Tax Tips: What To Do Now—Before 2026 Arrives
Not many of us like paying taxes. There is often little we can do to avoid the pending tax bill, especially if we wait until after the tax year ends. However, with a few months left before 2026, there are still tax moves that can help reduce your liability.
Review and adjust withholdings if necessary. Many times, filing status or dependents change throughout the year and taxpayers forget to update their federal or state withholding. This can often lead to significant under or overpayments. It’s never too late to adjust and prepare. These forms have become more complicated, and we recommend reaching out if you need assistance reviewing or deciding how to adjust properly. This includes not only W-2s but retirement and social security as well.
Make pre-tax contributions to qualified retirement accounts. This can be the best way to reduce your tax liability but also save for retirement. Studies show confidence in the future of programs like Social Security is dropping. Increasing your contributions when there is additional cash, or when taxes are a concern, can have a dual benefit.
In a high tax year, it can be beneficial to bunch your deductions such as donations or medical bills. Lumping multiple years of deductions into one year can ensure a more tax-efficient way of spending. Consider a Donor-Advised Fund (DAF) if you’ve experienced a significant windfall or expect an abnormally high liability.
Max out your HSA or FSA in the current tax year. These accounts have a triple-tax advantage. They allow for deductible contributions, tax-free growth, tax-free withdrawals.
If you’re running a business or side hustle paying tax on a cash basis, always consider deferring income to the next year or accelerating expenses in the current year. Alternatively, if you’re in an abnormally low tax year, you can do the opposite to take advantage of lower rates.
Work with your advisor to see if tax-loss harvesting may be a good strategy to minimize capital gains in the current year.
Pay your estimates. Although this is less fun, just paying your tax timely can save hundreds or thousands in penalties and interest.
Work with us and your advisor to determine if additional ROTH, back-door ROTHs, or ROTH conversions may be a good idea in the current year.
For businesses, consider any major purchases needed in the current year, or shortly thereafter. These can often be purchased by 12/31 and FULLY deducted for taxes. TIP: this is allowed, even if the purchase is financed.
Consider your state residency. With many taxpayers retiring or working in a remote or hybrid role it’s never too early to consider the impact your residency has on your taxes this year and beyond. States like New York are increasingly aggressive in how they pursue tax from residents regardless of how little time they spend in the state. To truly change your domicile away from a high tax state, there are major considerations and nuances that need to be addressed, aside from just days in and out of the state.