Year-End Tax Moves to Make Before December 31

Most tax moves for 2026 have to be finished by December 31, 2026: selling investments to harvest losses or gains, Roth conversions, required minimum distributions and qualified charitable distributions, charitable gifts, 401(k) deferrals, prepaying assessed state and local taxes, and placing business equipment in service. A few can wait until April 15, 2027: IRA and HSA contributions for 2026 and fixing excess contributions. This guide lists each move with its deadline, the 2026 threshold that decides whether it helps, and a worked example.

All 2026 figures come from IRS Rev. Proc. 2025-32 (inflation adjustments for 2026) unless another source is cited. The One Big Beautiful Bill Act changed several of these rules starting in 2026, so last year's checklist is out of date on charitable gifts, SALT and depreciation. The 2026 tax changes guide covers the law changes in full.

Year-end tax checklist: what has a December 31 deadline?

Before you act on any of these, estimate your full-year 2026 income first. Almost every move on the list depends on which bracket, phase-out or cliff your income falls in, and a December decision made on a guess is hard to undo. The tax refund calculator gives a full-year Form 1040 estimate, and the MAGI calculator shows the income figure that drives most phase-outs.

Should I harvest tax losses before the end of the year?

Selling an investment that is worth less than you paid locks in a capital loss. Losses first offset capital gains; if losses are larger, up to $3,000 ($1,500 married filing separately) of the net loss offsets ordinary income each year, and the rest carries forward with no time limit (IRS Topic 409).

Worked example. A single filer with about $90,000 of taxable income (22% bracket) sold a fund earlier in 2026 for a $10,000 long-term gain. In December they sell another fund at a $13,000 long-term loss.

• The loss wipes out the $10,000 gain: $10,000 × 15% = $1,500 of capital gains tax avoided.
• The remaining $3,000 offsets wages: $3,000 × 22% = $660 saved.
• Total 2026 tax saved: $1,500 + $660 = $2,160. No loss is left to carry forward.

The wash sale rule is where most harvests go wrong. A loss is disallowed if, within 30 days before or after the sale, you buy substantially identical stock or securities (or a contract or option to buy them), acquire them for your IRA or Roth IRA, or your spouse buys them (IRS Pub. 550). An automatic dividend reinvestment in the same fund counts as a purchase. The disallowed loss normally moves into the basis of the new shares, but when the repurchase happens inside an IRA, the loss is gone for good. Crypto has its own wrinkles, covered in crypto tax-loss harvesting.

Harvesting saves the most when the loss offsets short-term gains (taxed at your ordinary rate) or gains that would otherwise push you into the 3.8% net investment income tax. It saves little if your gains would have been taxed at 0% anyway, which leads to the opposite move.

When does it make sense to harvest capital gains instead?

If your 2026 taxable income, including the gain, stays at or below the top of the 0% bracket, long-term gains and qualified dividends are taxed at 0%. Selling and immediately buying back resets your cost basis higher at no federal tax cost. The wash sale rule only applies to losses, so you can repurchase the same fund the same day.

Worked example. A married couple filing jointly expects $70,000 of taxable income in 2026 (after the $32,200 standard deduction) with no other gains. Room at 0%: $98,900 − $70,000 = $28,900. They can realize up to $28,900 of long-term gains and pay no federal tax on them. A gain of $35,000 would put $6,100 in the 15% bracket: $6,100 × 15% = $915.

Two cautions. Gains are taxable income for your state in most states. And the gain raises your AGI, which can cost you elsewhere: the ACA premium tax credit, the taxable share of Social Security, and the senior deduction phase-out all key off income that includes the gain. More ways to cut the rate are in capital gains tax strategies.

Is a December Roth conversion a good idea?

A conversion moves money from a traditional IRA to a Roth IRA; the converted pre-tax amount is taxed as ordinary income in the year the money leaves the traditional IRA. It must be done by December 31 to count for 2026, and it is final: conversions made after 2017 can't be recharacterized back (IRS Pub. 590-A). That makes December the natural time to convert, because by then you know most of your income.

The usual rule is to "fill" a bracket, converting only up to its top. For a single filer in 2026, the 22% bracket covers taxable income from $50,400 to $105,700, and the 24% bracket runs to $201,775.

Worked example. A single filer expects $80,000 of 2026 taxable income.

• Room left in the 22% bracket: $105,700 − $80,000 = $25,700.
• Tax on a $25,700 conversion: $25,700 × 22% = $5,654.
• Converting $40,000 instead: $25,700 × 22% + $14,300 × 24% = $5,654 + $3,432 = $9,086.

Pay the tax from outside the IRA if you can; tax withheld from the conversion itself never reaches the Roth, and under 59½ the withheld part can also be hit by the 10% early-distribution tax. Model your own numbers in the Roth conversion calculator, and see Roth conversion tax strategies for multi-year planning.

Conversions and the ACA subsidy cliff

If you buy health insurance on HealthCare.gov or a state marketplace, check the cliff before converting. The enhanced subsidies expired after 2025, so for 2026 coverage a household above 400% of the poverty line gets no premium tax credit at all, and any advance credit already paid is repaid in full with Form 8962. For one person in the 48 contiguous states and DC that line is $62,600 of 2026 household income.

Worked example. A single marketplace enrollee with $60,000 of 2026 income converts $5,000 in December. Income becomes $65,000, which is above $62,600, so every dollar of the year's advance credit must be paid back. The ACA premium tax credit calculator shows how far you are from the line. Open enrollment for 2027 coverage runs November 1 to January 15, and you must enroll by December 15 for coverage starting January 1 (HealthCare.gov); the income you project for 2027 on that application decides next year's advance credit.

Have you taken your required minimum distribution?

If you are 73 or older, your 2026 required minimum distribution (RMD) from traditional IRAs and most workplace plans is due by December 31, 2026. The one exception is your first RMD: if you turn 73 in 2026, you can wait until April 1, 2027 (IRS Pub. 590-B). If you are still working and don't own more than 5% of the employer, most workplace plans let you delay RMDs from that employer's plan until April 1 of the year after you retire, and designated Roth accounts in 401(k) and 403(b) plans have no lifetime RMDs (IRS Pub. 575). IRAs get neither break. Delaying it means taking two RMDs in 2027 (the 2026 one by April 1 and the 2027 one by December 31), which can push you into a higher bracket.

Missing an RMD costs a 25% excise tax on the amount not taken, cut to 10% if you take the shortfall and file a return reporting the tax within the correction window (Pub. 590-B). On a missed $20,000 RMD that is $20,000 × 25% = $5,000, or $20,000 × 10% = $2,000 if corrected in time. You can also request a waiver for reasonable error on Form 5329.

The RMD calculator uses the IRS Uniform Lifetime Table and your December 31, 2025 balance. If you inherited an IRA, your rules are different: when the owner died on or after their required beginning date, most beneficiaries owe an RMD in each of years 1 to 9 of the 10-year period, and 2026 is the second year the IRS enforces it. The inherited IRA RMD calculator works out that amount.

Give from the IRA with a qualified charitable distribution

From age 70½ you can send up to $111,000 in 2026 directly from an IRA to a charity as a qualified charitable distribution (QCD) (IRS Notice 2025-67). It counts toward your RMD but is left out of your income entirely. That is usually better than taking the RMD and donating it, because a lower AGI also lowers the share of Social Security that is taxed, helps keep you under the senior deduction phase-out and Medicare IRMAA tiers, and avoids the new 0.5% charitable floor (below). The money must go straight from the IRA custodian to the charity by December 31; donor-advised funds, supporting organizations and most private foundations can't receive a QCD.

How did charitable deductions change for 2026, and should you bunch gifts?

Three changes took effect for tax years starting in 2026 under 26 U.S.C. §170 and §68:

A gift counts in the year it is delivered: a mailed check on the day you mail it, a credit card gift on the day of the charge (IRS Pub. 526). Stock is delivered when it is transferred into the charity's account, which can take days, so start transfers well before December 31.

Bunching means giving two years' worth in one year so you itemize that year and take the standard deduction the next. The floor makes it more valuable, because you lose 0.5% of AGI once instead of twice.

Worked example. A married couple filing jointly with $200,000 of AGI has $15,000 of state and local taxes and $12,000 of mortgage interest ($27,000 before gifts) and gives $8,000 a year. Their floor is $200,000 × 0.5% = $1,000. Using 2026 figures for both years for illustration:

• Give $8,000 each year: each year they itemize $27,000 + ($8,000 − $1,000) = $34,000. Two years: $68,000.
• Give $16,000 in 2026, nothing in 2027: 2026 itemized = $27,000 + ($16,000 − $1,000) = $42,000; 2027 standard deduction $32,200. Two years: $74,200.
• Extra deductions from bunching: $74,200 − $68,000 = $6,200. At their 22% bracket: $6,200 × 22% = $1,364 less tax.

A donor-advised fund lets you take the bunched deduction in December and send grants to charities over time. Giving appreciated stock held more than a year lets you deduct its market value without paying tax on the gain. Larger plans, such as a charitable remainder trust, are covered by the CRT calculator, and high earners should read the 37% bracket itemized deduction limit.

Should you prepay state and local taxes before December 31?

For 2026 the SALT deduction cap is $40,400 ($20,200 married filing separately). It shrinks by 30% of modified AGI above $505,000, but never below $10,000 ($252,500 and $5,000 if married filing separately) (26 U.S.C. §164(b)(7)). Paying in December only helps if you itemize and are still under your cap.

Two prepayments work. A fourth-quarter state estimated payment made in December is deductible for 2026. Property tax is deductible in the year you pay it only if it has already been assessed; paying next year's bill before the county assesses it is not deductible (IRS IR-2017-210).

Worked example of the phase-down. With 2026 MAGI of $555,000, the cap is $40,400 − 30% × ($555,000 − $505,000) = $40,400 − $15,000 = $25,400. The cap hits the $10,000 floor at $505,000 + ($30,400 ÷ 0.30) = $606,333 of MAGI. Inside that band, each extra $1,000 of income also removes $300 of deduction, so someone who pays more SALT than the cap faces about 32% × 1.3 = 41.6% federal tax on that income in the 32% bracket, or 35% × 1.3 = 45.5% in the 35% bracket. A Roth conversion, bonus or capital gain that lands in the band costs more than it looks; deferring it, or a QCD that lowers AGI, saves more.

State and local taxes are not deductible for the alternative minimum tax, so a prepayment can be wasted if you owe AMT for 2026. That is more likely this year for high earners, because the AMT exemption now phases out at 50 cents per dollar above $500,000 of AMT income ($1,000,000 joint). Exercising incentive stock options in December raises the same question; run both through the AMT calculator first.

What should business owners do before year-end?

Equipment, vehicles and software count for 2026 only if they are placed in service (ready and available for use) by December 31; paying for them is not enough.

• Section 179: up to $2,560,000 of qualifying property can be expensed for 2026, reduced dollar for dollar once purchases exceed $4,090,000 (Rev. Proc. 2025-32). The SUV limit is $32,000. The Section 179 deduction also can't exceed your taxable income from active businesses; the excess carries forward (26 U.S.C. §179(b)(3)). Bonus depreciation has no such income limit.
• Bonus depreciation: 100% for qualified property acquired after January 19, 2025 (26 U.S.C. §168(k)).

Worked example. A sole proprietor in the 24% bracket places a $30,000 machine in service on December 20, 2026 and expenses it. Income tax saved: $30,000 × 24% = $7,200, plus self-employment tax savings. Delivered on January 5 instead, the deduction moves to 2027. Compare expensing with regular depreciation in the MACRS depreciation calculator and the MACRS guide.

Cash-method businesses can also shift income: invoices sent in late December and paid in January are generally 2027 income, and expenses paid in December are generally 2026 deductions, though prepaying a benefit that runs more than 12 months ahead usually is not. The QBI deduction calculator shows whether a lower 2026 profit changes your 20% pass-through deduction.

Retirement contributions: which deadlines are December 31 and which are April 15?

401(k), 403(b) and governmental 457(b) deferrals must come out of 2026 paychecks. The 2026 limit is $24,500, plus $8,000 at 50 or older, or $11,250 instead if you turn 60 to 63 in 2026 (IRS Notice 2025-67). If you are behind, raise your deferral percentage for the last paychecks now; many payroll systems need a full cycle to apply a change. If your 2025 FICA wages from your employer topped $150,000, your 2026 catch-up has to go in as Roth. Full details: 401(k) and IRA contribution limits.

Changed jobs this year? The $24,500 limit is per person across all your 401(k), 403(b) and SIMPLE plans, even with different employers; a governmental 457(b) has its own separate limit. If you went over, notify the plan by its own deadline (often early March) so it can pay out the excess plus earnings by April 15, 2027; left in the plan, the excess is taxed twice, once in 2026 and again when it is distributed (IRS Pub. 525).

IRA and HSA contributions for 2026 can be made until April 15, 2027: $7,500 for an IRA ($8,600 at 50+), and $4,400 self-only / $8,750 family for an HSA, plus $1,000 if you are 55 or older. Check Roth eligibility with the Roth IRA calculator. If you already put too much into a Roth IRA, withdrawing the excess and its earnings by your filing deadline (with extensions) avoids the 6% excise tax for 2026 (Pub. 590-A); the excess Roth IRA contribution fix walks through it.

Gifts, FSAs and other use-it-or-lose-it items

• Annual exclusion gifts: each person can give $19,000 to any number of people in 2026 without using their lifetime exemption or filing a gift tax return. A married couple can give $38,000 per recipient by electing gift splitting on Form 709. The exclusion doesn't carry over: an unused 2026 exclusion is gone on January 1. See how the gift tax works.
• Health FSA: the 2026 limit is $3,400. Unused money is forfeited unless your plan allows a carryover (up to $680 into 2027) or a grace period of up to 2½ months (IRS Pub. 969); a plan can offer one or the other, not both. Check which your plan has before December. The FSA guide covers eligible expenses and 2027 elections.
• 529 plan contributions: a gift to a 529 uses the $19,000 exclusion, and you can elect to spread a gift of up to five years' exclusions ($95,000 in 2026) over five years on Form 709 (26 U.S.C. §529(c)(2)(B)). If your state gives a deduction for contributions, check its deadline; it is set by the state, not the IRS. Compare a 529 with a custodial account in the 529 vs UTMA calculator.
• Dependent care FSA for 2027: open enrollment is when you choose next year's election. The limit is $7,500 per household ($3,750 married filing separately) from 2026, up from $5,000 (IRS Pub. 15-B).
• Opportunity zone deferrals: gain deferred into a qualified opportunity fund under the original rules is included in income on December 31, 2026 if you haven't sold the investment earlier (26 U.S.C. §1400Z-2(b)(1)). That gain shows up on your 2026 return, so include it in your income estimate and your December withholding.
• Marriage or divorce: your filing status for all of 2026 depends on whether you are married on December 31 (IRS Pub. 501). A December wedding means filing as married for the whole year.

Can you still fix underpaid taxes in December?

You avoid the underpayment penalty if withholding plus timely estimated payments cover the smaller of 90% of your 2026 tax or 100% of your 2025 tax (110% if your 2025 AGI was over $150,000, or $75,000 married filing separately) (Form 1040-ES (2026)). There is also no penalty if you owe less than $1,000 after withholding and credits. The fourth-quarter estimated payment is due January 15, 2027.

Withholding is the better tool in December. Federal income tax withheld is treated as paid evenly through the year unless you choose to use the actual dates (Form 2210 instructions), so a large withholding from your last paycheck, or from an IRA distribution such as your RMD, also covers the April, June and September installments you missed. A January 15 estimated payment only counts from that date and leaves earlier quarters short. Use the tax withholding calculator to size the extra amount, and see how to pay quarterly estimated taxes for the payment schedule.

Common year-end mistakes

1. Repurchasing too soon after a loss sale, including through dividend reinvestment or in an IRA. The loss is disallowed, and in the IRA case lost permanently.
2. Converting to Roth without checking the cliffs. One conversion can cost the entire ACA credit, push Social Security into taxation, or land in the SALT phase-down band.
3. Delaying the first RMD to April 1 without planning for two RMDs in the following year.
4. Bunching gifts without itemizing. If your itemized total in the bunched year still doesn't beat the standard deduction, you get at most the $1,000/$2,000 non-itemizer deduction for the bunched gifts and nothing in the empty year.
5. Prepaying property tax that hasn't been assessed, or paying more SALT when you are already over the cap.
6. Buying equipment in December that isn't delivered and set up until January.
7. Taking a QCD as a regular distribution first. The check must go from the IRA custodian to the charity; a distribution you receive and then donate is taxable income.

What to do next

1. Estimate full-year 2026 income with the tax refund calculator and your exact bracket with the federal tax bracket calculator.
2. Mark which cliffs and phase-outs apply to you (0% capital gains, 400% ACA line, SALT band, NIIT at $200,000 single / $250,000 joint, senior deduction).
3. Do the irreversible moves last, once your income is clear: Roth conversions and gain harvesting.
4. Book the moves that need processing time early in December: stock gifts, QCDs, payroll deferral changes and RMDs.
5. Put the April 15, 2027 items (IRA, HSA, excess contribution fixes) on your filing-season list.

More guides on brackets, deductions and filing are on the income tax basics hub. This guide is general information based on federal law for tax year 2026; state rules differ, and your own return depends on facts this page can't see.