Year-End Tax Planning for 2026: 9 Moves to Make Before December 31

By Allen Buckley, CFP®, Managing Partner | Paragon Private Wealth Management

Most people think about taxes in April. By then, the only thing left to do is report what already happened. The planning window is the months before December 31, not the months after.

If you have a meaningful amount of investable assets, own a business, or you're approaching retirement, the decisions you make (or don't make) in the next few months can directly affect what you owe the IRS. Some of these moves can only be made before the calendar turns. Miss the deadline and the opportunity is gone.

Here are nine strategies worth reviewing before year-end. Not all of them will apply to every household, but most families I work with in Middle Tennessee can act on at least three or four of these.

1. Max Out Your Retirement Contributions

This sounds obvious, but I still see six- and seven-figure earners who leave money on the table every year. For 2026, the 401(k) contribution limit is $24,500. If you're 50 or older, you can add another $8,000 in catch-up contributions. And if you happen to be 60, 61, 62, or 63, the SECURE 2.0 Act gives you an even higher catch-up limit of $11,250.

IRA contributions are now $7,500 for 2026, with an additional $1,100 catch-up if you're 50 or older.

Said another way, a married couple who are both 50 or older and both have access to 401(k) plans could defer up to $65,000 between the two of them this year. That is a significant reduction in taxable income, and it compounds year after year.

If you haven't maxed out yet, now is the time to adjust your payroll deferrals so you hit the limit by December 31.

2. Harvest Tax Losses Before Year-End

If you own individual stocks, you can sell positions that are sitting at a loss to generate a realized loss on your tax return. That loss can offset gains elsewhere in your portfolio, reducing your overall tax bill.

This is called tax-loss harvesting, and it is one of the most direct ways to manage your tax liability in any given year. It only works if you own individual securities. Mutual fund investors do not have this option because the fund manager controls which positions are bought and sold.

At Paragon, we actively look for harvesting opportunities throughout the year, not just in December. But the final weeks of the year are when we do a complete sweep of every taxable account to make sure nothing is left on the table.

One important rule: the wash sale rule prevents you from repurchasing the same or a "substantially identical" security within 30 days before or after the sale. Your advisor needs to manage this carefully across all your accounts, including IRAs.

3. Evaluate a Roth Conversion

A Roth conversion moves money from a traditional IRA or 401(k) into a Roth IRA. You pay income tax on the converted amount now, but qualified withdrawals in retirement are completely tax-free.

This strategy is most powerful in years when your income is temporarily lower. If you have retired but have not yet started Social Security or required minimum distributions, you may be sitting in a lower tax bracket than you will be in a few years. That window is the ideal time to convert.

Even if you are still working, partial conversions designed to fill up your current tax bracket without pushing you into the next one can be valuable over time. The key is running the numbers before you act. A conversion that pushes you into a higher bracket or triggers IRMAA surcharges on your Medicare premiums may cost more than it saves.

For 2026, the standard deduction for married couples filing jointly is $32,200. That is income you can earn (or convert) tax-free before the first bracket even kicks in.

4. Watch Your IRMAA Brackets

IRMAA stands for the Income-Related Monthly Adjustment Amount. It is a surcharge on your Medicare Part B and Part D premiums that kicks in when your modified adjusted gross income exceeds certain thresholds.

For 2026, the surcharge begins at $218,000 MAGI for married couples filing jointly. Even though Tennessee has no state income tax, your federal MAGI still determines your IRMAA bracket.

Here is what catches people: IRMAA uses a two-year lookback. The income you report in 2026 will determine your Medicare premiums in 2028. So a large Roth conversion, a capital gain from selling a property, or even a higher-than-expected RMD this year can increase your Medicare costs two years from now.

If you are already on Medicare or approaching 65, every year-end tax decision should be evaluated against the IRMAA thresholds. This is one of the areas where integrated tax and investment planning pays for itself.

5. Take Your Required Minimum Distributions

If you are 73 or older, you are required to take minimum distributions from your traditional IRAs and most employer retirement plans each year. Miss the deadline and the IRS penalty is steep: 25 percent of the amount you should have withdrawn.

The deadline for most RMDs is December 31. If this is your first RMD year, you have until April 1 of the following year, but that means you would have to take two distributions in the same calendar year, which could push you into a higher tax bracket.

If you do not need the income, consider directing your RMD to a qualified charitable distribution. A QCD allows you to send up to $111,000 directly from your IRA to a qualifying charity. The distribution satisfies your RMD but is not included in your taxable income. It can be a tax-efficient way to give.

6. Use Charitable Giving Strategically

Beyond QCDs, there are several year-end charitable strategies worth considering.

Donating appreciated stock directly to a charity or a donor-advised fund allows you to avoid the capital gains tax you would have paid if you sold the stock first. You still receive a charitable deduction for the full fair market value of the shares. This can also help reduce a concentrated stock position while supporting causes you care about.

Bunching charitable contributions into a single year can also make sense if your total itemized deductions are close to the standard deduction threshold. By concentrating two or three years of planned giving into one year, you may exceed the standard deduction and receive a larger tax benefit, then take the standard deduction in the off years.

The standard deduction for 2026 is $32,200 for married couples filing jointly. If your other deductions (state and local taxes, mortgage interest) are close to that number, a well-timed charitable gift can tip you over.

7. Review Your Capital Gains Exposure

Before year-end, review your portfolio for unrealized gains. If you are planning to sell any positions, the timing matters.

Long-term capital gains (on assets held more than one year) are taxed at 0, 15, or 20 percent depending on your income. Short-term gains are taxed as ordinary income. If you can wait a few more days or weeks to cross the one-year holding period, the tax savings can be significant.

Also consider whether any planned sales, combined with other income, could push you into a higher capital gains bracket or trigger the 3.8 percent net investment income tax. Your advisor should be modeling these scenarios before executing any trades.

8. Fund Your HSA If You Are Eligible

If you have a high-deductible health plan, a Health Savings Account is one of the most tax-efficient accounts available. Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free.

For 2026, the contribution limit is $4,400 for individuals and $8,750 for families. If you are 55 or older, you can add an additional $1,000 catch-up contribution.

Unlike most retirement accounts, HSA funds roll over indefinitely. If you can afford to pay medical expenses out of pocket now and let your HSA grow, it becomes a powerful supplemental retirement account.

9. Business Owners: Review Your Retirement Plan Options

If you own a business, the year-end deadline is critical for establishing certain retirement plans. A Solo 401(k) must be established by December 31 to allow employee deferrals for the current tax year. SEP-IRAs are more flexible and can be set up and funded as late as your tax filing deadline, including extensions.

For 2026, SEP-IRA contributions can be as high as $72,000, depending on your net self-employment income. A Solo 401(k) allows both employee deferrals ($24,500, plus catch-up) and employer profit-sharing contributions.

If you have employees, the plan design matters. The right structure can maximize your own contributions while managing costs for the business. This is one area where working with an advisor who also handles your taxes makes a meaningful difference.

The Common Thread

You will notice a pattern in every strategy above: the tax move and the investment decision are connected. Harvesting a loss requires knowing your full tax picture. Converting to a Roth requires modeling your brackets. Taking an RMD efficiently means understanding how it affects your Medicare premiums two years from now.

This is why we believe investment management and tax preparation should not live in separate offices. At Paragon, we handle both, which means every year-end decision is made with the complete picture in front of us.

If you are within a few years of retirement, or already retired, and you do not have a coordinated plan for these decisions, that is worth a conversation. No cost, no obligation. Schedule 30 minutes with Allen Buckley, CFP®.

Advisory services offered through Savvy Advisors, Inc, a SEC registered investment adviser. Paragon Private Wealth Management is a DBA of Savvy Advisors, Inc.

Frequently Asked Questions

When is the deadline for year-end tax planning moves?

Most tax planning strategies must be completed by December 31 of the current tax year. Some exceptions exist: IRA contributions and SEP-IRA funding can be made until your tax filing deadline (typically April 15), and HSA contributions follow the same rule. However, 401(k) employee deferrals, tax-loss harvesting, Roth conversions, RMDs, and charitable distributions must all happen before the calendar year ends.

How does tax-loss harvesting work with individual stocks?

Tax-loss harvesting involves selling investments that have declined in value to generate a realized loss. That loss can offset capital gains elsewhere in your portfolio, reducing your tax bill. When you own individual stocks rather than mutual funds, you have direct control over which positions to sell and when. This allows your advisor to harvest losses throughout the year rather than waiting for a fund manager to make those decisions for you.

What is a Roth conversion and who should consider one?

A Roth conversion moves money from a traditional IRA or 401(k) into a Roth IRA. You pay income tax on the converted amount now, but qualified withdrawals in retirement are completely tax-free. Roth conversions tend to be most beneficial for individuals who are in a temporarily lower tax bracket, who expect higher tax rates in the future, or who want to reduce the size of their required minimum distributions later in life.

What is IRMAA and how does it affect retirees in Tennessee?

IRMAA is the Income-Related Monthly Adjustment Amount, a surcharge on Medicare Part B and Part D premiums for higher-income beneficiaries. Even though Tennessee has no state income tax, your federal adjusted gross income still determines your IRMAA bracket. For 2026, the surcharge begins at $218,000 MAGI for married couples filing jointly. Because IRMAA uses a two-year lookback, decisions you make this year will affect your 2028 Medicare premiums.

Can I do year-end tax planning without an integrated advisor?

You can, but it is significantly harder. Year-end tax strategies require real-time coordination between your investment portfolio and your tax situation. If your investment advisor and your CPA don't communicate, opportunities like bracket-filling Roth conversions, loss harvesting to offset gains, and IRMAA-aware withdrawal planning are easy to miss. An integrated approach where one team manages both investments and tax preparation ensures nothing falls through the cracks.

Related Articles

Tax Planning for Retirement in Nashville, TN: What Smart Families Do Differently

Roth Conversions: The Retirement Tax Strategy Most Investors Wait Too Long to Use

Small Business Taxes in Tennessee: What Every Owner Needs to Know

Have a question about your year-end tax plan? Schedule a complimentary 30-minute call with Allen Buckley, CFP®.