Year-End Planning Checklist for 2026: What to Do Before December 31

There are a little over nine weeks left in the year. Most of the moves that can change your 2026 tax bill have to be finished by December 31, and a lot of them can't be reversed once they're done.

This year is different from the last several. 2026 is the first full year under the tax law signed in July 2025, usually called the One Big Beautiful Bill Act, and several of the rules that matter most to high earners and larger estates changed on January 1: the charitable deduction, the estate exemption, and a new limit on itemized deductions for people in the top bracket. The state and local tax cap moved again too.¹ Some of the old year-end playbook still works. Some of it doesn't. We covered the law itself in What the One Big Beautiful Bill Act Means for Retirees and High Earners; this post is about what to do with it before the calendar turns.

It's written for people with real money in play: high earners, business owners, families with estates near the exemption, and anyone who retired in the past year or two or plans to soon. It's long. Skip to the sections that apply to you.

Start with a projection, not a to-do list

Almost every decision below depends on one number: where your 2026 taxable income is going to land. Before you convert, sell, give, or defer anything, get a rough projection done. Your tax preparer can run one in an hour, and the cost of guessing wrong is a lot higher than the cost of asking.

Why start there? Because the lines that matter are close together, and crossing one by accident is expensive. Here are the 2026 thresholds that come up most for this audience (married filing jointly, with single in parentheses):

• The 32% bracket starts at $403,550 of taxable income ($201,775). The 37% bracket starts at $768,700 ($640,600).²
• Long-term capital gains and qualified dividends are taxed at 0% up to $98,900 of taxable income ($49,450), 15% up to $613,700 ($545,500), and 20% above that.³
• The 3.8% net investment income tax applies once modified adjusted gross income passes $250,000 ($200,000). Those thresholds aren't indexed for inflation, so they catch more people every year.⁴
• The alternative minimum tax exemption starts phasing out at $1,000,000 of AMT income ($500,000).³
• If you're in the 37% bracket, your itemized deductions are now trimmed. The reduction is 5.4% of the lesser of your total itemized deductions or the amount your taxable income exceeds the 37% threshold. In plain numbers, a deduction is worth about 35 cents on the dollar instead of 37.⁵
• If you're on Medicare, or will be within two years, your 2026 income sets your 2028 premiums. More on that below.

We like to leave a buffer under whichever line matters most, because projected income has a way of coming in a little higher than expected once the last 1099 shows up.

One more thing while you have the projection open: check your estimated payments. If your 2025 adjusted gross income was over $150,000, you avoid an underpayment penalty by paying in at least 110% of your 2025 tax (or 90% of your 2026 tax, if that's less) through withholding and estimates. The last 2026 estimate is due January 15, 2027.⁵ A large Roth conversion or a big gain in December can leave you short if the payments weren't adjusted for it.

Roth conversions: the December 31 deadline is real

A Roth conversion counts in the year the money leaves the traditional IRA. There's no extension to April, and since 2018 there's been no way to undo one.⁶ Many custodians also set internal processing cutoffs in December so the transfer settles in time, which means "I'll handle it the last week of the year" is usually a plan to miss it.

The usual approach is to fill a bracket. Say a married couple expects $150,000 of taxable income in 2026. The 24% bracket runs to $403,550, so they could convert roughly $253,000 before any of it is taxed at 32%.² Whether they should is a separate question that depends on their future bracket, where the money to pay the tax comes from, and how long the Roth will stay invested. We walked through that math in When and How to Do a Roth Conversion.

Two things that get missed:

Medicare looks back two years. Your 2026 modified adjusted gross income determines your 2028 Part B and Part D premiums. For 2026, the surcharges start above $109,000 for a single filer and $218,000 for a joint filer (based on 2024 income), and at the top tier the Part B premium alone is $689.90 a month per person instead of $202.90.⁷ One large conversion that triggers a surcharge for a single year can still be the right move. It just needs to be a decision rather than a surprise. If you aren't on Medicare yet, count backward: the year you enroll, minus two, is the first year of income that counts. Our post on IRMAA in 2026 has the full bracket table.

The conversion needs a funding source. Paying the tax out of the IRA itself shrinks the benefit, and if you're under 59½ the amount withheld for taxes is treated as an early distribution.⁶ People who do this well have the cash sitting in a taxable account before they start.

If you retired this year or last, you're in the window

The years after the paycheck stops and before Social Security and required distributions begin are often the lowest-income years a person will ever have. That isn't a problem. It's an opening.

A married couple living on cash and a brokerage account might show $60,000 of taxable income in 2026. Long-term gains are taxed at 0% up to $98,900 for joint filers,³ so they could sell appreciated holdings and realize just under $39,000 of gain without paying federal tax on it. The point isn't to spend the money. It's to buy the same investment back immediately at a higher cost basis. The wash sale rule only applies to losses, not gains.⁸ The same income room can be used for Roth conversions instead, and the right answer is usually some of each.

Two dates for this group. Medicare's open enrollment runs October 15 through December 7, and changes take effect January 1.⁹ And if you turned 73 this year, your first required distribution can wait until April 1, 2027, but your second one is still due December 31, 2027. That stacks two taxable distributions into one year.¹⁰ Taking the first one in 2026 is often the cleaner choice.

Retirement accounts: the numbers changed, and so did a rule

The 2026 limits are up across the board. Employee deferrals to a 401(k), 403(b), or governmental 457 plan are capped at $24,500. The catch-up for anyone 50 or older is $8,000, and for people who turn 60, 61, 62, or 63 during 2026 it's $11,250, for a total of $35,750. The overall cap on everything else going into a defined contribution plan, including employer money and after-tax contributions, is $72,000, with catch-ups sitting on top of that.¹¹

Here's the rule change. If you're 50 or older and earned more than $150,000 in Social Security wages from your employer in 2025, your 2026 catch-up contributions have to be Roth.¹¹ ¹² That took effect January 1. Two practical consequences: your catch-up is now after-tax money, which changes your tax projection, and if your plan doesn't offer a Roth option, you can't make a catch-up contribution at all.¹³ It's worth pulling a recent paystub to confirm the catch-up is actually going in.

Three other items for this section:

The pro-rata rule is measured on December 31. If you're doing a backdoor Roth contribution this year and you still have pre-tax money in any traditional, SEP, or SIMPLE IRA, the taxable share of your conversion is calculated using those balances as of year-end.¹⁴ Rolling the pre-tax money into a 401(k) before December 31 clears the problem. We covered the mechanics in The Pro-Rata Rule.

Business owners have more room than they think. A new solo 401(k), SEP, or cash balance plan can be adopted as late as the business's tax filing deadline, including extensions,¹⁵ though salary deferrals from W-2 wages still have to run through payroll by December 31. And a cash balance plan has to be designed and documented by an actuary, and that work takes weeks. If you had a strong year and want a six-figure deduction, the conversation needs to happen in November, not March.

HSAs are still the only account that gets all three tax breaks: deductible going in, tax-free growth, and tax-free withdrawals for medical expenses. For 2026 the limits are $4,400 for self-only coverage and $8,750 for family coverage, plus $1,000 if you're 55 or older.¹⁶ You have until the April filing deadline to contribute, but contributions made through payroll also skip Social Security and Medicare tax,¹⁷ so finishing them in 2026 is better than catching up in the spring.

IRA and Roth IRA contributions ($7,500, plus a $1,100 catch-up) aren't due until April 15, 2027.¹¹ They're about the only item on this list that can wait.

Required distributions and QCDs

If you're 73 or older, your 2026 required minimum distribution is due December 31. Miss it and the excise tax is 25% of the shortfall, reduced to 10% if you correct it within two years.¹⁰ The custodian may calculate the amount for you, but the IRS holds you responsible for getting it right.¹⁰ Inherited IRAs have their own rules, and many beneficiaries now owe an annual distribution on top of the 10-year deadline. Our RMD guide goes through all of it.

If you give to charity and you're 70½ or older, a qualified charitable distribution is usually the most tax-efficient way to do it. You can send up to $111,000 directly from your IRA to charity in 2026 (each spouse, from their own IRA), and the amount is excluded from your income entirely.¹¹ It counts toward your RMD, it doesn't require itemizing, it lowers the income Medicare looks at, and because it never shows up as a deduction it isn't touched by the new 0.5% floor described below. There's also a one-time election to send up to $55,000 to a charitable gift annuity or charitable remainder trust.¹¹ The payment has to go from the custodian to the charity and be completed by December 31. We explained the process in How Qualified Charitable Distributions Work.

The taxable account

This is where most of the December activity in our industry happens, and most of it is fine. A few things to get right:

Tax-loss harvesting. Selling a position that's down and replacing it with something similar, but not substantially identical, books a loss you can use against gains, then against up to $3,000 of ordinary income, with the rest carrying forward indefinitely.⁸ The wash sale rule disallows the loss if you buy the same or a substantially identical security within 30 days before or after the sale, and it counts purchases in any of your accounts, including your spouse's and your IRA.⁸ ²⁶ Watch automatic dividend reinvestment, which can trigger it without anyone noticing. The IRS goes by the trade date, not the settlement date, so a sale placed on December 31 counts for 2026.⁸ The bigger picture on keeping taxes off your returns is in Tax-Efficient Investing in 2026.

Mutual fund distributions. Funds pay out their internal gains in December, and you owe tax on them even if you never sold a share and even if you bought the fund the week before. Estimates are usually published in October and November. Don't buy an actively managed fund in a taxable account in December without checking.

Concentrated stock. If you've been putting off selling a large position because of the tax, year-end is when the plan gets made, not when it gets executed. Spreading sales across tax years, pairing them with harvested losses, and giving some of the shares to charity instead of selling them all work better with a calendar in front of you. This is also the problem direct indexing was built to work on.

Rebalance while you're in there. If you're already selling for tax reasons, it's the cheapest moment to fix an allocation that has drifted.

Charitable giving under the 2026 rules

This is the section that changed the most, and plenty of the year-end articles you'll read this fall still describe the old rules.

Three things are new for 2026:¹ ⁵

1. A floor. If you itemize, only the portion of your charitable gifts above 0.5% of your adjusted gross income is deductible. On $600,000 of AGI, the first $3,000 of giving produces no deduction.
2. A cap for the top bracket. If your taxable income is above $768,700 (joint) or $640,600 (single), the tax benefit of your itemized deductions, charitable gifts included, is limited to roughly 35 cents per dollar instead of 37.
3. A deduction for people who don't itemize. Up to $1,000 ($2,000 joint) of cash gifts to public charities can now be deducted on top of the standard deduction. Gifts to donor-advised funds don't count for this one.

What does that mean in practice?

Bunching matters more, not less. The floor applies every year. If you give $40,000 a year on $600,000 of AGI, you lose $3,000 of deduction each year. Put three years of gifts into a donor-advised fund in one year and you hit the floor once; the other two years you take the standard deduction. Cash gifts are deductible up to 60% of AGI and appreciated securities up to 30%, with any excess carrying forward for five years.¹⁸ Our donor-advised fund post walks through how they work.

Stock usually beats cash. Appreciated shares held more than a year can be deducted at full market value, and the capital gain is never taxed.¹⁸ A stock transfer to a charity or a donor-advised fund has to settle by December 31, and in the last two weeks of the year that isn't guaranteed. Start in November.

QCDs skip all of this. They aren't deductions, so neither the floor nor the cap applies.

Gifts and the estate exemption

The annual exclusion is $19,000 per recipient for 2026, or $38,000 from a married couple, and whatever you don't use doesn't carry over.³ A couple with three married children and six grandchildren can move $456,000 out of their estate this year without touching their exemption or filing a return. Checks are the trap: the IRS treats a gift by check as complete when it's deposited, so a check written December 28 and deposited January 3 is a 2027 gift.¹⁹ Have the recipient deposit it before year-end, or send a wire.

Direct payments of tuition or medical bills to the school or provider don't count against the $19,000 and have no limit.²⁰ For grandparents, paying a semester of tuition in December is one of the cleanest moves on this list.

Contributions to a 529 plan can be front-loaded. You can elect to treat up to $95,000 per beneficiary ($190,000 from a couple) as if it were spread over five years. That requires a gift tax return for the year of the gift, even though no tax is due, and the return is due April 15, 2027.²¹

The federal estate and gift exemption is $15,000,000 per person in 2026, $30,000,000 for a married couple, and it's now permanent and indexed for inflation from 2027 on.² ³ We wrote about what that means in The Federal Estate Tax Exemption Just Hit $15 Million. The rush to use exemption before it dropped in half is over. For families well above $30 million, the planning is the same as it was, minus the deadline: lifetime gifts to irrevocable trusts move future growth out of the estate, and a gift completed in 2026 is valued at 2026 prices. That work belongs with your estate attorney, and it doesn't get done in December. If it's on your list, it's a 2027 project. Our post on trusts for high-net-worth families covers the common structures.

One item for trustees: a non-grantor trust hits the 37% bracket at just $16,000 of income in 2026.³ Distributing income to beneficiaries in lower brackets is often the better result, and the tax code gives you until March 6, 2027 to make a distribution that counts for 2026.²² That's not a December deadline, but it does mean the trust's income needs to be tallied early in the new year.

And the item everyone skips: beneficiary designations. Retirement accounts and life insurance pass by designation, not by your will. If anyone in the family has died, divorced, married, or been born since you last looked, look again.

Business owners

A few 2026 items with year-end timing:

• Bonus depreciation is back to 100% for qualified property acquired and placed in service after January 19, 2025, and it's permanent.¹ Equipment ordered in December but delivered in January doesn't count for 2026. Placed in service is the test.
• The QBI phase-in range widened. The 20% deduction starts phasing out at $403,500 of taxable income for joint filers ($201,750 single), and the phase-in range is now $150,000 for joint filers instead of $100,000.³ ⁵ If you're near the threshold, retirement plan contributions and the timing of income can keep you under it.
• SALT and pass-through entity taxes. The federal SALT cap is $40,400 for 2026, but it phases down by 30 cents for every dollar of modified AGI above $505,000 and bottoms out at $10,000, which happens at about $606,000.¹ ²³ Most owners above that level are effectively back at the old $10,000 cap. If your state offers a pass-through entity tax election, which lets the business deduct state tax at the entity level, that election often has a year-end or earlier deadline. State rules vary. Check yours.
• QSBS got better. For qualified small business stock issued after July 4, 2025, the per-company gain exclusion rose to $15 million, and partial exclusions now apply after three years (50%) and four years (75%), with the full exclusion at five.¹ If you're forming or recapitalizing a C corporation, the issue date matters.

Deferred compensation and equity

If your employer offers a nonqualified deferred compensation plan, the election to defer 2027 salary generally has to be made before 2027 begins.²⁴ For most plans that means an enrollment window in November or December. Once the year starts, that income is locked in.

Stock options are a year-end item too. Exercising incentive stock options can trigger the alternative minimum tax even though there's no regular income to report,²⁵ and the AMT exemption starts phasing out at $1,000,000 for joint filers.³ Splitting a large exercise across two tax years is sometimes the difference between owing AMT and not.

The deadline list

Due by December 31, 2026:

• Roth conversions (custodian cutoffs are earlier)
• Required minimum distributions, unless 2026 is your first year
• Qualified charitable distributions
• 401(k), 403(b), and 457 deferrals and catch-ups (through your final payroll)
• Tax-loss or gain harvesting trades (trade date controls)
• Charitable gifts of cash or securities (securities must settle)
• Annual exclusion gifts (checks must be deposited)
• Direct tuition and medical payments
• Equipment placed in service for bonus depreciation
• Rolling pre-tax IRA money into a 401(k) ahead of a backdoor Roth
• Deferred compensation elections for 2027
• Medicare plan changes (December 7)

After December 31:

• Fourth-quarter estimated tax payment: January 15, 2027⁵
• Trust distributions that count for 2026: March 6, 2027²²
• First RMD if you turned 73 in 2026: April 1, 2027¹⁰
• IRA, Roth IRA, and HSA contributions: April 15, 2027¹¹ ¹⁶
• Gift tax return for 2026 gifts: April 15, 2027²¹
• New retirement plan adoption and employer contributions: the business's filing deadline, with extensions¹⁵

The bottom line

Year-end planning for a larger balance sheet isn't one move. It's a sequence, and the order matters: project income first, then decide what to convert or realize, then size the charitable gifts against the result, then fit the family gifts and business items around the edges. Done in that order, the pieces reinforce each other. Done one at a time in the last week of December, they tend to collide.

Most of these items take days or weeks to execute, and the custodians, charities, and attorneys involved are busiest in the final two weeks of the year. Starting in early November gives everything room to clear.

Sources

1. One Big Beautiful Bill Act, Public Law 119-21 (July 4, 2025), full text: https://www.congress.gov/bill/119th-congress/house-bill/1/text
2. Internal Revenue Service, IR-2025-103, "IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill" (Oct. 9, 2025): https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
3. Internal Revenue Service, Rev. Proc. 2025-32 (2026 inflation adjustments, including capital gains thresholds, AMT exemption and phaseout, estate and trust rate table, QBI thresholds, annual gift exclusion, and basic exclusion amount): https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
4. Internal Revenue Service, Topic No. 559, Net Investment Income Tax: https://www.irs.gov/taxtopics/tc559
5. Internal Revenue Service, 2026 Form 1040-ES, Estimated Tax for Individuals (safe harbor rules, payment due dates, 2026 itemized deduction limitation, charitable floor and non-itemizer deduction, QBI phase-in range): https://www.irs.gov/pub/irs-pdf/f1040es.pdf
6. Internal Revenue Service, Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs) (recharacterization of conversions not permitted after 2017): https://www.irs.gov/publications/p590a
7. Centers for Medicare & Medicaid Services, "2026 Medicare Parts A & B Premiums and Deductibles" (Nov. 14, 2025): https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles
8. Internal Revenue Service, Publication 550, Investment Income and Expenses (wash sales, capital loss limits, trade date): https://www.irs.gov/publications/p550
9. Medicare.gov, "Joining a plan" (Open Enrollment Period, October 15 through December 7): https://www.medicare.gov/basics/get-started-with-medicare/get-more-coverage/joining-a-plan
10. Internal Revenue Service, "Retirement plan and IRA required minimum distributions FAQs": https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
11. Internal Revenue Service, Notice 2025-67, 2026 Amounts Relating to Retirement Plans and IRAs (deferral limits, catch-up limits, Roth catch-up wage threshold, IRA limits, QCD limits): https://www.irs.gov/pub/irs-drop/n-25-67.pdf
12. Internal Revenue Service, IR-2025-91, "Treasury, IRS issue final regulations on new Roth catch-up rule, other SECURE 2.0 Act provisions" (Sept. 15, 2025): https://www.irs.gov/newsroom/treasury-irs-issue-final-regulations-on-new-roth-catch-up-rule-other-secure-2point0-act-provisions
13. Department of the Treasury, Internal Revenue Service, "Catch-Up Contributions," final regulations, T.D. 10033, 90 Fed. Reg. 44527 (Sept. 16, 2025): https://www.federalregister.gov/d/2025-17865
14. Internal Revenue Service, Instructions for Form 8606, Nondeductible IRAs (year-end IRA balances used in the pro-rata calculation): https://www.irs.gov/instructions/i8606
15. Internal Revenue Service, Publication 560, Retirement Plans for Small Business (plan set-up deadline): https://www.irs.gov/publications/p560
16. Internal Revenue Service, Rev. Proc. 2025-19 (2026 HSA contribution limits): https://www.irs.gov/pub/irs-drop/rp-25-19.pdf
17. Internal Revenue Service, Publication 15-B, Employer's Tax Guide to Fringe Benefits (HSA contributions through a cafeteria plan excluded from Social Security and Medicare wages): https://www.irs.gov/publications/p15b
18. Internal Revenue Service, Publication 526, Charitable Contributions (AGI limits, carryover, fair market value for appreciated property held more than one year): https://www.irs.gov/publications/p526
19. Internal Revenue Service, Rev. Rul. 96-56, 1996-2 C.B. 161 (completion of gifts made by check): https://taxnotes.com/lr/resolve//dgxl
20. 26 U.S.C. § 2503(e), exclusion for direct payments of tuition and medical expenses: https://www.law.cornell.edu/uscode/text/26/2503
21. Internal Revenue Service, Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (five-year election for 529 contributions; filing deadline): https://www.irs.gov/instructions/i709
22. 26 U.S.C. § 663(b), distributions in first 65 days of taxable year: https://www.law.cornell.edu/uscode/text/26/663
23. Internal Revenue Service, "Correction to state and local income tax deduction amount in the 2026 Form 1040-ES" ($40,400 limit, $505,000 phase-down threshold, $10,000 floor): https://www.irs.gov/forms-pubs/correction-to-state-and-local-income-tax-deduction-amount-in-the-2026-form-1040-es
24. 26 C.F.R. § 1.409A-2, Deferral elections (initial deferral election timing): https://www.law.cornell.edu/cfr/text/26/1.409A-2
25. Internal Revenue Service, Publication 525, Taxable and Nontaxable Income (incentive stock options and the alternative minimum tax): https://www.irs.gov/publications/p525
26. Internal Revenue Service, Revenue Ruling 2008-5 (wash sales involving IRAs), Internal Revenue Bulletin 2008-3: https://www.irs.gov/irb/2008-03_IRB