2026 Year-End Tax Planning Items to Consider

Year-end tax planning works best when you look at all of your financials. And with the OBBBA bringing new deductions, accounts and limits, some of these adjustments reward people who act before closing out 2026.

To keep things organized, we’ve grouped the most important items to review into 8 tax and financial planning areas below.

1. Retirement Planning

With higher contribution limits and a brand-new account for children this year, 2026 offers more ways than usual to save while lowering your tax bill.

Max Out Your 401(k) and IRA

Contribution limits increased for 2026. The IRA limit is now $7,500, up from $7,000. The 401(k) employee limit is $24,500, or $32,500 if you’re 50 or older, and $35,750 if you’re between 60 and 63. 401(k) contributions must go through payroll by year-end, so check your year-to-date total now while you have paychecks left to adjust.

There’s also one change for high-income earners. Starting in 2026, if your prior-year FICA wages from your employer were over $150,000, your catch-up contributions must be made as Roth (after-tax). That means those dollars won’t lower this year’s taxable income.

Fund Your HSA (Health Savings Account)

If you have a qualifying high-deductible health plan, the 2026 HSA limits are $4,400 for self-only coverage and $8,750 for family coverage. HSAs are one of the few accounts that are tax-deductible going in, grow tax-free and come out tax-free for qualified medical expenses. You generally have until the tax filing deadline to make 2026 contributions, but contributing through payroll by December 31 also saves Social Security and Medicare tax.

Open a Trump Account for Your Kids

These new accounts for children launched in July 2026 and began accepting contributions on July 4. Families can contribute up to $5,000 per year. Children who are U.S. citizens born between January 1, 2025 and December 31, 2028 may be eligible for a one-time $1,000 government deposit, but you have to actively elect that deposit when you sign up; it isn’t automatic. If you haven’t enrolled yet, you can do so by filing IRS Form 4547.

You can also read through this article for more details:
Trump Accounts (Section 530A Accounts): What Parents Need to Know and Why They Matter for Tax Planning

Update: As of October 1, 2026, the Treasury Department began automatically opening a Trump Account for every eligible child under 18 with a Social Security number, so most families no longer need to take action just to get the account itself opened. However, auto-enrollment does not automatically secure the $1,000 government deposit, that still requires an active election. Guidance on how to access automatically opened accounts is currently unclear, please visit TrumpAccounts.gov for updates.

Consider a Roth Conversion

Converting part of a traditional IRA to a Roth means paying tax now in exchange for tax-free withdrawals later. It tends to make the most sense in a year when your income is lower than usual. Conversions must be completed by December 31 to count for 2026. Keep in mind, a Roth conversion can not be undone.

Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.

2. Education Planning

The cost to go to college continues to increase. The good news is that 529 plans got more flexible this year, so the money covers expenses beyond college tuition.

Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

Contribute to a 529 Plan

Earnings in a 529 grow tax-free when used for qualified education expenses, and many states offer a state tax deduction for contributions. The new law also broadened how 529s can be used, adding more homeschool, vocational, credentialing and K-12 expenses up to $20,000.

Contributions count as gifts, so the 2026 annual gift exclusion of $19,000 per beneficiary ($38,000 for married couples who split gifts) applies. You can also “superfund” a 529. This means that you can front-load 5 years of gifts at once. A married couple can put in $190,000 per beneficiary in one year without triggering gift tax. However, a gift tax return is required to make that election.

3. Legacy Planning

Now that Congress has made the higher estate tax exemption permanent, this is a good year to confirm your plan still matches current law and expectations.

Draft or Review Your Trust

The estate and gift tax exemption rose to $15 million per individual and $30 million for married couples in 2026, with inflation adjustments after that. The new law removed the risk of the exemption dropping in half, which many existing estate plans were built around. If your trust was drafted with that risk in mind, it may be time for a review with your attorney. Also confirm that beneficiaries, trustees and account titling still reflect your wishes.

Review Your Life Insurance

Life insurance can provide liquidity for heirs, fund a buy-sell agreement or replace income. Check whether your coverage still fits your family, and whether policies should be owned inside a trust to keep proceeds out of your taxable estate.

Plan for Long-Term Care

Long-term care costs can quickly drain a retirement plan. Premiums for qualified long-term care insurance can count toward the medical expense deduction, subject to age-based limits, and only medical expenses above 7.5% of AGI are deductible. HSA funds can also generally be used to pay qualified long-term care premiums.

Feel free to use our interactive medical expense deduction checklist:
Qualified Medical Expense Tax Deductions Checklist

4. Business Planning

With the estate tax rules now more settled, this is a good year to confirm your plan still matches current law and expectations.

Review Your Employee Benefits

Benefits are a way to reward employees with tax-advantaged dollars instead of fully taxable wages. Two new opportunities for 2026:

Dependent Care FSA
The limit rose to $7,500 per household starting in 2026, up from $5,000. However, a change in the law doesn’t automatically update your plan, so employers who want to offer the higher limit need to amend their plan documents.

Trump Account Contributions
Employers can contribute up to $2,500 per employee per year, and that contribution is excluded from the employee’s taxable income.

Towards the end of the year is also a good time to review whether a retirement plan, health plan or other benefits make sense for your business next year. Many of these need to be set up before the plan year begins.

5. Cash Flow Planning

The timing and the details of what you purchase can turn an expense you were already planning on into a valuable deduction.

New Car Interest Deduction

For tax years 2025 through 2028, eligible taxpayers can deduct up to $10,000 per year of interest on a loan for a new vehicle for personal use, whether or not they itemize. The requirements are strict:

The vehicle must be new (used vehicles and leases don’t qualify).
Final assembly must be in the United States.
The loan must have been taken out after December 31, 2024, and be secured by a first lien on the vehicle.

The $10,000 cap applies per tax return, not per vehicle, so a married couple filing jointly gets one $10,000 limit. The deduction starts to phase out when modified AGI exceeds $100,000, or $200,000 for joint filers. Check the vehicle’s VIN and assembly information before you buy, not after.

6. Investment Planning

The timing and the details of what you purchase can turn an expense you were already planning on into a valuable deduction.

Stock investing includes risks, including fluctuating prices and loss of principal.

Harvest Stock Losses

Selling investments that are down can offset capital gains elsewhere in your portfolio. Up to $3,000 of excess losses can offset ordinary income, with the rest carried forward.

But, be careful of the wash sale rule: buying the same or a substantially identical investment within 30 days before or after the sale will disallow the loss, even if the purchase happens in your IRA.

Time Your Rental Property Improvements

If you own rental property, the timing and type of work matters. Routine repairs are generally deductible in the year paid. However, improvements are usually depreciated over time. Some items, such as appliances or certain equipment, may qualify for faster write-offs. Remember, 100% bonus depreciation has been permanently reinstated for qualifying property.

For improvement expenses to count towards 2026, the work has to be finished and ready to use by December 31. Keep receipts, and note which costs were repairs and which were improvements.

7. Risk Planning

If you’ve bought a home, had a kid or seen your savings grow, your insurance might not have kept up. Risk planning makes sure that your coverage matches your current situation.

Review Life and Property Insurance

Review your homeowners, auto and umbrella coverage along with your life insurance. It’s worth doing because personal casualty and theft losses are generally deductible only in limited circumstances, such as federally declared disasters. In most cases, insurance is your main protection.

8. Special Situation Planning

Some decisions, like buying vs. renting, don’t fit into one category but have significant tax consequences.

Buying vs. Renting a Home

The tax advantages on homeownership changed this year. The SALT deduction cap rose to $40,400 in 2026, after years at $10,000, with a phase-out for incomes over $505,000. Combined with mortgage interest, that means more homeowners may benefit from itemizing than in recent years, especially in high-tax states.

That said, taxes are only one part of the decision. Consider the following:

Your down payment
How long you plan to stay
Home maintenance costs
Local housing prices

If you do buy before year-end, property taxes and points paid at closing may be deductible for 2026. And if you eventually sell, you may be able to exclude up to $250,000 of gain, or $500,000 for married couples. However, you must have owned and lived in the home for at least 2 of the past 5 years.

Why This Matters

Many of these planning decisions affect each other. A Roth conversion can push you out of eligibility for the car loan deduction, and a home purchase can change whether you itemize. The best results come from looking at everything together while there’s still time to act.

Questions? Contact Us Today

Sources:
IRS: 401(k) limit increases to $24,500 for 2026

IRS: One, Big, Beautiful Bill provisions for individuals and workers

IRS: Tax inflation adjustments for tax year 2026

Federal Register: Car Loan Interest Deduction final regulations

IRS Revenue Procedure 2025-19

IRS Notice 2026-05

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