Tax Savings Are Won in October, Not April. A 2026 Year-End Checklist.
Around the third week of October every year, my calendar starts filling up with what I call planning calls — thirty-minute slots with clients who want to know what they can still do before the year closes. April is the filing deadline, but almost every meaningful move you can make to reduce your 2026 federal tax bill has to be done by December 31, 2026. The exceptions get a small extension into 2027 (IRA, HSA, SEP-IRA, solo 401(k) employer side) and the rest don’t. The clients who do the call in October walk out with a plan. The ones who call me in February are filing what their W-2 says and hoping for the best.
This is the checklist I work through. Not every item applies to every client. Read it the way you’d read a menu: take what fits.
1. Run a year-end projection. Like, an actual one.
You can’t plan what you can’t see. Pull the most recent paystub, year-to-date 1099-NEC totals, any K-1 estimates from a CPA who sends them, projected capital gains and losses, dividends, interest. Stack them, subtract above-the-line adjustments, then run the 2026 brackets against the result. Compare the projected liability to year-to-date withholding plus estimated payments. The IRS underpayment safe harbor is the lower of 90% of the current year or 100% of the prior year (110% if prior-year AGI was over $150,000). Miss it and the underpayment penalty under IRC § 6654 applies at the short-term federal rate plus three points, computed by day. Currently around 8% annualized. Not deductible.
2. Top off pre-tax retirement deferrals while there’s still time
The 2026 401(k) / 403(b) / 457(b) deferral limit is $23,500. Catch-up at 50+ adds $7,500. SECURE 2.0 super catch-up at ages 60 through 63 adds $11,250 instead of the standard $7,500. The window to adjust your payroll deferral isn’t December 31 — it’s the last full pay period in December, and most payroll engines need two to three weeks of lead time. So practical deadline is mid-November to early December. If you changed jobs mid-year, sum YTD deferrals across employers; the two employers don’t coordinate and you’ll over-defer if you both run at their separate maxes.
3. Max the HSA, before or after year-end
HSA contributions for the 2026 tax year can be made up to April 15, 2027. So technically the deadline is April, not December. But payroll HSA contributions also save FICA on top of federal and state income tax — a benefit personal contributions made after year-end don’t get. If you have room to redirect a December paycheck into HSA, do that before you cut a personal contribution check in March. 2026 limits: $4,400 self-only, $8,750 family, $1,000 catch-up at 55 or older.
4. Spend the healthcare FSA or carry it over
Healthcare FSAs are use-it-or-lose-it past the $660 federal carryover (or the 2.5-month grace period, if that’s what your plan adopted instead — you can have one or the other, not both). Check the plan’s exact terms. Schedule overdue dental and vision. Glasses, prescription sunglasses, contact lens solution, sunscreen of SPF 15 or higher, menstrual products, and over-the-counter medications all qualify since the CARES Act. So do telehealth co-pays, dermatology consultations, allergy testing, and the dental work you keep putting off.
5. Tax-loss harvest investment positions
Realized losses offset realized gains dollar-for-dollar. Up to $3,000 of net loss can offset ordinary income per year; anything past that carries forward indefinitely. The wash sale rule under IRC § 1091 disallows the loss if you repurchase “substantially identical” securities within 30 days before or after. “Substantially identical” for an ETF usually means another ETF that tracks the same index, so swapping VOO for IVV is a wash; swapping VOO for VTI is generally not. The wash sale rule doesn’t currently apply to crypto, though legislation extending it has reached committee at least three times. I’d treat that one as a temporary state of nature.
6. Harvest the 0% long-term capital gains if you qualify
This one’s underused. For 2026, single filers with taxable income up to $49,450 and MFJ up to $98,900 pay zero on long-term capital gains and qualified dividends. Zero. Retirees living off cash and Social Security, gap-year filers, self-employed clients with a low-income year, sabbatical-takers — all of these people can sell appreciated long-term positions, recognize the gain at 0%, immediately re-buy (the wash sale rule applies to losses, not gains), and reset cost basis higher. Done right, the tax cost is literally zero and the basis step-up is permanent.
7. Bunch itemized deductions if you’re near the threshold
With the 2026 standard deduction at $16,100 / $32,200 / $24,100, and the SALT cap raised to $40,000 for most MFJ households under the OBBBA, most filers itemize only in years they bunch. Practically, that means paying two years of charitable contributions, property taxes (where prepayment is legal), and elective medical expenses in the same year. A donor-advised fund is the cleanest way to bunch charity — you fund the DAF in the bunching year, take the full deduction, and grant out to the underlying charities over time at your own pace.
8. Qualified Charitable Distributions, if you’re 70½+
QCDs let traditional IRA owners 70½ and older direct up to $108,000 (2026) to qualified charities directly from the IRA. The QCD satisfies your RMD for the year and is excluded from AGI entirely. Since it reduces AGI rather than taxable income, the QCD also helps you stay below the Medicare IRMAA brackets, the Social Security taxability phase-in, and the 3.8% NIIT trigger. For a retiree who’s charitable anyway, the QCD is almost always the right vehicle.
9. Take RMDs by December 31
If you turned 73 this year or earlier, your RMD is due December 31, 2026. The exception is the very first RMD, which can be delayed to April 1 of the following year. The penalty under SECURE 2.0 for missed RMDs is 25% of the shortfall, reduced to 10% if corrected within two years. Set the distribution to automatic with your custodian and don’t wait until December 28 — brokerages get swamped at year-end and ACAT transfers don’t happen overnight.
10. Roth conversions in low-income years
A Roth conversion moves dollars from a traditional IRA or 401(k) to a Roth IRA, recognizing ordinary income in the year of conversion in exchange for tax-free growth and qualified withdrawals later. The right years for a big conversion are: between retirement and the start of Social Security, between job loss and re-employment, in any year your marginal rate is lower than your expected future rate. The art is converting just enough to fill a bracket without spilling into the next one. For MFJ in 2026, that means about $215,000 of taxable income to fill the 22% bracket completely, or about $410,300 to fill the 24% bracket completely. Doing this consistently for five to ten years of early retirement can move six figures of taxable retirement income into tax-free retirement income.
11. 529 contributions in state-tax states
Thirty-two states offer a state-income-tax deduction or credit for contributions to a 529 college savings plan. Most have a December 31 cutoff, though Georgia, Iowa, Mississippi, Oklahoma, and a few others allow contributions up to the state filing deadline (usually mid-April) to count toward the prior year. Specific 2026 numbers worth noting: New York deducts up to $5,000 single / $10,000 MFJ; Illinois deducts up to $10,000 single / $20,000 MFJ; Indiana grants a 20% tax credit up to $1,500; Utah grants a credit equal to 4.55% of contributions; Pennsylvania allows up to $19,000 deduction per beneficiary per donor.
12. Self-employed: Section 179 and equipment timing
Section 179 of the Code lets self-employed taxpayers and small businesses expense up to $1,250,000 of qualified equipment placed in service during 2026 (subject to phase-out above $3,130,000 of total purchases). Bonus depreciation has phased down to 40% for 2026 under the schedule originally set by the 2017 TCJA. “Placed in service” means actually installed and ready for use — not just ordered. The truck has to be on your lot before midnight December 31. Manufacturers and dealers know this and have been pushing back delivery dates in recent years to manage their own quarter, so confirm in writing.
13. Self-employed: SEP-IRA, solo 401(k), defined benefit plans
A solo 401(k) must be established by December 31 even though contributions can be funded until the extended filing deadline (October 15, 2027 if you extend). A SEP-IRA can be both established and funded up to the extended deadline. A defined benefit cash balance plan, which allows much larger deductions for high-income owners (typical contribution range $100,000 to $300,000 per year for owners in their 50s and 60s), must be set up by year-end with a third-party actuary. The actuary timeline matters — reputable actuaries are usually booked solid by mid-November, so this is a September decision, not a December one.
14. Update your W-4 for the new year
A January W-4 reset prevents twelve months of incorrect withholding. The right answer changes any time life changes: marriage, divorce, birth of a child, a second job, a spouse leaving the workforce, starting Social Security, retiring. Use the IRS Tax Withholding Estimator and our W-4 calculator together — they should produce the same per-paycheck dollar amount for Step 4(c). If they don’t, you’ve probably entered something inconsistently between the two.
Equity comp deadlines (the underrated ones)
A few specifically equity-related deadlines bite people every year. The 83(b) election under IRC § 83(b) for restricted stock or early-exercised options must be filed within 30 days of grant. Thirty days. Miss it and the planning opportunity is gone for that grant. ISOs require holding shares one year past exercise and two years past grant for the qualifying long-term capital gain treatment, and year-end ISO exercises should always be modeled for AMT impact because they create a preference item that can push you into AMT territory. RSU vesting is usually withheld at the flat 22% supplemental rate, which under-withholds anyone in the 32%+ bracket, so a Q4 estimated payment is usually needed. NSO exercise-and-hold versus exercise-and-sell-same-day shifts when the bargain element shows up as ordinary income; spreading exercises across two tax years can manage the bracket impact.
Crypto specifically
The 1099-DA broker reporting rules take effect for 2026 transactions, with brokers required to issue 1099-DA in early 2027 under the final regulations Treasury released in 2024. Reconcile every wallet and exchange position before year-end so the broker’s 1099-DA matches your records when it shows up. Hard forks, airdrops, staking rewards, mining income, and DeFi swaps each have their own treatment under existing IRS guidance — staking rewards are ordinary income at fair market value when control transfers (Rev. Rul. 2023-14), DeFi swaps are realization events. The default cost-basis method on most US exchanges is now FIFO unless you specifically elect specific-ID at the time of sale.
Gift planning, since it’s December anyway
The 2026 gift tax annual exclusion is $19,000 per donor per recipient. Married couples can split gifts and double it to $38,000 per recipient. Direct payments to educational institutions for tuition and to medical providers for care are unlimited under IRC § 2503(e) and don’t use the annual exclusion. The federal estate and gift lifetime exclusion under the OBBBA is $15,000,000 per individual for 2026, which is historically high — if there’s any chance Congress reverses it in a future year, this is the window for very-high-net-worth families to lock in lifetime gifts at the current exclusion level.
What you can still do after December 31
A small number of moves remain available into 2027. Traditional and Roth IRA contributions for 2026 can be made up to April 15, 2027. HSA contributions for 2026 likewise up to April 15, 2027. SEP-IRA contributions up to the extended due date. Solo 401(k) employer contributions up to the extended due date, but only if the plan was established by December 31, 2026. The fourth-quarter estimated payment for 2026 is due January 15, 2027. Form 1040 is due April 15, 2027, with a six-month extension available to October 15 — but remember, that’s an extension to file, not to pay. Any balance owed is still due April 15 or interest and penalties accrue.
FAQs
Will paying my January 2027 property tax in December 2026 deduct in 2026?
Only if the tax has actually been assessed and is properly due. Prepayment of estimated future property tax is not deductible under Rev. Rul. 71-190. Many county assessors publish the assessed bill in December for the following calendar year — that bill can be paid and deducted in the year paid. Check what your county is doing this year.
Can I deduct a charitable contribution I pledged but haven’t paid?
No. The contribution must be paid or charged to a credit card by December 31. A check mailed but not cashed is deductible in the year it’s mailed if you can prove the mailing date — certified mail receipts work.
If I retire mid-year, what changes about my year-end planning?
Almost everything. Your marginal rate usually drops dramatically in the partial-retirement year. This is the prime year for Roth conversion, 0% capital gains harvesting, and accelerating income into the standard deduction. It’s the worst year to take a large IRA distribution beyond your RMD. Plan the conversion before you take any non-RMD distributions.
Do I need a CPA to use this checklist?
For W-2-only households with no equity comp and a simple investment portfolio, software plus a careful read of this checklist will get you most of the way there. Bring in a credentialed CPA, EA, or tax attorney when you have equity compensation, a small business, rental property, K-1 income, multi-state filings, an estate plan above the lifetime exclusion, or any open IRS notice. The fee usually pays for itself the first year and several times over afterward.