By Adam Brooks, CFP®
Did 2026 bring a large bonus or the sale of a business? If so, you may already be wondering what your April 2027 tax bill could look like and whether you can still lower it. Many of the most useful year-end tax moves close on December 31, and some take weeks to set up, which is why part of our comprehensive planning services includes starting year-end tax planning in October.
The One Big Beautiful Bill Act also changed the rules for 2026, raising the standard deduction to $16,100 for single filers and $32,200 for married couples filing jointly.
Let’s go over five planning actions to consider before the year closes.
1. Use the Rest of Your Retirement Plan Room
For 2026, you can contribute up to $24,500 to a 401(k), 403(b), or most 457 plans, according to the IRS. Savers 50 and older can add an $8,000 catch-up contribution, and those 60 through 63 can add $11,250 if their plan allows it. Because these contributions come out of your paycheck, your last payroll of the year is the practical deadline for adding more.
Executives should also know about a new rule this year: if your 2025 Social Security wages from your employer topped $150,000, any catch-up contributions you make in 2026 must go into the Roth (after-tax) side of your plan. Those dollars won’t lower this year’s taxable income, although qualified withdrawals later can be tax-free.
IRAs give you more time, since you can contribute up to $7,500 for 2026 ($8,600 if you’re 50 or older) until the April 15, 2027, filing deadline.
2. Decide on a Roth Conversion Before the Year Closes
A Roth conversion moves money from a traditional IRA or 401(k) into a Roth account, where you pay income tax on the converted amount now and qualified withdrawals later can be tax-free. A conversion counts for the year it’s completed, so it has to be finished by December 31; and once it’s done, it can’t be undone.
Conversions often work ideally in a lower-income year, such as the years between retirement and Social Security. The converted amount is added to your taxable income and can push you into a higher bracket, so many people convert in smaller amounts over several years.
Because Medicare premiums are based on income from two years earlier, a large 2026 conversion can also raise your Medicare costs in 2028. If your income is too high to contribute to a Roth IRA directly, our article on Roth strategies for high-income earners explains another route.
3. Plan Your Charitable Giving Around the New Rules
Charitable gifts are deducted differently starting in 2026, whether or not you itemize.
- If you take the standard deduction, you can now deduct up to $1000 in cash gifts to qualified charities ($2,000 for married couples filing jointly), although gifts to donor-advised funds don’t count.
- If you itemize, only the giving above 0.5% of your adjusted gross income is deductible, so a household with $400,000 of adjusted gross income gets no deduction for its first $2,000 of gifts. In the top 37% bracket, each dollar of itemized deductions now saves no more than about 35 cents in tax.
One response is “bunching,” or grouping two or three years of planned gifts into one year so you itemize that year and take the standard deduction in the others. A donor-advised fund helps, because you claim the deduction when you fund it and recommend grants to charities over time. Giving stock you’ve held more than a year also avoids the capital gains tax you’d owe on a sale.
If you’re 70½ or older, a qualified charitable distribution (QCD) lets you send up to $111,000 directly from your IRA to charity in 2026. The gift stays out of your taxable income, and once you’re 73 or older it can count toward your required minimum distribution.
Arizona residents can also take advantage of five dollar-for-dollar state tax credits, including gifts to:
- Qualifying Charitable Organizations (QCO) (up to $506 for single filers and $1,009 for joint filers in 2026)
- Qualifying Foster Care Charitable Organizations (QFCCO)
- Veterans’ services organizations
- Public schools
- Private school tuition organizations
Gifts made to these qualifying organizations through April 15, 2027, can still count as credits on your 2026 Arizona state return.
4. Review Gains and Losses in Your Taxable Accounts
Selling investments worth less than you paid can create losses that offset gains you’ve already taken this year, a strategy called tax-loss harvesting.
Losses beyond your gains can offset up to $3,000 of ordinary income, with the remainder carried forward, as long as you avoid buying the same or a substantially identical investment within 30 days before or after the sale.
Planning Notes for Executives and Business Owners
If you hold stock options, the timing of when you exercise them can change your tax bill considerably.
Our article on incentive and non-qualified stock options explains how each type is taxed and why an exercise that triggered no alternative minimum tax in 2025 could trigger it in 2026. If you have a deferred compensation plan, your election for 2027 pay is usually due before the new year begins.
For business owners, the One Big Beautiful Bill Act permanently restored 100% bonus depreciation, so qualifying equipment you place in service by December 31 can be deducted in full on your 2026 return. Bonus depreciation only applies to property acquired after January 19, 2025.
If you expect to sell your business in the next few years, the tax year of the sale deserves its own plan, and our Business Exit Readiness Checklist covers what to prepare.
5. Start Your Year-End Review Now With ABLE
Reading through a tax checklist is a good first step, but taking action before December 31 is what delivers real savings. Many of these strategies (e.g., processing Roth conversions, setting up donor-advised funds, executing final payroll 401(k) adjustments) take days or even weeks to implement with your custodian and CPA.
Waiting until mid-December might leave too little time to run the math and coordinate execution. At ABLE Financial Group, transition and year-end planning are at the center of our work, and we coordinate each step with your CPA before anything is executed. Call us today at 480.258.6104 or email adam@ablefinancialgroup.com to book your year-end review while there is still time to act.
Frequently Asked Questions
Do I have to take my required minimum distribution by December 31?
Yes, if you’re 73 or older, your 2026 required minimum distribution (RMD) generally has to come out by December 31, 2026. The exception is your first RMD, which you can delay until April 1, 2027, although you’d then take two distributions in 2027. Our guide to understanding required minimum distributions explains the rules.
Can I still contribute to my 401(k) for 2026 after December 31?
No, your 2026 employee 401(k) contributions have to come out of paychecks paid in 2026. IRA contributions work differently, and you can make 2026 traditional or Roth IRA contributions until April 15, 2027. The team at ABLE Financial Group recommends checking your year-to-date 401(k) total before your final payroll so there’s time to raise your rate.
How does tax-loss harvesting work?
Tax-loss harvesting means selling investments worth less than you paid so the loss offsets your capital gains. Extra losses can offset up to $3,000 of ordinary income a year and carry forward. Buying the same or a substantially identical investment within 30 days disallows the loss. Our planning process includes portfolio reviews where we look for these opportunities.
Does getting divorced or losing a spouse this year change how I file taxes?
Yes, your marital status on December 31 sets your filing status for all of 2026. If your divorce is final by then, you file as unmarried. If your spouse passed away during 2026 and you haven’t remarried, you can generally still file jointly for this year. Our article on financial planning after divorce covers the next steps.
About Adam
Adam Brooks is Managing Director at ABLE Financial Group, a financial services practice that focuses on transition planning and simplifying the complexities of their clients’ wealth. As a CERTIFIED FINANCIAL PLANNER® practitioner, Adam has been guiding individuals, businesses, and non-profit organizations toward their financial goals since 1993. Co-founding ABLE Financial Group in 2006, Adam oversees the practice, working with business owner clients, primarily focusing on succession planning and mergers and acquisitions (M&As).
Adam obtained degrees in finance and accounting from the University of Arizona and holds the CFP® certification. Adam was recognized as one of Barron’s Top 1,200 Financial Advisors in 2021 and 2022, and was named a 2022 Forbes Best-in-State Wealth Advisor. Outside of his work as a financial advisor, Adam has taught a variety of courses at surrounding community colleges, including Successful Money Management Seminars and Rich Dad’s Cash Flow courses. Adam also previously hosted a radio show called The Truth About Money.
When not serving his clients, Adam actively serves his community in a variety of leadership positions. In 2011, Adam and co-founder Lee began funding the ABLE Financial Group Philanthropic Fund at the Jewish Community Foundation, allowing them to support some of their favorite organizations and causes today and into the future. Adam lives in Scottsdale with his wife, Cindy, their three sons, Jordan, Dylan, and Cameron, and their two dogs, Nelson and Sunny. Adam is active in his children’s lives, an avid cyclist, and enjoys local hikes with his family. To learn more about Adam, connect with him on LinkedIn.
