The calendar is running out on 2026. And while most of us are busy preparing for the holidays, there's something else worth preparing for: your financial future.
The final weeks of the year offer a rare opportunity. By now, you should have a pretty good idea of your income, investments, and tax situation. That clarity, combined with a few deadlines that arrive on December 31, creates opportunities to save on taxes, make better financial decisions, and set yourself up for 2027 and beyond.
Here are six moves worth considering before the ball drops:
1.Manage Your Tax Bracket--Today and Tomorrow
The tax code has perhaps never been friendlier to middle-class Americans. Unfortunately, it may never have been more complicated. These two things go together. It's called a code for a reason, and if you take the time to crack it and apply it to your situation, it can pay off.
Tax planning is a year-round endeavor, but the final weeks of the year offer two advantages: deadlines and clarity.
Some opportunities disappear when the calendar turns to January. Just as important, by November or December, you should have a pretty good idea of your income from work, bonuses, retirement distributions, dividends, interest, and capital gains.
That gives you an opportunity to make some deliberate choices rather than letting the tax code make them for you.
Bump that Bracket
A great place to start is figuring out the tax bracket in which you currently reside. You can then determine if there are benefits to realizing more income in this bracket or if you should make moves to downshift into a lower bracket.
A couple with $100,000 of expected adjusted gross income, for example, would be in the 12 percent bracket, a truly lovely place to be. (Here the AGI stands also for All Goes In.) At this point, the federal government taxes dividends and capital gains at my favorite rate, zero percent. If a couple is under 65 and elects the standard deduction, they could realize $33,000 additional dollars of income prior to moving up 10 percent to the 22 percent bracket.
If they are over 65 and eligible for the added senior deductions, they could realize an additional $47,500 and retain all their deductions.
Realizing this income this year is especially valuable if you expect to be in the higher bracket later due to Required Minimum Distributions (RMD) or other predictable income.
You can achieve this by either manufacturing more income or realizing investment gains. Converting a portion of your pre-tax IRA to a Roth IRA is a classic example of manufacturing income and it works well for people who do not expect to need the funds to spend in the coming year. If the government keeps its promise on these accounts, this money will be available income-tax-free for you and your heirs.
You may expect to need it in 2027 perhaps for a trip to Europe or a new roof. If this is the case, just take it and put it in the bank.
2. Invest Some Time in Your Investments
We manage our clients’ investments year-round with systematic rebalancing and situational tax harvesting. Still, year-end requires special attention, especially for taxable accounts.
By November, you should have a good read on the expected total dividends for the year, as well as potential capital gains distributions from mutual funds. This allows you to determine your long term capital gains and dividend tax rates. They are the same and will: 0, 15 or 2 percent ith a 3.8 percent additional surcharge for singles with income over $200,000 and married couples with income over $250,000. (Notice the marriage penalty.)
Selling investments that have declined in value to offset realized capital gains is a familiar tax-saving strategy. It's called tax-loss harvesting.
Sometimes It Pays to Sell Your Winners
But here's something less obvious. Sometimes it makes sense to sell your winners.
If your income puts you in the zero percent federal capital gains bracket, you may be able to realize gains without paying any federal capital gains tax. If you still like the investment, you can buy it back, establishing a higher cost basis that could reduce taxes when you eventually sell.
It's a case where paying attention to your tax bracket can make your investments more tax-efficient.
Your taxes will be zero at the federal level. Results by state will vary. We do not provide tax advice, so you will want to run strategies by the professional who handles your taxes.
What should you do with the proceeds? If you need the cash, spend it in the coming year. If not, reinvest it in comparable securities and establish a new and higher cost basis.
3. A Time to Give
Giving to both charities and to family is a calendar year affair as far as the tax code is concerned. Now is the time to consider your giving goals for this year and beyond.
Give to Charity, Give Yourself a Break
Single filers can deduct up to $1,000 in gifts (must be cash) even if they don’t itemize. Couples can deduct $2,000.
People who are at least 70.5 years old can make Qualified Charitable Deductions (QCDs) right from their IRAs. This has the benefit of not increasing your AGI on your tax return. (As previously noted, you will want to consult a qualified tax professional on the details of all tax strategies.)
Give to Your Family — Before the Calendar Turns
When it comes to family, keep in mind that your $19,000 annual gift exclusion is a calendar year exclusion. So, for example, if you and your spouse wanted to provide $50,000 for a child’s downpayment in 2027, you could give half of it in 2026 and the other half in 2027, using part of each year’s combined $38,000 exclusion for two eligible spouses and one recipient. This would avoid exceeding the $38,000 limit in 2027.
For funding investment accounts, the calendar year deadline applies to Section 529 contributions as well as the newly created Section 530a Trump Accounts.
4. Check Your Retirement Accounts
Retirement accounts play by their own rules, and the calendar matters.
You generally have until the following year's tax-filing deadline to make an IRA contribution for the prior year. But contributions through payroll to a workplace retirement plan generally must be made during the year.
If you're trying to maximize your 401(k), 403(b), or other workplace plan contributions, now's the time to make sure you're on track.
If you’re over 50, don’t forget the catch up of $8,000. If you’re 60 to 63, you have the super catch up of $11,250.
If you’re subject to RMDs, now’s the time to make sure you’ll have the correct amount out. Don’t forget your inherited accounts, which are subject to a different set of rules.
5. Watch Out for Hidden Tax Traps
The current tax code can be extremely generous to middle-class millionaires. But some of these benefits come with traps.
One More Dollar Costs You
Make a little too much income, and a deduction can shrink or disappear. Cross another threshold, and you could find yourself paying considerably more for Medicare.
That's why knowing your tax bracket is only part of the story. You also need to know what happens when your income crosses certain lines.
These include:
- The enhanced deduction for seniors is $6,000 per person over age 65, but starts to phase out for individuals at $75,000 of income and for married couples at $150,000.
- The zero percent tax on long-term capital gains and qualified dividends tops out at $49,450 of taxable income for singles and $98,900 for married couples filing jointly. Remember that your standard or itemized deduction goes on top of this.
- The phaseout for state income tax breaks varies by state. In Connecticut, for example, pension and retirement plan distributions are excluded for singles with income under $75,000 and for married couples with income under $100,000. After that, the exclusion starts to phase out. (Again, there’s a substantial penalty for being married.)
- On the penalty side, focus on both Social Security and Medicare. More modest earners will want to avoid realizing income that would cause more of their Social Security benefit to be subject to federal income tax. For people who earn too much, they will find their Medicare premiums will increase two years in the future because of the Income Related Medicare Adjustment Amount (IRMAA). This is a cliff penalty. One dollar in additional income could cause you to pay more than $1,000 in extra annual premium.
6. Don’t Win the Tax Battle and Lose the Estate Transfer War
Ponder this. You can spend a lifetime making the right investment and tax decisions. You can carefully manage your income, minimize taxes, rebalance your investments, and grow your wealth.
And then blow it at the end. How? By leaving retirement accounts to the wrong beneficiaries. By creating trusts and never funding them. Or by leaving money outright to a loved one with special needs, potentially jeopardizing the government benefits they depend on.
These aren't little mistakes. They can cost families tens of thousands of dollars, sometimes much more.
Don't let that happen. Before the year ends, take a few minutes to review your beneficiaries, estate documents, and trusts. Make sure your money will go where you intend it to go.
If you work with us, make sure we have a copy of your estate plan. We will document your beneficiaries for you.
An Attitude of Gratitude
I've spent this article discussing ways to make the most of your money before the year ends. But as Thanksgiving approaches, I'd like to turn our attention to something more important: making the most of what we already have.
Years ago, sports psychologist and motivational speaker Dr. Kevin Elko made a tremendous impression on me with a simple thought which I’m told he sourced from the Book of Job.
Imagine that yesterday you lost everything you had. Your home, your money, your health, your family and friends. Today, you got it all back. Wouldn't this be the best day of your life?
Yet here we are, with so much of that already in our lives, and we sometimes forget how fortunate we are.
Elko also reminded his audience that somewhere, someone is lying in a hospital bed praying for the opportunity to have the day we're having right now.
I've tried to incorporate that lesson into my life: to be grateful for the experiences I've enjoyed, the things I have, and, most importantly, the people who make it all worthwhile.
Listing everyone I'm grateful for would take another essay, and you've already read enough of this one.
So I'll simply say thank you. Thank you for being part of my financial planning journey and for allowing our team to be part of yours.
Enjoy Thanksgiving. Bask in an attitude of gratitude. And remember to enjoy the wealth you already have.