Your tax return tells you what happened last year. By the time you sit down to file, most of the choices that shaped it are already locked in. The weeks between now and December 31 are when you can still change the outcome.
Not every step below applies to every household, and some don't need to happen this year at all. Several carry a hard December 31 deadline, while others stay open until you file in April. We've sorted them that way so you can spend the next few weeks on the items that won't wait.
Start With a Projection
Before you act on anything, estimate where your taxable income will land for 2026. Add up wages, business income, pensions, Social Security, interest, dividends, retirement distributions and realized capital gains, then subtract expected deductions. The result shows which bracket you're in and how much room sits below the next one.
Then look ahead. If you expect your income to fall next year, perhaps because you plan to retire or sell a business, it may make sense to defer income and pull deductions into 2026. If you expect it to rise, the reverse can apply. Almost every decision that follows depends on this comparison.
Actions That Must Happen by December 31
Roth Conversions
A Roth conversion moves money from a traditional IRA or similar account into a Roth IRA. You pay income tax on the amount now, and qualified withdrawals later come out tax-free. Conversions often make the most sense in lower-income years, such as the stretch between retiring and claiming Social Security.
A conversion counts toward the year it happens, so it must be finished by December 31. It also can't be undone. Size it with your projection in hand, and check the effect on Medicare premiums, capital gains rates and any deductions that phase out with income. Our article Is a Roth Conversion Right for You? covers how to decide on an amount.
Required Minimum Distributions
If you are 73 or older, you generally must take your required minimum distribution from traditional IRAs and most workplace plans by December 31. Missing it brings a penalty. The one exception is your first RMD, which you can delay until April 1 of the following year. Delaying means taking two distributions in one year, which can push you into a higher bracket, so it isn't always the better choice.
Coordinate the timing and amount with your cash needs, charitable plans and tax withholding. Many retirees use the RMD to cover the taxes owed on it.
Qualified Charitable Distributions
If you are 70½ or older and give to charity, a qualified charitable distribution lets you send money straight from your IRA to a qualifying charity. The amount stays out of your adjusted gross income, and it can count toward your RMD. The limit for 2026 is $111,000 per person.
Two cautions apply. The money must go directly from the IRA to the charity, not through your checking account, and donor-advised funds don't qualify as recipients. Because a QCD lowers your adjusted gross income itself, it can also help with Medicare premiums and other income-based limits in ways a regular deduction can't.
Capital Gains and Losses
Review your taxable investment accounts for gains and losses you have already realized this year. Selling investments that have dropped in value can offset gains, and losses beyond your gains can offset up to $3,000 of ordinary income, with the rest carried forward. If you buy back the same or a substantially identical investment within 30 days, the wash-sale rule disallows the loss.
The opposite move can make sense too. In a lower-income year, you may be able to realize long-term gains at a low or even zero federal rate, which resets your cost basis higher for the future.
Charitable Gifts
2026 is the first year of new charitable deduction rules under the One Big Beautiful Bill Act. According to Fidelity, itemizers can now deduct charitable gifts only to the extent they exceed 0.5% of adjusted gross income, and filers in the 37% bracket see the tax benefit of their itemized deductions capped at 35%. For those who don't itemize, a new deduction allows up to $1,000 of cash gifts for single filers and $2,000 for joint filers. Gifts to donor-advised funds don't count toward that non-itemizer deduction.
These rules make it more important to think about which asset you give and when. Giving appreciated stock you have held more than a year can avoid capital gains tax on the growth. Bunching several years of gifts into one year, often through a donor-advised fund, can lift you above the standard deduction in that year. To count for 2026, gifts must be completed by December 31.
Workplace Retirement Plan Contributions
Contributions to a 401(k), 403(b) or most 457(b) plans have to come out of a paycheck dated this year. The 2026 limit is $24,500, plus an $8,000 catch-up at 50 or older. If you are 60 to 63, a larger $11,250 catch-up replaces the standard one. If you are behind, ask your payroll team now whether you can raise your contribution for the last paychecks of the year.
Annual Gifts to Family
You can give up to $19,000 per recipient in 2026 without using any of your lifetime federal exemption or filing a gift tax return. The exclusion resets each January, so any amount you don't use this year is gone. For Minnesota families, the state's estate tax works differently from the federal one, which we explain in Preserving Both Minnesota Estate-Tax Exclusions. Any gift should fit your own plan first.
Business Owner Decisions
If you own a business, year-end is when income timing has the most room to move. Review projected profit, owner compensation, planned equipment purchases and whether to bill or pay certain items before or after January 1. Some retirement plans must be set up before year-end to accept contributions for 2026, while others can be opened later. Ask your CPA which deadline applies to your plan.
Actions That Can Wait Until You File
These still deserve attention, but you can make them with a final year-end tax picture in hand.
- IRA contributions. You can contribute up to $7,500 for 2026, plus $1,100 if you are 50 or older, until the April 2027 filing deadline.
- Health savings account contributions. If you had eligible high-deductible coverage, the 2026 limits are $4,400 for self-only coverage and $8,750 for family coverage, plus $1,000 at 55 or older. Contributions are due by the filing deadline. Our HSA article explains why many people treat the account as a retirement health care fund.
- SEP IRA contributions. Business owners can generally fund a SEP for 2026 until the filing deadline, including extensions.
- Fourth-quarter estimated taxes. The final 2026 estimated payment is due January 15, 2027.
Keep an Eye on Medicare Premiums
Medicare sets Part B and Part D premiums using your income from two years earlier. Your 2026 income will set your premiums for 2028. For 2026 premiums, the first surcharge tier starts at $109,000 for single filers and $218,000 for joint filers, and the thresholds adjust each year.
A Roth conversion, a large capital gain or a bigger IRA withdrawal can push you over a threshold by a single dollar and raise your premiums for a full year. If you are 63 or older, check those income events against the thresholds before December 31.
Check Withholding and Estimated Payments
Retirement, a business sale, a large gain or a Roth conversion can leave you underpaid for the year. You generally avoid an underpayment penalty if your withholding and estimated payments cover at least 100% of last year's tax, or 110% if your prior-year adjusted gross income was above $150,000. Withholding from an IRA distribution in December counts as if it had been paid evenly throughout the year, which makes it a useful way to catch up.
Year-End Tax Questions We Hear Most
Is the goal to pay as little tax as possible this year?
Not always. Paying a bit more now through a Roth conversion or harvested gains can lower your taxes over the rest of your life. We look at taxes across your full retirement, along with this year.
I don't itemize. Does charitable giving still help on my taxes?
Starting with 2026 returns, yes. Non-itemizers can deduct up to $1,000 in cash gifts, or $2,000 for joint filers. If you are 70½ or older, a QCD may still do more for you, since it lowers your adjusted gross income directly.
I already have a CPA. Why would my financial advisor be involved?
Your CPA reports what happened. A planner who sees your investments, retirement income and estate plan together can help decide what should happen before the year closes, then coordinate with your CPA so the return reflects it. We cover how the two roles fit in Tax Planning Strategies That Actually Move the Needle.
What if I miss the December 31 deadline?
Most of the items in the first section can't be redone for 2026 once the year ends. A missed RMD is the exception, since the IRS allows you to correct it and request a penalty waiver. The items in the second section stay open into 2027.
This article is for general information only and is not individualized tax, legal or investment advice. Tax rules and limits change. Confirm the details of any year-end action with your tax professional before you act.
Related Reading
- Tax Planning Strategies That Actually Move the Needle
- Is a Roth Conversion Right for You?
- Maximizing Your Health Savings Account: A Strategic Tool for Retirement
- Preserving Both Minnesota Estate-Tax Exclusions: Why a Credit-Shelter Trust Matters for Married Couples
December fills up fast, and several of these steps take time to set up. Contact MJT & Associates to schedule a year-end review.
