditional IRA dollars to Roth costs less in tax. The tradeoff is paying tax now for tax-free growth later, and it interacts with Medicare premiums and Social Security taxation, so it's worth running the numbers rather than eyeballing it.

Income Timing and Withholding

Shift income and deductions between years

If you expect to be in a lower bracket in 2027, deferring a year-end bonus or delaying invoices can move that income into the cheaper year. If you expect a higher bracket next year, the opposite. Business owners and anyone with variable income have the most room to work with here.

On the deduction side, prepaying deductible expenses before December 31 pulls them into this year's return. With the SALT cap at $40,400, state and local tax prepayment is worth more consideration than it was under the $10,000 cap.

Fix a withholding shortfall while you still can

If it looks like you'll owe, increasing withholding on your W-4 for the rest of the year is more forgiving than making a fourth-quarter estimated payment. Withholding is treated as though it was paid evenly across the year, so it can reduce or eliminate underpayment penalties that an estimated payment made in December cannot.

Health Accounts and Open Enrollment

Open enrollment usually lands in October and November, and the decisions you make there are locked for a year.

• HSA, self-only coverage: $4,400
• HSA, family coverage: $8,750
• HSA catch-up, age 55 and older: an additional $1,000
• Health FSA: $3,400
• Dependent care FSA: $7,500, up from $5,000

HSAs remain the only account that is deductible going in, tax-free while growing, and tax-free coming out for qualified medical expenses. If you have a high-deductible plan and cash flow to spare, it's structurally the most tax-favored account available to you.

FSAs mostly still work on use-it-or-lose-it, though many plans allow a small carryover or a grace period. Check yours in October, not in December.

Estate and Gifting

The annual gift tax exclusion is $19,000 per recipient for 2026, unchanged from last year. You can give that much to any number of people without filing a gift tax return or touching your lifetime exemption. A married couple can combine for $38,000 per recipient.

These gifts don't carry over. December 31 closes the 2026 window.

Your Year-End Calendar

Now through September: Project your 2026 income. Everything below depends on knowing roughly where you'll land. Check whether the Roth catch-up rule applies to you.

October and November: Open enrollment. Set HSA, FSA, and dependent care elections using the 2026 limits above. Review insurance coverage while you're in there.

November and December: Harvest losses. Decide on charitable strategy, including whether bunching makes sense. Adjust withholding if you're short. Take your RMD if you're subject to one.

By December 31: Employer plan contributions, charitable gifts, RMDs, annual exclusion gifts, and any realized gains or losses.

Through April 2027: IRA and HSA contributions for the 2026 tax year.

Frequently Asked Questions

What is the 401(k) contribution limit for 2026?

$24,500 in employee deferrals. If you're 50 or older, you can add an $8,000 catch-up for $32,500 total. Ages 60 through 63 get an enhanced catch-up of $11,250 instead of $8,000.

Can I deduct charitable donations in 2026 if I don't itemize?

Yes. Beginning in 2026, non-itemizers can deduct up to $1,000 in cash contributions to qualifying charities, or $2,000 filing jointly, in addition to the standard deduction. It applies to cash gifts to public charities, not donor-advised funds.

What is the new 0.5% charitable deduction floor?

For itemizers in 2026, only charitable contributions exceeding 0.5% of adjusted gross income are deductible. If your AGI is $200,000, the first $1,000 of giving produces no deduction. This makes concentrating several years of gifts into one year more attractive for some filers.

What is the deadline for 2026 tax moves?

Most are December 31, including employer retirement plan contributions, charitable gifts, RMDs, tax-loss harvesting, and annual exclusion gifts. IRA and HSA contributions for 2026 can be made until the April 2027 filing deadline.

What is the RMD age in 2026?

73 if you were born between 1951 and 1959, and 75 if you were born in 1960 or later. The penalty for missing one is 25% of the amount you should have withdrawn, reduced to 10% if corrected within two years.

How much can I give tax-free in 2026?

$19,000 per recipient under the annual gift tax exclusion, with no limit on the number of recipients. Married couples can combine for $38,000 per recipient. Gifts at this level don't require a gift tax return or reduce your lifetime exemption.

A Note on All of This

Tax rules are specific and personal. Every figure here is current for the 2026 tax year as of August 2026, but whether any of these moves fits your situation depends on details this post can't see. Run anything meaningful past your CPA or tax advisor before you act on it.

What I'd take from this: the changes to charitable giving are the ones most likely to catch people off guard, and they're also the ones with the most planning room. If you give regularly and you haven't looked at how the new floor affects you, that's the first thing to put on the calendar.