By Michael Stanton, CFP®

If you’ve ever looked at your tax return in April and wondered what you could have done differently in December, you’re not alone. Many tax-saving moves have a December 31 deadline, and 2026 brings new federal tax rules for charitable deductions and catch-up contributions. Our planning services include reviewing these decisions alongside your investments before the year ends.

Here are 10 year-end tax strategies you may want to consider.

1. Tax-Loss Harvesting

Tax-loss harvesting, or selling investments in a taxable account that have dropped below their tax basis, may let you use those losses to offset capital gains. If your losses exceed your gains, for federal tax purposes, you can use up to $3,000 ($1,500 if married filing separately) to offset ordinary income, while any remaining losses carry forward into future tax years.

This may help if you plan to trim a concentrated position, such as company stock built up through equity awards. The wash-sale rule can disallow the loss if you buy the same or a substantially identical investment within 30 days before or after the sale.

2. Charitable Giving Under the 2026 Federal Rules

Even if you don’t itemize deductions, you can now deduct up to $1,000 in cash donations to charity ($2,000 for joint filers). If you do itemize, only the portion of your total qualifying charitable contributions that exceeds 0.5% of your adjusted gross income (AGI) is deductible, subject to other applicable limits. For taxpayers in the 37% bracket, the federal tax benefit of itemized deductions is generally capped at 35 cents per deductible dollar. The IRS summarizes the charitable contribution rules.

If you itemize, donating appreciated securities held longer than a year to an eligible public charity may let you deduct their fair market value, subject to applicable limits, without recognizing the capital gain. Long-held company shares may be a good fit for a charitable giving strategy.

3. Donor-Advised Funds

A donor-advised fund (DAF) lets you contribute several years of planned gifts in one tax year, generally with a federal deduction that year. You can then suggest grants to charities over time. With the new 0.5% floor, grouping several years of planned gifts into one contribution year may reduce the effect of applying the floor across multiple years. The benefit depends on your income, whether you itemize, and applicable deduction limits. DAF gifts don’t count toward the non-itemizer deduction.

4. Required Minimum Distributions and Qualified Charitable Distributions

Required minimum distributions (RMDs) generally begin at age 73 for people reaching that age in 2026. Under current law, the starting age is 75 for those born in 1960 or later. Some workplace plans allow eligible employees who are still working to delay RMDs until retirement. Your first RMD may wait until April 1 of the year after you turn 73, though that can mean taking two distributions in one tax year.

If you’re at least 70½ when the distribution is made, a qualified charitable distribution (QCD) lets you transfer up to $111,000 per person in 2026 directly from an eligible IRA to a qualifying charity. A QCD can count toward your RMD and is generally excluded from taxable income. You cannot also claim a charitable deduction for the same amount.

5. Retirement Plan Contributions

Pre-tax contributions to a workplace plan may lower this year’s taxable income. The 2026 limits are:

• 401(k)s and similar workplace plans: $24,500
• Age 50 and older: an additional $8,000
• Ages 60 through 63: an $11,250 catch-up instead of the standard $8,000, if the plan permits
• IRAs: $7,500, or $8,600 if you’re 50 or older

Beginning in 2026, if your 2025 FICA wages from the employer sponsoring your plan exceeded $150,000, catch-up contributions generally must be Roth (after-tax), so they won’t reduce this year’s taxable income.

6. Roth Conversions

In a lower-income year, converting part of a traditional IRA to a Roth IRA may make sense. You’ll generally owe income tax on the previously untaxed portion of the amount converted, but future qualified withdrawals can be tax-free. Lower-income years can appear between retirement and the start of Social Security, or when one spouse retires before the other. The IRS explains conversions in Publication 590-A.

7. Health Savings Account (HSA) Contributions

If you’re covered by an HSA-eligible health plan, your contributions may be deductible, and the account can grow tax-free. Withdrawals for qualified medical expenses are generally tax-free as well. For 2026, you can contribute up to $4,400 for self-only coverage or $8,750 for family coverage, with a $1,000 catch-up for eligible account holders age 55 or older. Eligibility depends on your health coverage and other factors, including Medicare enrollment.

8. Prepaying Tuition

Paying qualified college expenses by December 31 for a term that starts by March 2027 may help you claim a federal education credit for 2026, such as the American Opportunity Tax Credit of up to $2,500 per student. These credits are unavailable when modified AGI reaches $90,000, or $180,000 for married couples filing jointly, and other eligibility requirements apply. A lower-income year may therefore create an opportunity. You cannot use the same expenses to claim an education credit and support a tax-free 529 withdrawal.

Grandparents may also pay tuition directly to a school without using any of their $19,000 annual federal gift exclusion.

9. 529 Plan Contributions

529 contributions aren’t deductible federally, and state rules vary. Pennsylvania residents, for example, can deduct contributions to any state’s 529 plan from Pennsylvania taxable income, up to $19,000 per beneficiary, per taxpayer in 2026. Married couples filing jointly may deduct up to $38,000 per beneficiary if each spouse has at least $19,000 of Pennsylvania taxable income.

10. Getting Help Before December 31

Many of these strategies interact: a Roth conversion may raise your Medicare premiums two years later, and a large gift may change whether itemizing makes sense. As part of our tax planning work, we can help you evaluate which moves fit your situation and coordinate with your CPA before the deadline.

To schedule a meeting, call (215) 376-5530 or email mstanton@thrivewealth.com.

Frequently Asked Questions

What is the deadline for year-end tax moves in 2026?

Many year-end tax moves, including Roth conversions and tax-loss harvesting, must be completed by December 31, 2026. 

A few have later deadlines:

• IRA and HSA contributions: the April 15, 2027, tax filing deadline
• First required minimum distribution (RMD): generally April 1 of the year after reaching your applicable RMD age; certain workplace plans permit a later start for eligible employees who are still working.

Can you deduct charitable donations without itemizing in 2026?

Yes, starting in 2026, federal taxpayers who take the standard deduction can deduct up to $1,000 in cash gifts to qualified charities, or $2,000 for married couples filing jointly. Gifts to donor-advised funds don’t qualify, and noncash gifts, such as appreciated stock, aren’t eligible for this deduction.

Is a Roth conversion a good idea before the end of the year?

A Roth conversion can make sense in a year when your income is lower than usual, since you’ll owe income tax on the amount converted. It must be completed by December 31 to count for 2026. Financial advisors at Thrive Wealth Management can help you weigh a conversion against your projected future income.

About Michael

Michael Stanton, CFP®, is a Financial Planner at Thrive Wealth Management, LLC, a boutique financial planning firm in Blue Bell, Pennsylvania. With experience since 2012 helping individuals and families pursue their financial goals with confidence, Michael seeks to build lasting relationships with his clients. He offers more than just financial advice; his goal is to provide genuine care, responsiveness, and transparency. His approach is centered on coordinating the various aspects of a client’s financial life, working to make them feel supported and confident in their plan. Michael’s most fulfilling moments come from helping clients realize their dreams, whether it’s saving for college, retiring comfortably, or navigating life’s challenges. He can also act as the quarterback, working alongside clients’ CPAs, attorneys, and other professionals to keep their financial lives aligned.

Prior to joining the Thrive team, Michael worked at Prudential Financial and Lincoln Investment Planning, Inc., gaining critical knowledge and experience in retirement planning. He holds a BS in Business Management & Finance from the University of Scranton, the CERTIFIED FINANCIAL PLANNER® designation, and is the founder of Stand-By-Steve, a nonprofit providing scholarships. Outside of work, he enjoys golfing, playing guitar with his band, and spending time with his wife, two daughters, and son. To learn more about Michael, connect with him on LinkedIn.

Disclosure:

This material is provided for informational and educational purposes only, should not be viewed as an exhaustive discussion of the topics presented, and should not be construed as individualized advice for any reader’s personal circumstances. For guidance on how these matters may impact your financial plan or investment portfolio, please contact your Thrive Wealth Management, LLC representative. While the information presented is believed to be factual and up to date, Thrive Wealth Management, LLC does not guarantee its accuracy and, due to various factors, including but not limited to changing laws and regulations, this information is subject to change. All expressions of opinion reflect the judgment of the authors as of the date of publication. Thrive Wealth Management, LLC is not a law firm or an accounting firm, and no content contained herein should be construed as legal or accounting advice. Federal, state, and local state tax laws differ, and readers are encouraged to evaluate and consider the impact of each prior to taking action. Please consult with the qualified professional(s) of your choosing for legal and accounting advice.

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