As 2026 comes to a close, many individuals and business owners are beginning to think about their taxes. However, waiting until tax season to evaluate your financial situation could mean missing valuable planning opportunities.
With recent changes to federal tax legislation and important year-end deadlines approaching, now may be an appropriate time to review your retirement accounts, investments, and overall financial strategy.
While everyone’s circumstances are different, here are five tax-planning considerations worth discussing with your financial and tax professionals before December 31.
Could a Roth Conversion Help Reduce Future Taxes?
If you have accumulated significant savings in traditional IRAs or 401(k)s, a Roth conversion may be worth considering.
A Roth conversion allows you to move eligible tax-deferred retirement assets into a Roth IRA. Although the converted amount is generally subject to income taxes today, future qualified Roth withdrawals can be tax-free.
For individuals approaching retirement, particularly those expecting higher tax rates or substantial required minimum distributions (RMDs) later in life, converting a portion of retirement savings may provide long-term advantages.
However, conversions can also increase current taxes and potentially affect Medicare premiums. The key is determining whether a conversion makes sense within your overall financial plan.
Remember: Roth conversions intended for the 2026 tax year generally must be completed by December 31.
Are You Taking Advantage of Tax-Loss Harvesting?
Market fluctuations can create opportunities to manage taxes within taxable investment accounts.
Tax-loss harvesting involves selling investments that have declined in value to realize losses that may offset capital gains elsewhere in your portfolio.
For example, if you realized $25,000 in capital gains but also have an investment showing a $10,000 loss, selling that investment could potentially reduce your net taxable capital gains to $15,000.
Additional net capital losses may offset up to $3,000 of ordinary income annually, with unused losses generally carried forward.
However, IRS wash-sale rules and your long-term investment objectives must be considered before making any changes.
The goal should never be to make investment decisions solely for a tax deduction.
Have You Reviewed Your Retirement Contributions and Required Distributions?
Year-end is an important time to review both contributions to and withdrawals from retirement accounts.
For 2026, employees can generally contribute up to $24,500 to a 401(k), with an additional $8,000 catch-up contribution available to eligible individuals age 50 and older. Certain participants ages 60 through 63 qualify for an even higher catch-up limit of $11,250.
For retirees, required minimum distributions deserve equal attention.
Most individuals subject to annual RMDs must complete their distributions by December 31, although special rules apply to first-year distributions and certain retirement accounts.
Missing an RMD can result in significant IRS penalties, while taking larger distributions than necessary may increase taxable income.
Coordinating retirement contributions and withdrawals with your broader tax strategy may help you better understand potential tax implications and planning considerations.
What Tax Strategies Should Business Owners Consider?
For business owners, year-end planning often presents additional opportunities.
Depending on your business structure, you may benefit from reviewing retirement plan contributions, the timing of deductible expenses, equipment purchases, and available business deductions.
For example, qualifying pass-through businesses may be eligible for the Section 199A Qualified Business Income deduction, which can allow a deduction of up to 20% of eligible business income, subject to applicable limitations.
Business owners considering a future sale should also think beyond their current tax return.
The structure and timing of a business sale can significantly affect the amount of money an owner ultimately retains after taxes.
Working with your CPA, financial advisor, and legal professionals before major business decisions can help align your tax strategy with your long-term financial goals.
Could Charitable Giving Improve Your Tax Strategy?
If charitable giving is important to you, how you make contributions may be just as important as how much you give.
For individuals age 70½ or older, Qualified Charitable Distributions (QCDs) may allow eligible IRA funds to be transferred directly to qualifying charities without including the qualifying amount in taxable income.
For those required to take RMDs, these distributions may also satisfy some or all of that obligation.
Donating appreciated securities and coordinating the timing of charitable gifts may provide additional opportunities, depending on your circumstances.
As with any tax strategy, charitable contributions should align with your personal goals and overall financial plan.
Is Your Financial Plan Ready for 2027?
Effective tax planning involves more than reducing your current tax bill. It’s about understanding how today’s decisions may affect your retirement income, investments, business, and the wealth you eventually leave behind.
At Envisage Wealth Advisors, we believe tax-efficient strategies should be considered as part of a comprehensive financial plan.
Whether you’re approaching retirement, already retired, or managing a successful business, taking time to review your financial strategy before year-end may help you enter 2027 with greater confidence.
Have questions about your retirement or financial plan?
We invite you to reach out for a complimentary conversation. Contact Envisage Wealth Advisors at (859) 277-6528 to discuss your retirement and financial planning goals.
This article is for general informational purposes only and is not intended as individualized investment, tax, or legal advice. Tax laws and regulations are subject to change. Consult your qualified tax or legal professional regarding your individual circumstances. Investing involves risk, including potential loss of principal. No financial or tax strategy guarantees a particular outcome.
Sources
Internal Revenue Service — 2026 Retirement Contribution Limits
Internal Revenue Service — Required Minimum Distributions
Internal Revenue Service — IRA Distributions and Qualified Charitable Distributions
Internal Revenue Service — Capital Gains and Losses
Internal Revenue Service — https://www.irs.gov/newsroom/qualified-business-income-deduction
