The window to reduce your 2026 tax bill closes on December 31. Most moves require action before year end, not when you file in April. Here are the ones that matter most.
Max Out Retirement Accounts Before December 31
Maximize Retirement Contributions
The 2026 401(k) employee contribution limit is $24,500 (up from $23,500 in 2025). If you are 50 or older, an $8,000 catch-up raises your total to $32,500. Taxpayers aged 60 through 63 qualify for a super catch-up of $11,250 instead, bringing the total to $35,750 under SECURE 2.0.
Employee deferrals must be elected through payroll before December 31. IRA contributions for 2026 can be made through April 15, 2027, with a limit of $7,500 ($8,500 if age 50 or older). Traditional IRA contributions may be deductible depending on your income and workplace plan coverage. See the full 401(k) contribution limits guide for catch-up and combined employer limits.
Harvest Investment Losses Before Year End
Tax-Loss Harvesting
Selling investments at a loss before December 31 creates a capital loss you can use to offset capital gains dollar for dollar. After gains are zeroed out, up to $3,000 of excess losses can offset ordinary income. Any remaining losses carry forward to future years with no expiration.
Avoid the wash-sale rule: do not repurchase the same or a substantially identical security within 30 days before or after the sale. Buying a similar but not identical holding maintains your market exposure while locking in the loss for tax purposes.
Optimize Charitable Giving Before December 31
Charitable Giving Strategies
Three techniques maximize the tax benefit of charitable gifts under 2026 rules.
Donor-advised fund (DAF). Contribute appreciated stock before December 31. You deduct the full fair market value in 2026 and avoid capital gains tax. Grants from the fund to charities can happen over time.
Bunching. Combine two or more years of planned donations into a single year to push Schedule A above the $31,500 standard deduction for married filers, then take the standard deduction the following year.
Qualified charitable distribution (QCD). Taxpayers age 70.5 or older can direct up to $108,000 directly from an IRA to a qualified charity. A QCD satisfies your required minimum distribution and is excluded from gross income entirely.
Consider a Roth Conversion Before Year End
If your 2026 income is lower than expected because of a business loss, early retirement, or a gap year, converting traditional IRA funds to a Roth IRA locks in taxes at your current lower rate. Future growth and qualified withdrawals are then tax-free.
The converted amount is added to your 2026 AGI, so run the numbers before acting: a large conversion can push you into a higher bracket, trigger the 3.8% Net Investment Income Tax, or increase your IRMAA Medicare surcharges two years out. Conversions cannot be reversed after the fact.
Check Withholding and Estimated Payments
Confirm your 2026 withholding plus estimated tax payments will cover at least 90% of your 2026 liability, or 100% of your 2025 liability (110% if your 2025 AGI exceeded $150,000). Falling short results in an underpayment penalty even if you pay in full by April 15.
If you are short, increase withholding on your remaining paychecks before December 31. Unlike estimated payments, withholding is treated as evenly distributed throughout the year and can cure prior-quarter underpayment penalties retroactively.
Have questions about your year-end tax strategy? Contact TS CPA for a personalized review before December 31. We respond within the same day.