As the calendar year draws to a close, it’s a natural time to review your finances and prepare for the year ahead. Beyond evaluating your progress toward financial goals, year-end also provides an opportunity to consider how recent financial decisions may affect your taxes.
Certain tax planning strategies must be completed by December 31, while others allow additional time after the calendar year ends. Understanding the differences can help you prioritize decisions and avoid overlooking important deadlines.
Whether you’re preparing for the end of 2026 or planning for future tax years, the following year-end tax planning checklist highlights key areas worth reviewing.
1. Review Your Income and Tax Situation
Start by estimating your taxable income for the year. Changes in compensation, investments, retirement distributions, or business revenue may affect your tax liability and available planning opportunities.
Consider reviewing:
- Salary, bonuses, and other compensation.
- Investment income, including dividends and capital gains.
- Business or self-employment income.
- Retirement account distributions.
- Potential deductions, credits, and changes in filing status.
Your expected income may influence decisions about charitable contributions, Roth conversions, investment transactions, and retirement savings.
What to consider: Your marginal tax bracket is only one part of the picture. Certain deductions, credits, and additional taxes may also depend on income, making it important to evaluate your overall tax situation.
2. Review Retirement Contributions and Deadlines
Tax-advantaged retirement accounts can support long-term savings while offering different tax benefits.
Depending on the account, contributions may reduce current taxable income or provide potential tax-free withdrawals in retirement.
Common accounts to review include:
- 401(k) and 403(b) plans: Employee salary deferrals generally must be made through payroll by the end of the calendar year.
- Traditional and Roth IRAs: Eligible contributions can generally be made until the following year’s federal tax filing deadline, excluding extensions.
- SEP IRAs and solo 401(k)s: Business owners may have additional contribution deadlines, depending on the plan and type of contribution.
- Health Savings Accounts (HSAs): Eligible contributions generally can be made until the following year’s federal tax filing deadline.
Contribution limits, eligibility requirements, and potential tax deductions vary by account and tax year.
What to consider: Before increasing contributions, review your cash flow, eligibility, and existing savings. Employer matching contributions and available catch-up contributions may also affect your planning.
3. Evaluate Investment Gains and Losses
Year-end can be an opportunity to review taxable investment accounts and determine whether realizing gains or losses aligns with your broader investment strategy.
Tax-loss harvesting involves selling investments at a loss to offset realized capital gains. If losses exceed gains, a limited amount may generally offset ordinary income, with remaining eligible losses carried forward to future tax years.
However, investors should consider the wash-sale rule. This rule can disallow a loss when substantially identical securities are purchased within 30 days before or after the sale, including certain purchases in other accounts.
It’s also worth reviewing unrealized gains. Investments held for more than one year generally qualify for long-term capital gains treatment, which may differ from the rates applied to short-term gains.
What to consider: Tax considerations shouldn’t be the only reason to sell an investment. Evaluate transaction costs, portfolio allocation, investment objectives, and the potential tax consequences before making changes.
4. Consider Whether a Roth Conversion Makes Sense
A Roth conversion involves transferring eligible retirement assets into a Roth account, generally creating taxable income in the year of conversion.
Depending on your circumstances, converting funds may be worth evaluating when your current tax rate is relatively low compared with the rate you expect in future years.
Roth conversions may also affect future required minimum distributions and the tax treatment of retirement withdrawals.
However, increasing taxable income through a conversion can have consequences beyond your federal income tax bracket, including potential effects on Medicare premiums, tax credits, and other income-based calculations.
Conversions generally must be completed by December 31 to count for that tax year, and Roth conversions generally cannot be reversed.
What to consider: Compare the potential long-term benefits with the immediate tax cost. The source of funds used to pay conversion taxes and your expected retirement income are important parts of the decision.
5. Review Charitable Giving Opportunities
Charitable contributions may support organizations you care about while providing potential tax benefits.
Depending on your circumstances, strategies may include:
- Donating eligible appreciated investments directly to qualified charities.
- Contributing to a donor-advised fund.
- Combining contributions into one tax year, sometimes called bunching.
- Making qualified charitable distributions (QCDs) directly from eligible IRAs if you’re age 70½ or older.
Beginning in 2026, eligible taxpayers who don’t itemize may qualify for a limited deduction for certain cash contributions. Taxpayers who itemize generally face a charitable deduction threshold based on adjusted gross income, along with other applicable limits.
Qualifying charitable contributions generally must be completed by the end of the tax year to count toward that year’s deduction.
What to consider: Tax benefits depend on the recipient organization, type of contribution, income, and applicable rules. Review contribution deadlines and documentation requirements before making significant gifts.
6. Check Required Minimum Distributions
If you own certain retirement accounts, you may be required to withdraw a minimum amount each year once you reach the applicable age.
Required minimum distributions (RMDs) generally begin at age 73 under current rules, increasing to age 75 for certain younger individuals under the statutory schedule. Different requirements may apply to inherited retirement accounts.
For individuals already subject to annual RMDs, the deadline is generally December 31. However, someone taking their first RMD may be eligible to delay it until April 1 of the following year.
Failing to take a required distribution can result in an excise tax, although corrections and certain exceptions may provide relief.
What to consider: Review all accounts potentially subject to RMDs, including inherited accounts. If you’re eligible for QCDs, consider whether charitable giving could satisfy part or all of an applicable IRA distribution requirement.
7. Check Health and Dependent Care Benefits
Employer-sponsored benefit accounts can have different deadlines and rules.
For example, health flexible spending accounts (FSAs) generally operate under use-it-or-lose-it rules. Depending on the employer’s plan, a grace period or limited carryover may be available.
Dependent care FSAs have separate requirements, and unused funds may be forfeited under applicable plan rules.
HSAs work differently. Eligible HSA balances generally carry forward from year to year, and contributions may be permitted after December 31 for the preceding tax year.
What to consider: Review your employer’s benefit deadlines, remaining account balances, and eligible expenses. Don’t assume every account follows the same year-end rules.
8. Review Business Tax Planning Opportunities
Business owners and self-employed individuals may have additional planning considerations before year-end.
Potential areas to evaluate include:
- Timing business income and deductible expenses.
- Reviewing equipment purchases and depreciation options.
- Evaluating retirement plan contributions.
- Confirming estimated tax payments.
- Reviewing business deductions, credits, and recordkeeping.
The appropriate strategy depends on factors such as the business’s accounting method, entity structure, taxable income, and cash flow.
For example, purchasing equipment solely to obtain a deduction may not be beneficial if the expense doesn’t support the business’s operational needs.
What to consider: Coordinate business and personal tax planning before making significant financial decisions. A strategy that reduces taxable business income may also affect cash flow, retirement contributions, or other financial priorities.
9. Review Tax Withholding, Estimated Payments, and Credits
Changes in income or household circumstances may affect whether you’ve paid enough tax throughout the year.
Consider reviewing withholding and estimated payments if you’ve experienced:
- A significant salary increase or bonus.
- A change in employment or self-employment income.
- Substantial investment gains.
- Retirement or a change in retirement income.
- Marriage, divorce, or changes involving dependents.
You may also want to review eligibility for applicable tax credits and deductions, including education-related benefits, dependent-related credits, and other provisions that may change from year to year.
Federal estimated tax payments generally follow quarterly deadlines, with the final payment for a calendar tax year typically due in January of the following year.
What to consider: The IRS has safe-harbor rules that may help taxpayers avoid underpayment penalties. Reviewing your payments before year-end can help identify whether adjustments are appropriate.
10. Identify Which Tax Deadlines Apply to You
Not every year-end tax planning decision has the same deadline. Some actions generally must occur by December 31, while others can be completed during the following tax filing season.
| Tax planning action | General deadline |
|---|---|
| Employee 401(k) and 403(b) salary deferrals | December 31 |
| Roth conversions | December 31 |
| Realizing investment gains or losses for the calendar tax year | December 31 |
| Charitable gifts intended for the current tax year | December 31 |
| Annual RMDs | December 31, with exceptions for certain first-year distributions |
| Traditional and Roth IRA contributions | Generally the following year’s federal tax filing deadline |
| HSA contributions | Generally the following year’s federal tax filing deadline |
| Certain business retirement contributions | Varies by plan and business circumstances |
| Final quarterly estimated tax payment | Generally January of the following year |
Deadlines may differ based on weekends, holidays, plan requirements, and individual circumstances. Financial institutions may also establish earlier processing cutoffs.
What to consider: Don’t wait until the final days of December to initiate transactions that require processing, account transfers, or professional review.
The Bottom Line
Year-end tax planning isn’t simply about finding deductions before December 31. It’s an opportunity to evaluate how your income, investments, retirement accounts, and financial decisions fit together.
The most useful year-end tax planning checklist is one that helps you identify which decisions require attention now and which can be addressed during the next tax filing season.
Not every strategy will be appropriate for every taxpayer, and reducing taxes in one year doesn’t necessarily produce the best long-term financial outcome.
At Navalign Wealth Partners, we help individuals, families, and business owners incorporate tax considerations into their broader financial plans. By coordinating with your tax professionals, we can help you evaluate planning opportunities in the context of your long-term financial goals.