As year-end approaches, consider reviewing your tax situation for potential opportunities to reduce your federal income tax liability. Here are some tax-planning moves that you may want to review.
Increase your workplace retirement savings. If you participate in an employer-sponsored 401(k) plan, 403(b) plan, or most 457 plans, consider boosting your contributions before year end. For tax year 2026, you can contribute up to $24,500. If you’re age 50 or older, you can generally make an additional $8,000 as a catch-up contribution. A higher limit of $11,250 applies if you turn 60, 61, 62, or 63 during the year.
Harvest your losses. You may want to consider selling investments in taxable accounts that have declined in value to offset your capital gains through tax-loss harvesting. If your total net capital losses exceed your capital gains, you can use up to $3,000 ($1,500 if married filing separately) of the remaining capital loss to offset ordinary income, while any excess can be carried forward to future tax years. Beware of the wash-sale rule: you can’t deduct the loss if you buy the same or a substantially identical investment within 30 days before or after the sale.
Adjust your health care contributions. If you are eligible to participate in a health savings account (HSA), you may want to boost your contribution to potentially help reduce your tax liability. You can do this by increasing payroll deductions or making direct contributions to your account. For 2026, you can contribute up to $4,400 for self-only coverage or $8,750 for family coverage. An additional $1,000 can be contributed if you reach age 55 by the end of the year.
You cannot establish or contribute to an HSA unless you are enrolled in an HDHP and have no disqualifying additional coverage or Medicare enrollment. You also cannot be claimed as someone else’s dependent on their tax return. For 2026, an HSA-qualified HDHP generally must have a deductible of at least $1,700 for individuals ($3,400 for families) and cap annual out-of-pocket costs at $8,500 ($17,000 for families), excluding premiums. You can use tax-free HSA withdrawals to pay qualified medical expenses, including deductibles and copayments. Total annual contributions, including any employer contributions, must not exceed your applicable contribution limit, as excess uncorrected contributions are subject to a 6% annual excise tax.
Review possible deductions. For tax year 2026, you may have several deductions available that can provide additional tax savings.
- Tips and overtime deductions: If you work in an occupation that customarily and regularly receives tips, you may be able to deduct up to $25,000 of qualified tips (if you are married, you must file a joint return to claim the deduction). Eligible workers also may deduct up to $12,500 of qualified overtime compensation, or $25,000 for married couples filing jointly. Both deductions are subject to income phaseouts.
- Senior deduction: If you are age 65 or older, you may qualify for an additional $6,000 senior deduction (if you are married, you must file a joint tax return to claim the deduction; up to $12,000 can be deducted if both spouses qualify). This deduction is available in addition to the existing additional standard deduction for taxpayers age 65 or older and is subject to an income phaseout.
- Auto loan interest deduction: If you financed a qualifying new vehicle for personal use with a qualifying loan originated after December 31, 2024, you may be able to deduct up to $10,000 of qualified car loan interest. Among other requirements, the vehicle must have undergone final assembly in the United States. The deduction is also subject to an income-based phaseout.
- Charitable contributions: If you claim the standard deduction, you may deduct up to $1,000 of qualifying cash contributions to eligible charities, or up to $2,000 if you are a married couple filing jointly. If you itemize, beginning in 2026, your charitable contributions generally are deductible only to the extent that they exceed 0.5% of your adjusted gross income. If you’re making a substantial gift, you might want to consider whether and how this threshold affects the timing of your contribution.
Evaluate a Roth conversion. Taxpayers with assets in a traditional IRA or certain employer retirement plans may want to consider converting a portion of those assets to a Roth IRA before year-end. Previously untaxed amounts that are converted generally are included in taxable income for the year of conversion, while qualified Roth IRA distributions generally are tax-free. If your taxable income is lower than usual or if your income is within a particular income tax bracket, a conversion may make sense; however, the additional income can affect other income-based tax provisions. Roth conversions generally must be completed by December 31 to count for that tax year and cannot later be reversed.
Take an RMD to avoid penalties. Required minimum distributions (RMDs) are annual withdrawals that you must take from traditional, non-Roth employer-sponsored plan accounts, such as 401(k), 403(b), and 457(b) plans, and from traditional, non-Roth IRAs, SEP IRAs, and SIMPLE IRAs. RMDs must begin the year you reach age 73 (rising to 75 after 2032). The RMD amount is calculated by dividing the value of your account as of December 31 of the previous year by a life expectancy factor found in IRS Publication 590-B. RMDs typically must be taken by December 31. Your first RMD can be delayed until April 1 of the following year (e.g., if your first RMD is for 2026, you can delay it until April 1, 2027); however, delaying your first RMD to the following year generally means you would have to take two RMDs in one year, which could bump you into a higher tax bracket. Failure to take the full required amount in any year typically results in a 25% penalty on the shortfall. For more information about RMDs, consider talking to a tax professional.
Prepared by Broadridge Advisor Solutions. © 2026 Broadridge Financial Services, Inc.