Year-end tax planning checklist for 2026: what to do before December 31

The rule of thumb: anything that changes what happened in 2026, such as paycheck contributions, gifts, sales of investments and business purchases, has to happen in 2026. Contributions to IRAs and HSAs can still be made for 2026 until the April 2027 filing deadline.

Raising your 401(k) contribution is the most common year-end move for employees, but it only counts for 2026 if it comes out of 2026 paychecks, so change your payroll election in time for the last ones. The limit is per person, across all your plans. New for 2026: if your 2025 Social Security wages from your employer were over $150,000, your catch-up contributions must go in as Roth (after-tax) contributions.

Self-employed people have more time. A SEP-IRA can be set up and funded up to the return due date, including extensions; for a sole proprietor the 25% limit works out to about 20% of net self-employment profit. A sole proprietor with no employees who opens a brand-new solo 401(k) after year-end can still make 2026 employee contributions by the April 15, 2027 filing deadline, but an existing plan, or an S-Corp owner paid by payroll, has to contribute through 2026 pay.

These accounts are pre-tax, so using the full limit lowers your taxable income.

If you take the standard deduction, from 2026 you can also deduct up to $1,000 ($2,000 joint) of cash gifts to qualifying charities. Gifts to donor-advised funds or supporting organizations, gifts of goods or stock, and carryovers do not count, and you need a receipt.

If you itemize, two new limits apply from 2026. Charitable gifts are deductible only above 0.5% of your AGI. And if you are in the 37% bracket (taxable income over $640,600 single or $768,700 joint), your itemized deductions are reduced by 2/37 of the smaller of those deductions or your income above that bracket line, so each dollar is worth about 35 cents. Bunching several years of gifts into one year, for example through a donor-advised fund, clears the 0.5% floor once instead of every year.

At 70½ or older, a qualified charitable distribution of up to $111,000 paid directly from your IRA to a charity counts toward your required minimum distribution and is left out of your income instead of being deducted. It has to leave the IRA by December 31.

Year-end itemizing moves, such as paying property tax or a fourth-quarter state estimate before December 31, only help if your itemized deductions will beat the standard deduction. For 2026 the cap on state and local taxes rises to $40,400 ($20,200 married filing separately). It shrinks by 30% of modified AGI over $505,000, but not below $10,000.

The July 2025 tax law added four deductions for 2025 through 2028, which you can take whether or not you itemize. Each phases out at higher incomes, so keeping your modified AGI below the limits, for example by timing a Roth conversion or a capital gain into another year, can keep them.

Selling losing investments by December 31 lets the losses offset your gains, plus up to $3,000 of other income ($1,500 married filing separately), with the rest carried forward. If you buy the same or substantially identical stock within 30 days before or after the sale, including in an IRA, the wash sale rule disallows the loss. That rule is written for stocks and securities; the IRS treats cryptocurrency as property and has not applied the rule to it, so get advice before relying on that.

In a low-income year you may be able to take gains at 0%. Remember the 3.8% net investment income tax above modified AGI of $200,000 (single or head of household) or $250,000 (joint), which is not indexed, and that gains raise the AGI that the new deductions depend on.

Required minimum distributions start at age 73 and are due by December 31 each year. Your first one can wait until April 1, 2027, but then you take two in 2027. If you still work and do not own more than 5% of the business, you can delay distributions from that employer’s plan, though not from IRAs. Roth IRAs have no required distributions during the owner’s life.

A missed distribution carries a 25% excise tax, cut to 10% if corrected within two years. A qualified charitable distribution, described above, can satisfy all or part of it.

Equipment and vehicles count for 2026 only if they are placed in service, ready for use, by December 31; ordering or paying is not enough. Freelancers and gig workers have their own year-end checklist, covering expenses, the cash method and records, on our year-end tax moves page.

The last 2026 estimated payment is due January 15, 2027, unless you file your 2026 return and pay in full by February 1, 2027. You avoid an underpayment penalty if your withholding and estimates cover at least 90% of your 2026 tax or 100% of your 2025 tax (110% if your 2025 AGI was over $150,000, or $75,000 married filing separately).

If you are behind, for example from side income or a large gain, raising the federal withholding on your last 2026 paychecks helps more than a late estimate: the IRS treats withholding as paid evenly through the year, so it covers earlier quarters too.

Gifts must be completed by December 31 to count for 2026; a check counts when the bank pays it.