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The window to reduce your 2026 tax bill closes December 31. After that, your options are limited to contributions you can still make before the April 2027 filing deadline — primarily IRA contributions. Everything else must be done by year end. Here are the ten moves that have the highest impact for most people.
1. Max Out Your 401(k) Contributions
The 2026 401(k) contribution limit is $23,500 ($31,000 if you are 50 or older). Every dollar you contribute reduces your taxable income by one dollar. At a 22% marginal rate, contributing the full $23,500 saves $5,170 in federal taxes. If you are behind on contributions, check if your employer allows you to increase your contribution percentage before year end to catch up.
Check your year-to-date contributions in your 401(k) portal. Divide the remaining limit by the number of paychecks left in the year to determine what percentage increase is needed to max out.
2. Contribute to Your HSA
The 2026 HSA limit is $4,300 for individuals and $8,550 for families. HSA contributions are pre-tax, grow tax-free, and are withdrawn tax-free for medical expenses — the only account with this triple advantage. If you have an HSA-eligible high-deductible health plan and have not maxed your HSA this year, making contributions before December 31 reduces your 2026 taxable income immediately.
Unlike IRAs, HSA contributions for 2026 must be made by December 31, 2026 — not the April 2027 deadline. Do not miss this window.
3. Harvest Tax Losses in Your Investment Accounts
Tax-loss harvesting means selling investments that have declined in value to realize a capital loss, which offsets capital gains and up to $3,000 of ordinary income. If you have taxable brokerage accounts with positions sitting at a loss, selling them before December 31 captures the tax benefit this year.
After selling, you can immediately reinvest in a similar (but not identical) fund to maintain your market exposure without triggering the wash-sale rule. Selling VOO at a loss and buying IVV the same day maintains S&P 500 exposure while realizing the loss. Wait 31 days before buying back the original fund.
4. Accelerate Deductible Expenses Into 2026
If you are close to itemizing deductions (above the $15,000 standard deduction for single filers, $30,000 for married filing jointly), accelerating deductible expenses into 2026 can push you over the threshold.
Expenses you can accelerate:
- Mortgage interest payment due January 1 — pay in December instead
- Charitable contributions — make your planned 2027 donations in December 2026
- State and local tax payments — pay Q4 state estimated taxes before December 31
- Medical expenses — schedule any elective procedures before year end if you are close to the 7.5% AGI threshold for medical deductions
5. Make Charitable Donations Strategically
Cash donations to qualifying charities are deductible if you itemize. But two strategies maximize the tax value:
Donate appreciated stock instead of cash. If you own stock that has gained significantly in value, donating it directly to a charity lets you deduct the full fair market value while avoiding capital gains tax on the appreciation. On $5,000 of appreciated stock with a $2,000 cost basis, you avoid $450 in capital gains tax (at 15% rate) while still getting the full $5,000 deduction.
Donor Advised Fund (DAF) bunching. If you normally donate $3,000 per year, consider bunching 3-5 years of donations ($9,000-$15,000) into a DAF in one year to clear the itemization threshold. The DAF grants to charities over subsequent years while you take the full deduction this year.
Note: The OBBBA created a 0.5% of AGI floor before charitable deductions become deductible for itemizers. On a $100,000 AGI, the first $500 of charitable giving is not deductible. Most donors giving over $1,000 are unaffected.
6. Convert Traditional IRA to Roth (If the Time Is Right)
A Roth conversion moves money from a traditional IRA (tax-deferred) to a Roth IRA (tax-free in retirement), triggering ordinary income tax on the converted amount now. This makes sense in years when your income is unusually low — job loss, career transition, early retirement, large deductions — pushing you into a lower tax bracket than you expect to be in at retirement.
The decision: if you expect to be in a higher tax bracket in retirement than you are today, converting now pays off. If you expect lower taxes in retirement, keep the traditional IRA. For most people in their 30s and 40s currently in the 22% bracket expecting retirement income in the 22-24% range, a partial conversion each year makes sense.
Conversions must be done by December 31 to count for 2026. There is no April deadline extension for Roth conversions.
7. Use Your Flexible Spending Account Before It Expires
Healthcare FSA funds are use-it-or-lose-it. If you have an FSA with a December 31 deadline (no grace period or rollover offered by your employer), spend the remaining balance before year end. Eligible expenses: prescriptions, dental work, vision (glasses, contacts, eye exam), medical equipment, over-the-counter medications, and many others.
Check your FSA balance in October and schedule any needed medical, dental, or vision appointments for November-December to use remaining funds deliberately rather than scrambling in late December.
8. Make a 529 Contribution
529 contributions are not federally deductible, but 36 states offer a state income tax deduction or credit for contributions. If you live in a state with a 529 deduction and have children with educational expenses ahead, making a year-end 529 contribution reduces your state taxable income for 2026. Some states require contributions by December 31; others allow contributions until the April filing deadline.
9. Review Your Withholding
If you have had a significant life change in 2026 — marriage, divorce, new child, side income, major investment gains — your withholding may be miscalibrated. Use the IRS Tax Withholding Estimator at irs.gov to check. If you are significantly overwithholding, you are giving the government an interest-free loan. If you are underwithholding, you may face a penalty plus a large April bill.
Submit an updated W-4 to your employer now to have withholding corrections take effect in your final 2026 paychecks.
10. Maximize Dependent Care FSA
The 2026 Dependent Care FSA limit increased to $7,500 under the OBBBA. If you have childcare costs and did not elect the full $7,500 during open enrollment, you generally cannot add more mid-year without a qualifying life event. But if you have a new child, change in childcare arrangement, or other qualifying event before year end, you may have a window to increase your election. Contact HR immediately if this applies to you.
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Sources: IRS Publication 505; IRS Publication 526 (Charitable Contributions); One Big Beautiful Bill Act (P.L. 119-21). Tax strategies vary by individual situation. Consult a tax professional before implementing year-end tax moves. This article is for informational purposes only.
