6 Year-End Tax Planning Strategies to Take Before 2026
Year-end is a great time to start taking inventory and integrating tax-smart strategies into your financial plan for the upcoming tax season. Effective tax planning can help you reduce your upcoming tax bill, maximize your savings and set you up for financial success in 2026. Proactive tax planning isn’t just for the ultra-wealthy; it is a fundamental component of healthy financial planning and management for everyone. By taking a few specific actions now, you can potentially keep more of your hard-earned money and set yourself up for a stronger financial future.
Strategy 1: Supercharge Your Retirement Savings
One of the most effective ways to lower your taxable income is often right under your nose: your retirement accounts. Contributions to tax-deferred accounts such as a 401(k) or a traditional individual retirement account (IRA), reduce your taxable income dollar-for-dollar for the current year.
Maximize Your 401(k) or 403(b)
Check your pay stubs. Have you maxed out your employer-sponsored plan? For 2025, the contribution limit rose to $23,500. If you’re 50 or older, you are eligible for an additional “catch-up” contribution of $7,500. And starting in 2025, if you’re between age 60 and 63, you are eligible to contribute up to $11,250, if your plan allows.
So if you haven’t hit your limits, consider increasing your contribution percentage for your final few paychecks of the year. Every dollar you contribute lowers your taxable salary and grows tax-deferred until retirement. Check out our article here about ten money missteps that can delay your retirement dreams.
For 2026, some employer-sponsored contribution limits have changed. See table below.
Employee-Sponsored Contribution Limits 2025-2026 Changes
Don’t Forget IRAs and HSAs
While you typically have until the April 2026 tax filing deadline to contribute to an IRA or Health Savings Account (HSA) for 2025, funding them before year-end can help you wrap up your financial year cleanly.
- Traditional IRA: For 2025, the IRA contribution limit is $7,000 (plus an extra $1,000 catch-up if you are 50 or older). Contributions may be tax-deductible depending on your income level and whether you have a retirement plan at work.
- HSA: If you have a high-deductible health plan, HSA contribution limits for 2025 are $4,300 for individuals and $8,550 for families, with an additional $1,000 catch-up for those 55 or older. HSA contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-exempt.
For 2026, some IRA and HSA contribution limits have changed. See table below.
IRA& HSA Contribution Limits 2025-2026 Changes
Strategy 2: Turn Investment Losses into Wins
If your portfolio has seen some volatility in 2025, you might be able to use it to your advantage through tax-loss harvesting. This involves selling investments that have lost value to offset capital gains you’ve realized elsewhere in your portfolio.
How It Works
Let’s say you sold a stock earlier this year for a $5,000 profit. You now owe capital gains tax on that $5,000. However, if you have another holding that is currently down by $3,000, you could sell it to realize that loss. This loss offsets your gain, meaning you would only owe taxes on the remaining $2,000 of profit.
If your losses exceed your gains, you can use up to $3,000 of excess loss to offset your ordinary income (such as salary) for 2025. Any losses beyond that can be carried forward to 2026 and future years.
Pro Tip: Be aware of the “wash-sale rule”—you cannot sell a security for a loss and buy a “substantially identical” security within 30 days before or after the sale. Doing so negates the tax benefit.
Strategy 3: Optimize Your Charitable Giving
The holiday season is a time forgiving, and aligning your philanthropy with your 2025 tax strategy can amplify your impact.
Bunching Deductions
The standard deduction for 2025 is projected to increase, meaning fewer people will itemize deductions. If your total itemized deductions (mortgage interest, state and local taxes, charitable gifts) fall just short of the standard deduction threshold, you get no tax benefit for your charitable giving.
“Bunching” is a strategy where you combine multiple years of charitable contributions into a single tax year. By making a large donation in 2025, you may push your total deductions over the standard limit, allowing you to itemize and get a tax break. In the following year, you can take the standard deduction.
Donor-Advised Funds (DAFs)
A Donor-Advised Fund remains an excellent tool for bunching. Contribute a lump sum of cash or appreciated assets to the fund in 2025, take the immediate tax deduction for the full amount, and distribute grants to your favorite charities over time.
Donate Appreciated Stock
Instead of donating cash, consider donating appreciated stocks or mutual funds directly to a charity. You avoid paying capital gains tax on the appreciation, and you can still deduct the full fair market value of the asset—up to 30% of AGI for securities and 60% for cash gifts in 2025.
Strategy 4: Review Your Withholding
Did you get a massive refund for your 2024 tax return, or did you owe more than expected? Neither situation is ideal. A large refund means you gave the government an interest-free loan, while a large bill can cause cash flow problems.
Use the IRS Tax Withholding Estimator to check if you are on track for 2025. If you’ve had major life changes such as marriage, divorce, having a child, or a new job, your withholding needs likely changed. Adjusting your W-4 form now can help avoid penalties or unexpected bills when you file in 2026.
Strategy 5. Review Required Minimum Distributions (RMDs)
If you are 73 or older, the IRS requires you to take RMDs from certain retirement accounts, such as traditional IRAs and 401(k)s. Failing to withdraw the required amount can result in a hefty penalty of 50% of the missed distribution amount.
To manage RMDs effectively, calculate your required amount early in the year and schedule the withdrawal well before the deadline. If you don’t need the RMD for personal expenses, consider a Qualified Charitable Distribution (QCD), which allows you to donate up to $105,000 directly to a qualified charity, reducing your taxable income.
Strategy 6: Consider Roth Conversions
If 2025 was a lower-income year for you—perhaps due to a sabbatical, job change, or business slowdown—it might be the perfect time for a Roth conversion.
This involves moving money from a Traditional IRA (pre-tax) to a Roth IRA (after-tax). Important note: You will pay income tax on the converted amount for the 2025 tax year, but that money then grows tax-exempt and qualified withdrawals in retirement are also tax-exempt. A Roth conversion can be a great move, but make sure to work with a financial advisor to determine if a conversion fits into your overall financial plan.
Quotient Wealth Partners –Your Tax Planning Partner
At Quotient, we understand that effective year-end tax planning is a cornerstone of comprehensive financial success. Our team of experienced advisors works closely with you to develop tailored strategies that not only optimize your tax situation but also align with your broader financial goals.
The window for many of these strategies closes on December 31, 2025. Don’t let the holiday rush distract you from these critical financial tasks. Set aside time to review your accounts, consult your tax professional or financial advisor, and execute the moves that make sense for your financial situation.
By taking these steps, you can help save money on taxes but also give yourself clarity and finance confidence heading into 2026. At Quotient, we help individuals and families just like yours to reduce their tax liabilities and keep more of what’s theirs. To get started, contact a member of our team for a complimentary financial plan.
Next Steps
- Check your pay stubs: Ensure you are on track to hit your 2025 retirement contribution goals.
- Review your portfolio: Look for opportunities to harvest losses for 2025.
- Plan your giving: Consider if bunching donations or using a DAF makes sense for you in 2025.
- Consult a pro: Tax laws are complex and change frequently. Work with a CPA and a financial advisor. They can save you from costly mistakes when filing your 2025 taxes and creating a financial plan that optimizes your current and future tax bills.
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