Year-End Tax Planning 2026: The Decisions That Can’t Wait Until January
By Trinity Wealth Advisors
Every year, the holidays arrive a little faster than expected. One minute it’s early November and December 31 feels comfortably far away. The next, the turkey is carved, the travel is booked, the inbox is full of holiday sales, and the year is down to its final few weeks.
That’s usually when someone remembers the tax question they meant to ask back in October.
It happens to almost everyone, and there’s no shame in it. Life is full. Still, many of the most valuable tax planning decisions share one stubborn feature: they have to be made and completed before the year ends. Once January 1 arrives, the opportunity for 2026 is simply gone.
Here’s a look at the year-end decisions that may make a real difference, and why it pays to start the conversation now rather than in the last week of December.
Why Do So Many Tax Planning Opportunities Expire on December 31?
Most tax rules look at what happened during the calendar year. A trade placed on December 31 counts for 2026. The same trade placed on January 2 counts for 2027, no matter how good the intentions were.
The calendar is also shorter than it looks. Between Thanksgiving, holiday travel, and the quiet week between Christmas and New Year’s, there may be only a handful of truly usable business days left. Custodians, charities, and payroll departments often set their own cutoffs well ahead of December 31, and transfers of appreciated stock can take longer than expected.
In other words, “we’ll deal with it in December” can quietly turn into “we’ll deal with it next year.”
Is There Still Time for Tax-Loss Harvesting in 2026?
There is, though the trades generally need to happen by December 31 to count for this tax year.
Tax-loss harvesting means selling an investment in a taxable account that has lost value to realize the loss, which may then offset capital gains elsewhere. If losses exceed gains, up to $3,000 per year can generally offset ordinary income, with the rest carried forward.
A few details deserve care. The wash-sale rule disallows the loss if a substantially identical investment is bought within 30 days before or after the sale, including in a spouse’s account or an IRA. Selling purely for tax reasons can also pull a portfolio away from its intended risk level.
Missouri residents get a local twist. Starting with the 2025 tax year, Missouri generally no longer taxes individuals’ capital gains, so harvesting is now mostly about the federal return.
Should Income Be Deferred Into 2027 or Accelerated Into 2026?
Sometimes the most valuable tax question is simply “this year or next?”
A family expecting lower income in 2027, perhaps due to retirement or a planned business slowdown, may benefit from deferring a bonus, invoice, or other income into January. A family expecting higher income next year might do the opposite. Deductions work the same way in reverse.
Either way, the decision has to be made before December 31. A simple side-by-side projection of both years usually shows which direction makes sense.
Is a Roth Conversion Worth Doing Before Year-End?
Converting part of a traditional IRA to a Roth IRA means paying income tax now in exchange for the potential of tax-free qualified withdrawals later. Unlike IRA contributions, which can often be made up to the April filing deadline, a conversion must be completed by December 31 to count for 2026.
For someone in a lower-income year, such as the stretch between retirement and Social Security, a partial conversion may be worth evaluating. Sizing matters, too. Picture a newly retired couple who converts a large amount in December, feels great about it, and then opens a letter two years later announcing higher Medicare premiums tied to that year’s income. Nobody enjoys that kind of mail.
Conversions can’t be undone, so the numbers deserve a careful look with a tax professional before the window closes.
How Do the 2026 Charitable Deduction Changes Affect Bunching and Donor-Advised Funds?
Under the One Big Beautiful Bill Act, new rules took effect this year:
- Itemizers can deduct only the charitable gifts above 0.5% of adjusted gross income (AGI).
- Taxpayers who take the standard deduction may deduct up to 1,000(2,000 for joint filers) in cash gifts to qualifying public charities, though gifts to donor-advised funds don’t qualify.
- For those in the top bracket, the tax benefit of itemized deductions is capped at 35%.
These changes may make “bunching” more appealing. Consider a hypothetical couple with $200,000 of AGI who give $5,000 a year. The first $1,000 of each year’s giving generally isn’t deductible. If they contribute $15,000 to a donor-advised fund in one year to cover three years of giving, they’d run into the floor once instead of three times, and their charities could still receive grants on the usual schedule.
For IRA owners age 70½ or older, a qualified charitable distribution (QCD) of up to $111,000 per person may be an even more efficient route.
Every one of these gifts must be completed by December 31, and gifts of appreciated stock can take extra time to process.
What Retirement Plan Options Should Business Owners Review Before Year-End?
For business owners, qualified retirement plans can be one of the most powerful tax planning tools available. A 401(k) with profit sharing, or a cash balance plan layered on top, may allow significantly larger tax-deductible contributions than individual accounts alone. In 2026, total contributions to a defined contribution plan can reach $72,000 per participant, not counting catch-up contributions.
Here’s an important nuance. Under the SECURE Act, many new plans can be established as late as the business’s tax filing deadline. That flexibility is real, yet several key decisions still depend on what happens before December 31:
- Employee salary deferrals generally must come out of pay received during the year.
- For S-corporation owners, contributions are typically based on W-2 wages, so owner salary decisions need to run through 2026 payroll.
- Cash balance plans require actuarial design, which takes time and affects cash flow planning.
Waiting until April may still be possible for some plans, though it often means fewer options and less room to get the design right.
Why Should Year-End Tax Decisions Be Made Together?
The bigger opportunity often shows up in how these moves interact. A Roth conversion raises income, which could make a larger charitable gift more valuable in that same year. A business owner’s plan contribution could create room for a conversion. Handled separately, these moves can work against each other. Coordinated, they can support each other.
That’s the heart of what we call Life-Wealth Planning at Trinity Wealth Advisors. Led by founding partner Jim Matush, our team brings over 100 years of combined experience to these conversations, and one lesson keeps coming up: every money decision is tied to the people a family loves, the causes that matter to them, and the season of life they’re in.
What Should Families and Business Owners Do Before the Holidays Take Over?
Nobody needs to do everything here. The goal is to ask the right questions while there’s still time to act on the answers:
- Have realized gains been reviewed against any losses worth harvesting?
- Would shifting income between 2026 and 2027 help?
- Does a partial Roth conversion make sense at this year’s income?
- How do the new charitable deduction rules affect this year’s giving?
- For business owners, is the retirement plan doing as much as it could?
By the time the Thanksgiving leftovers are gone, roughly five weeks remain in the year. A short conversation now may be the difference between acting on an opportunity and reading about it next April.
Our team would be glad to help sort out which year-end decisions may matter most for your situation, in coordination with your CPA. Call us at 314-966-0033 ext. 101 to schedule a year-end tax review.
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