The Year-End Tax Moves Worth Making Before December 31

The year-end tax moves that actually change what you owe split into two groups, and the difference between them is the calendar. Anything that runs through a workplace retirement plan, a charitable gift, a realised investment loss or a required withdrawal has to be finished by December 31, 2026. Anything that runs through an individual retirement account or a health savings account can wait until the filing deadline in April 2027. Sorting your list by that single distinction does more good than any clever strategy, because the moves people miss are almost always the ones with the December deadline.

2026 also carries a change that quietly rewrites the arithmetic of charitable giving for the first time in years. It is covered below, because it is the one item on this list where doing the same thing you did last year produces a worse result.

The two deadlines, in one table

Every figure below is the limit for tax year 2026, as published by the Internal Revenue Service in Notice 2025-67 and Revenue Procedure 2025-32.

The first row is the one that catches people. A 401(k) contribution is a payroll deduction, so the money has to run through a pay cycle. If you decide on December 28 that you want to add 3,000 dollars, there is usually no pay cycle left to do it in. Payroll departments generally need the change one to two pay periods ahead, which in practice means acting in late November or early December.

The second and third rows are the opposite, and the relief is real. You have until the April filing deadline to fund an IRA or an HSA for 2026, which means you can wait until your tax software has told you what a contribution is actually worth before you make it. Very few tax decisions let you see the answer first.

What changed for 2026: charitable giving now has a floor

Two provisions of the law enacted in July 2025, which the Internal Revenue Service refers to as the One, Big, Beautiful Bill, take effect for tax year 2026 and pull in opposite directions.

The first is good news for most households. Beginning with tax year 2026, the IRS states that individuals who do not itemise may deduct up to 1,000 dollars of cash contributions to eligible charitable organisations, or 2,000 dollars for married taxpayers filing jointly. Given that the 2026 standard deduction is 16,100 dollars for single filers, 32,200 dollars for married couples filing jointly and 24,150 dollars for heads of household, the large majority of filers do not itemise, and for them this is a deduction that did not exist in 2025.

The second cuts the other way for people who do itemise. From 2026, charitable contributions are only deductible to the extent they exceed 0.5 percent of adjusted gross income. The Tax Foundation illustrated the effect in 2025 analysis: a filer with 200,000 dollars of income who gives 10,000 dollars can deduct 9,000 dollars, because the first 1,000 dollars falls below the floor. Separately, taxpayers in the top 37 percent bracket now see the value of itemised deductions capped at roughly 35 cents per dollar rather than 37.

Here is the arithmetic that matters, run for a household with 200,000 dollars of adjusted gross income. The floor is 1,000 dollars.

The last two rows are the whole lesson. The floor applies once per year, so a giver who spreads the same total across two years pays it twice. Concentrating two years of planned giving into one calendar year, sometimes called bunching, means crossing the floor once instead of twice and gives you a better chance of clearing the standard deduction in the year you give. The tradeoff is that your charities receive the money unevenly, which some of them care about more than others.

Move one: the retirement accounts with a December deadline

If your employer matches, the only truly urgent question is whether you are on track to capture the full match for 2026. A match is compensation you have already earned and not collected, and it does not carry forward. This is covered in more detail in our guide to capturing your full 401(k) match.

Two rules changed for people over 50. Under the SECURE 2.0 Act, participants aged 60 to 63 get a larger catch-up, which the IRS set at 11,250 dollars for 2026 against 8,000 dollars for everyone else aged 50 and over. That is 3,250 dollars of extra room available for exactly four years of your life, and it disappears at 64.

The second change is less welcome. Section 603 of the SECURE 2.0 Act requires higher earners to make their catch-up contributions as Roth contributions rather than pre-tax. The IRS granted an administrative transition period through the end of 2025 in Notice 2023-62, so 2026 is the first year plans are generally expected to apply the rule, and the final Treasury regulations issued in September 2025 apply broadly to contributions in taxable years beginning after December 31, 2026. The test looks at your prior-year Social Security wages from that employer, and IRS Notice 2025-67 sets the threshold at 150,000 dollars for wages earned in 2026. If you are above it, your catch-up money goes in after tax. That is not a penalty, but it does mean the deduction you were planning on may not arrive.

Move two: harvest losses, and check whether you can harvest gains instead

Selling a losing investment turns a paper loss into a deductible one. Losses first offset capital gains. Per IRS guidance on capital gains and losses, if losses exceed gains you may deduct up to 3,000 dollars of the excess against ordinary income, or 1,500 dollars if married filing separately, and carry the remainder forward indefinitely.

The trap is the wash sale rule, described in IRS Publication 550. If you buy the same or a substantially identical security within 30 days before or after the sale, the loss is disallowed. The practical rule is a 61-day window centred on the sale date, and it applies across your accounts, including a purchase in your IRA. Buying a different fund tracking a different index is the usual workaround; buying the identical fund back on January 2 is not.

The less familiar move is the reverse. Revenue Procedure 2025-32 sets the 2026 zero percent rate ceiling for long-term capital gains at 49,450 dollars of taxable income for single filers and 98,900 dollars for married couples filing jointly. Taxable income is after deductions, so a married couple with 120,000 dollars of gross income and the 32,200 dollar standard deduction is at roughly 87,800 dollars, leaving about 11,100 dollars of room to realise long-term gains at a federal rate of zero and reset the cost basis higher. There is no wash sale rule on gains, so the same investment can be bought back immediately. This is most useful in a year when income dropped: a sabbatical, a layoff, a first year of retirement before Social Security starts.

One caution worth stating plainly. Harvesting has to clear real costs, and moving money between funds can create tracking differences that outlast the tax saving. A loss worth 3,000 dollars saves a filer in the 22 percent bracket 660 dollars. That is genuine money, and it is not enough to justify wrecking an allocation you otherwise believe in.

Move three: take the required distribution, and consider routing it to charity

The IRS states that required minimum distributions begin at age 73. The first one is due by April 1 of the year after you turn 73, and every subsequent one by December 31. Missing one triggers a 25 percent excise tax on the shortfall, reduced to 10 percent if corrected within two years. Roth IRAs and designated Roth accounts require no distributions during the owner’s lifetime.

One aggregation detail saves people trouble. You may calculate the distribution for each traditional IRA separately and then take the entire combined amount from whichever IRA you prefer. Workplace plans do not work that way: each 401(k) or 457(b) must be satisfied from that plan.

For anyone over 70 and a half who gives to charity, the qualified charitable distribution deserves a fresh look this year specifically because of the new 0.5 percent floor. A QCD sends money directly from an IRA to an eligible charity. It counts toward the required distribution and never appears in adjusted gross income, so the floor is irrelevant to it and no itemising is required. IRS Notice 2025-67 raises the annual QCD limit to 111,000 dollars for 2026, with a 55,000 dollar limit for the one-time gift to a split-interest entity.

The comparison is stark for a retiree with 90,000 dollars of income giving 5,000 dollars. Written as an ordinary donation and itemised, the floor removes 450 dollars of it. Sent as a QCD, the full 5,000 dollars stays out of income, which can also help with items driven by adjusted gross income, including Medicare premium surcharges. Our guide to choosing between Roth and traditional accounts covers the longer-term version of this decision.

Move four: spend the flexible spending account, not the health savings account

These two accounts are constantly confused, and the December distinction is the important one. Revenue Procedure 2025-32 sets the 2026 health flexible spending account salary reduction limit at 3,400 dollars with a maximum carryover of 680 dollars. Whatever sits above the carryover at the end of your plan year, or after any grace period your employer offers, is forfeited. Check the balance now, because eligible expenses include far more than most people assume.

A health savings account is the opposite in every respect. Nothing expires, the money is yours after you leave the employer, and the 2026 limits are 4,400 dollars for self-only coverage and 8,750 dollars for family coverage, with the deadline in April 2027. The eligibility test is your coverage: the IRS requires a qualifying high deductible health plan, which for 2026 means a deductible of at least 1,700 dollars for self-only coverage or 3,400 dollars for family coverage, with out-of-pocket maximums no higher than 8,500 dollars and 17,000 dollars. We have a fuller treatment of why the HSA is the most tax-favoured account most people own.

Move five: check your withholding against the deductions you may now qualify for

Four deductions created for tax years 2025 through 2028 are claimed on a new form, Schedule 1-A, and none requires itemising. According to IRS material on the Working Families Tax Cuts, the caps are up to 25,000 dollars for qualified tips, up to 12,500 dollars for qualified overtime or 25,000 dollars filing jointly, up to 10,000 dollars of interest on a loan for a new vehicle with final assembly in the United States, and 6,000 dollars per qualifying person aged 65 and over.

Each phases out. The tips and overtime deductions begin phasing out above 150,000 dollars of modified adjusted gross income, or 300,000 dollars filing jointly. The senior deduction phases out above 75,000 dollars, or 150,000 dollars jointly. The vehicle loan interest deduction begins phasing out above 100,000 dollars, or 200,000 dollars jointly. We cover the vehicle rules in detail in our guide to choosing between an electric, hybrid or gas car, since final assembly location now affects the tax result as well as the sticker price.

The year-end action is not a deduction at all. It is checking whether your withholding still matches your likely bill, because a deduction you did not know you qualified for means you have been overwithholding all year, and one you assumed you qualified for but do not means the opposite. The IRS documentation is explicit that these deductions require records: pay stubs and tip logs for the first two, a lender statement and the vehicle identification number for the third.

A decision rule, if you only do one thing

Ranked by the size of the typical result rather than by how interesting the move is:

• Not capturing the full employer match. Fix this first and ignore everything else on the list. Nothing here returns 50 or 100 percent immediately.
• Aged 73 or older with a traditional IRA. Confirm the required distribution has been taken. The 25 percent excise tax dwarfs every optimisation below.
• A flexible spending account with a December 31 plan year. Spend it. Forfeited money has a 100 percent cost.
• Giving roughly 1,000 to 5,000 dollars a year to charity and not itemising. Give at least 1,000 dollars, or 2,000 dollars jointly, in cash this year and claim the new non-itemiser deduction.
• Itemising and giving steadily. Consider bunching two years of giving into one to cross the 0.5 percent floor once.
• A year of unusually low income. Look at realising long-term gains inside the zero percent bracket, and at Roth conversions, before income normalises.
• A taxable account holding a loss. Harvest it, respect the 61-day window, and do not let the tax tail wag the portfolio.

What does not work, whatever you have read

Buying something you do not need in order to deduct it is not a tax move, it is a purchase with a discount attached. A 10,000 dollar expense that saves 2,200 dollars in tax still costs 7,800 dollars.

Prepaying expenses achieves nothing if you take the standard deduction, which most filers do. Paying January’s mortgage interest in December only matters when you itemise and the additional interest changes the outcome.

Charitable deductions require an eligible organisation and, from 2026, cash gifts that clear the floor if you itemise. Giving to an individual, however deserving, is not deductible.

And the deadline for almost all of this is the end of the calendar year, not the April filing date. By the time a tax return is being prepared, the only 2026 moves still available are the IRA and HSA contributions in the table above. That is the honest reason this list exists in September rather than March.

Where these figures come from

• Internal Revenue Service, Notice 2025-67, 2026 Amounts Relating to Retirement Plans and IRAs
• Internal Revenue Service, Revenue Procedure 2025-32, inflation adjustments for tax year 2026
• Internal Revenue Service, Revenue Procedure 2025-19, 2026 health savings account and high deductible health plan limits
• Internal Revenue Service, Working Families Tax Cuts provisions and Schedule 1-A material
• Internal Revenue Service, Retirement plan and IRA required minimum distributions FAQs
• Internal Revenue Service, Topic no. 409, Capital gains and losses, and Publication 550
• Treasury and IRS final regulations on catch-up contributions, September 2025
• Tax Foundation, analysis of charitable deduction changes under the 2025 tax law

General information, current as of September 2026, and not personalised tax advice. Limits and thresholds change annually and several provisions above are scheduled to expire after 2028; check the primary sources or a tax professional before acting.