2026 Year-End Tax Planning Guide: Smart Moves to Make Before December 31st
As the year winds down, tax planning becomes less about what happened during the year and more about what you can still change.
For high-net-worth families, business owners, executives, and retirees, December 31 is an important dividing line. Many of the most valuable tax strategies must be completed during the calendar year. Once January arrives, some opportunities are simply gone.
The goal isn't to minimize taxes at all costs. Good tax planning looks at your lifetime tax liability and coordinates investment decisions, retirement accounts, charitable giving, estate planning, and business income.
Here are some of the most important areas to review before the end of 2026.
1. Run a Tax Projection Before Making Any Big Moves
This should be the starting point.
Before executing a Roth conversion, realizing a large capital gain, making a major charitable gift, or accelerating business expenses, estimate your 2026 income and tax liability.
At a minimum, project:
• W-2 and business income
• Interest and dividends
• Realized capital gains and losses
• Retirement distributions
• Roth conversions
• Stock compensation
• Charitable deductions
• Estimated payments and withholding
Then ask a more useful question than simply, "How much tax will I owe?"
What happens if we change one variable before December 31?
For example, run your projected return with a $50,000, $100,000, and $200,000 Roth conversion. Or determine how much capital gain you can realize before crossing into another tax bracket or triggering additional Medicare premiums.
Action before 12/31: Have your CPA and financial advisor run a year-end tax projection using your most recent pay stubs, investment gains and losses, retirement distributions, and expected business income.
2. Harvest Investment Losses
Review taxable investment accounts for positions trading below their cost basis.
Realized capital losses first offset realized capital gains. If losses exceed gains, individuals can generally deduct up to $3,000 of net capital losses against ordinary income, with unused losses carried forward to future years.
For example, suppose you sold a concentrated stock position earlier this year and generated a $150,000 long-term capital gain. If other investments now have $50,000 of unrealized losses, realizing those losses could reduce the net taxable gain to $100,000.
The key is not letting taxes dictate the portfolio. If you still want market exposure, you may be able to sell one investment and immediately purchase a similar—but not "substantially identical"—investment.
Be careful with the wash-sale rule. Purchasing a substantially identical security within 30 days before or after realizing the loss can cause the loss to be disallowed. The rule can also create issues across multiple accounts, including IRAs.
Action before 12/31: Review every taxable account for unrealized losses and compare them with gains already realized during 2026.
3. Don't Forget About Tax-Gain Harvesting
Sometimes intentionally realizing a gain is the better move.
If 2026 income is unusually low, you have large loss carryforwards, or you expect to be in a higher tax bracket in future years, it may make sense to realize gains now.
This can also reset the cost basis of an investment higher, potentially reducing future taxable gains.
Action before 12/31: Look at unused capital losses and your projected capital-gains bracket before automatically postponing gains until 2027.
4. Consider a Roth Conversion
A Roth conversion allows you to move money from a pre-tax IRA to a Roth IRA and voluntarily pay income tax today in exchange for potentially tax-free qualified withdrawals in the future.
The best question isn't simply, "Should I convert?"
It is:
At what tax rate am I willing to convert?
A partial Roth conversion can be designed to fill a targeted tax bracket without unnecessarily pushing income higher.
Roth conversions can be particularly attractive during:
• Early retirement before RMDs begin
• A temporary low-income year
• A market decline
• A year with unusually large deductions
• Years before Social Security or pensions begin
But conversions can increase adjusted gross income and potentially affect Medicare IRMAA premiums, the 3.8% Net Investment Income Tax, deductions, credits, and other income-based calculations.
Roth conversions must be completed during the calendar year; you cannot wait until tax filing season and make a conversion retroactively.
Action before 12/31: Calculate how much room remains in your targeted federal tax bracket and model at least two Roth-conversion amounts before executing one.
5. Max Out Employer Retirement Plans
For 2026, employees can defer up to $24,500 into most 401(k), 403(b), and governmental 457 plans.
Those age 50 or older can generally contribute an additional $8,000. Participants ages 60 through 63 have a higher 2026 catch-up limit of $11,250.
One important change begins in 2026: certain employees whose prior-year wages from the sponsoring employer exceeded $150,000 must make catch-up contributions on a Roth basis.
For business owners and executives with plans allowing after-tax contributions, the overall defined-contribution limit is $72,000 for 2026, before applicable catch-up contributions.
Action before 12/31: Check your year-to-date contributions now. If you're behind, determine whether increasing payroll deferrals during the remaining pay periods can get you closer to the maximum.
6. Review Backdoor Roth IRA Planning
The 2026 IRA contribution limit is $7,500, plus a $1,100 catch-up for individuals age 50 and older.
High-income households who cannot contribute directly to a Roth IRA may consider the Backdoor Roth strategy.
However, don't overlook the pro-rata rule.
Traditional IRA, SEP IRA, and SIMPLE IRA balances can affect how much of a Roth conversion is taxable. The calculation looks at applicable IRA balances at year-end.
Someone with an old 401(k) may have options that someone with a large rollover IRA does not.
Action before 12/31: Review all traditional, SEP, and SIMPLE IRA balances before executing a Backdoor Roth. If your employer plan accepts rollovers, evaluate whether moving pre-tax IRA assets into the plan could improve future Backdoor Roth planning.
7. Business Owners: Maximize Retirement Plan Opportunities
Business owners often have significantly more flexibility than W-2 employees.
Depending on the business and employee structure, year-end planning could include:
• Solo 401(k)
• SEP IRA
• SIMPLE IRA
• Profit-sharing contributions
• Cash-balance or defined-benefit plans
The 2026 defined-contribution limit is $72,000, before applicable catch-up contributions.
For consistently profitable businesses, a properly designed cash-balance plan can potentially allow much larger tax-deductible retirement contributions than a 401(k) alone.
Action before 12/31: Ask your TPA, CPA, and advisor to calculate the maximum retirement contribution under your current plan and compare it with alternative plan designs for 2027.
8. Donate Appreciated Investments Instead of Cash
If you're already planning to give to charity, don't automatically write a check.
Consider donating long-term appreciated securities.
Assume you own stock worth $100,000 with a $20,000 cost basis. Selling it could realize an $80,000 capital gain. Donating the shares directly to a qualified charity or donor-advised fund may allow you to avoid realizing that gain while potentially receiving a charitable deduction, subject to applicable limits and requirements.
This can be especially useful for investors with concentrated stock positions.
Action before 12/31: Identify highly appreciated positions and coordinate transfers early. Don't wait until December 30 to initiate a stock donation.
9. Consider Bunching Charitable Contributions
If your deductions aren't consistently high enough to make itemizing worthwhile, consider grouping multiple years of charitable giving into a single year.
A donor-advised fund can work particularly well for this.
Instead of donating $25,000 annually for four years, for example, you might contribute $100,000 of appreciated securities to a donor-advised fund in one year and then distribute money from the fund to charities over several years.
The tax deduction and the ultimate charitable distributions occur on different timelines.
Action before 12/31: Estimate your 2026 itemized deductions and determine whether accelerating future charitable gifts into 2026 improves the tax result.
10. Use Qualified Charitable Distributions When Appropriate
IRA owners age 70½ or older should evaluate Qualified Charitable Distributions, or QCDs.
With a QCD, money moves directly from the IRA to an eligible charity. When the requirements are satisfied, the distribution can be excluded from taxable income and can also count toward an RMD.
For charitable retirees, this can be more tax-efficient than taking an IRA distribution personally and then writing a check to charity.
Action before 12/31: If you are charitable and taking IRA distributions, compare a QCD with taking the distribution in cash and claiming an itemized deduction.
11. Verify Required Minimum Distributions
Missing an RMD can create unnecessary penalties and administrative headaches.
This is especially important for families managing multiple retirement accounts or inherited IRAs. Inherited IRA rules depend on factors including the year of death, beneficiary relationship, account type, and whether the original owner had reached the applicable RMD starting date.
Don't assume the custodian has calculated everything correctly across all accounts.
Action before 12/31: Create a list of every traditional IRA, inherited IRA, 401(k), and other retirement account and verify whether an RMD applies and whether it has been fully satisfied.
12. Review Annual Gifting and Estate Planning
The federal annual gift-tax exclusion is $19,000 per recipient for 2026.
A married couple may therefore potentially transfer $38,000 per recipient using both spouses' annual exclusions, assuming the applicable requirements are satisfied.
For a couple with three children and six grandchildren, that could mean $342,000 of annual-exclusion gifts across nine recipients.
Annual gifting can be particularly powerful when assets expected to appreciate significantly are transferred earlier, because future appreciation can occur outside the donor's estate.
The federal estate-tax basic exclusion amount is $15 million per individual for 2026.
Oregon residents have another issue: Oregon's estate-tax threshold remains only $1 million, with marginal rates ranging from 10% to 16%. That makes estate planning relevant to many Oregon families who are nowhere near the federal estate-tax threshold.
Action before 12/31: Review lifetime gifts already made during 2026 and determine whether additional cash, securities, trust, or 529 gifts fit your estate plan.
13. Consider Funding 529 Plans
529 contributions can accomplish both education and estate-planning goals.
Because the annual federal gift exclusion is $19,000 in 2026, parents or grandparents can make meaningful annual contributions. Larger contributions may also qualify for the special five-year gift-tax election, subject to the applicable rules and filing requirements.
Oregon residents may also qualify for a state tax credit for eligible Oregon 529 contributions; for 2026 the maximum credit is $190, or $380 for married couples filing jointly, subject to the applicable requirements.
Action before 12/31: Review education-funding goals for children and grandchildren and coordinate 529 contributions with your overall gifting strategy.
14. Review Stock Options, RSUs, and Concentrated Stock
Executives should review equity compensation before year-end rather than waiting for tax documents in the spring.
Consider:
• RSUs vesting before year-end
• ISO exercises and potential AMT exposure
• NSO exercises
• Concentrated employer stock
• Estimated withholding
• Upcoming trading windows
• Charitable gifts of appreciated shares
Exercising an option on December 20 versus January 2 can move income between tax years.
Action before 12/31: Build a calendar showing every 2026 vest, exercise, and sale and estimate the tax consequences before making additional transactions.
15. Review HSA Contributions
For 2026, eligible individuals can contribute up to $4,400 for self-only HSA coverage or $8,750 for family coverage.
HSAs can be unusually tax-efficient: eligible contributions may be deductible or pre-tax, earnings can grow tax-deferred, and qualified medical withdrawals can be tax-free.
For HNW families who can afford to pay current healthcare expenses from cash flow, allowing an HSA to remain invested can create another long-term tax-advantaged pool of assets.
Action before 12/31: Check year-to-date HSA contributions and your eligibility. If you haven't maximized the account, determine how much contribution room remains.
16. Business Owners: Review Expenses and Depreciation
If your business needs equipment, technology, furniture, or other qualifying assets, timing can matter.
Federal law now provides expanded Section 179 expensing and 100% bonus depreciation for qualifying property under applicable rules. However, Oregon enacted legislation in 2026 disconnecting from certain federal changes, including federal bonus depreciation for Oregon tax purposes beginning in 2026.
That creates an important planning issue for Oregon business owners: the federal and Oregon deduction may not be the same.
Never buy something solely for a deduction. Spending $100,000 to save $40,000 of taxes still leaves you $60,000 poorer.
Action before 12/31: If a significant business purchase is already planned, have your CPA model the federal and Oregon treatment before deciding whether to place the asset in service in 2026 or 2027.
17. Oregon Business Owners: Review the PTE-E Election
Oregon's Pass-Through Entity Elective tax remains available for qualifying S corporations and partnerships through tax years beginning before January 1, 2028.
The strategy can affect how state taxes are paid and the associated federal tax treatment.
This shouldn't be an automatic election. The benefit depends on the owner's circumstances, entity structure, income, and current federal rules.
Action before year-end: S-corp and partnership owners should specifically ask their CPA, "Should we make the Oregon PTE-E election for 2026?"
18. Check Estimated Taxes and Withholding
A large bonus, stock sale, Roth conversion, business distribution, or investment gain can leave you significantly underwithheld.
Federal estimated-tax safe-harbor rules generally look at current-year tax or prior-year tax, with different requirements applying to certain higher-income taxpayers.
Don't wait until April to discover the problem.
Action before 12/31: Compare projected 2026 tax with withholding and estimated payments already made. If there's a shortfall, determine whether additional withholding or an estimated payment makes sense.
19. Look Ahead to 2027 Before Accelerating or Deferring Income
"Defer income and accelerate deductions" isn't always good advice.
If you expect significantly higher income next year, realizing income in 2026 may actually be preferable. Conversely, if 2026 is unusually high-income and 2027 should be lower, postponing discretionary income may help.
This is particularly relevant for:
• Business owners
• Retiring executives
• People selling businesses
• Large Roth conversions
• Real estate transactions
• Stock-option exercises
• Large charitable deductions
Action before 12/31: Create a simple side-by-side estimate of 2026 and 2027 income before shifting income or deductions between years.
The 2026 Year-End Tax Planning Checklist
Before December 31, ask whether you have:
☐ Completed a 2026 tax projection
☐ Reviewed realized gains and losses
☐ Harvested appropriate investment losses
☐ Evaluated intentional gain harvesting
☐ Modeled a Roth conversion
☐ Maximized employer retirement contributions
☐ Reviewed Backdoor Roth eligibility and the pro-rata rule
☐ Evaluated business retirement-plan contributions
☐ Reviewed appreciated securities for charitable gifts
☐ Considered a donor-advised fund
☐ Evaluated QCDs
☐ Satisfied all RMDs and inherited IRA requirements
☐ Reviewed annual gifting
☐ Considered 529 contributions
☐ Reviewed RSUs and stock options
☐ Maximized eligible HSA contributions
☐ Reviewed business purchases and depreciation
☐ Evaluated Oregon PTE-E planning, if applicable
☐ Checked estimated taxes and withholding
☐ Compared projected 2026 and 2027 income
The Bottom Line
The most valuable year-end tax planning rarely comes from one dramatic strategy. It usually comes from coordinating several smaller decisions.
A Roth conversion affects taxable income. Taxable income affects capital-gains rates and Medicare premiums. A charitable gift can offset income while helping diversify appreciated stock. Tax-loss harvesting can create room to realize gains elsewhere. Retirement contributions can reduce current taxable income while changing the long-term composition of your balance sheet.
That's why we believe tax planning should be integrated with investment management, retirement planning, and estate planning—not treated as a once-a-year exercise.
At North Sister Wealth, we help clients look across their entire financial picture to identify opportunities before the calendar closes.
The important date isn't April 15. For many planning strategies, it's December 31.
This material is for educational purposes only and should not be considered individualized tax, legal, or investment advice. Tax rules are complex and individual circumstances vary. Consult your tax and legal professionals before implementing a strategy.
