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

Sep 26

By Novak Financial Partners · September 2026

The biggest opportunities before December 31 are maxing out your 401(k) and HSA, making backdoor or mega backdoor Roth contributions if eligible, harvesting investment losses or low-bracket gains, and getting your withholding and charitable giving in order. Some of these lower this year's tax bill directly; others move money into accounts that grow tax-free instead.

Maxing a traditional 401(k) and HSA, and harvesting losses, can lower this year's federal tax bill. Backdoor and mega backdoor Roth contributions don't, but they build tax-free savings instead
Retirees can also review Roth conversions, harvesting gains at 0%, and qualified charitable distributions
Business owners can also review expense timing and retirement plan contributions

1. Max out your traditional 401(k)

Check your 2026 contributions against the $24,500 employee deferral limit ($32,500 if you're 50+, $35,750 if you're 60 to 63), and increase your remaining paychecks if you have room. This lowers your taxable income for the year. If your 2025 wages from this employer topped $150,000, catch-up contributions generally have to go in as Roth starting in 2026. Deadline: December 31, 2026, through payroll.

2. Explore mega backdoor and backdoor Roth contributions

Mega backdoor Roth 401(k): Check your plan's contribution elections, or ask HR for the summary plan description, for after-tax contributions plus either in-plan Roth conversions or in-service rollovers. Both need to be available. The 2026 combined limit across all sources is $72,000: for example, $72,000 minus a $24,500 deferral minus a $10,000 employer contribution leaves $37,500 of after-tax room.

Backdoor Roth IRA: If your income is above the direct Roth IRA limits ($153,000 to $168,000 single, $242,000 to $252,000 married filing jointly for 2026), contribute to a nondeductible traditional IRA, then convert it. The 2026 limit is $7,500 ($8,600 if you're 50+). Other pretax IRA money (traditional, SEP, or SIMPLE) triggers the pro-rata rule, taxing the conversion proportionally across all of it, so check your balances first.

Both provide $0 in current tax reduction; the benefit is tax-free growth. Deadline: the mega backdoor after-tax contribution must go into the plan by December 31; when the conversion itself needs to happen depends on your plan, so check with your administrator. The backdoor IRA contribution has until the 2027 filing deadline, though converting the same year keeps reporting simpler.

3. Max out your HSA and check your FSA balances

If you're HSA-eligible, the 2026 limit is $4,400 self-only or $8,750 family, plus $1,000 if you're 55+, minus any employer contribution. If you were only HSA-eligible for part of 2026, your limit is generally prorated by month, subject to the last-month rule, so confirm your actual limit before maxing out. This lowers your taxable income. Payroll contributions must run through payroll by December 31; direct contributions designated for 2026 can be made until the 2027 filing deadline, though without payroll-tax treatment.

Separately, the 2026 health care FSA limit is $3,400. Some plans allow up to $680 to carry into 2027, but that's optional for the employer, so check your own plan's rules. Deadline: HSA payroll by December 31, direct contributions by the 2027 filing deadline; FSA funds generally forfeited after December 31 unless your plan offers a grace period or carryover.

4. Harvest investment losses

Selling a losing position offsets realized gains dollar for dollar, and lowers your taxable income. Up to $3,000 of any excess ($1,500 married filing separately) can then offset ordinary income, with the rest carrying forward. Buying the same or a substantially identical security within 30 days before or after triggers the wash-sale rule and disallows the loss. Deadline: trade date, not settlement date, by December 31, 2026; place the order early.

5. Consider harvesting gains at 0%

If your 2026 taxable income falls at or below $49,450 (single) or $98,900 (married filing jointly), selling appreciated long-term holdings within that room resets your cost basis higher at no federal tax cost. That's a future benefit, not money saved on this year's return, since an unsold position owes no tax either way, and the gain still counts as income for other thresholds like ACA subsidies. Deadline: trade date by December 31, 2026.

6. Review your withholding and estimated payments

A raise, bonus, RSU vest, investment gain, or self-employment income can leave you owing more than expected at tax time. Compare your projected 2026 tax bill with what you've already paid through withholding and estimated payments, then adjust if needed. This won't reduce your total tax, but it can help you avoid a surprise bill or underpayment penalty. Deadline: adjust withholding through your remaining 2026 paychecks. The fourth-quarter estimated tax payment is due January 15, 2027.

7. Review your charitable giving

If you itemize, donating appreciated stock held over a year avoids capital gains tax on the appreciation while still deducting its fair market value. A donor-advised fund lets you bunch several years of giving into one, to clear the standard deduction threshold ($16,100 single, $32,200 married filing jointly). New for 2026: even without itemizing, you can deduct up to $1,000 single or $2,000 married filing jointly for cash gifts made directly to a charity. Deadline: December 31; start stock transfers by mid-December.

Two examples, by bracket

Single filer: a $24,500 traditional 401(k) contribution, a $4,400 self-only HSA contribution, and a $3,000 net capital-loss deduction ($31,900 total).

Married couple: two $24,500 traditional 401(k) contributions, one $8,750 family HSA contribution, and one $3,000 household net capital-loss deduction ($60,750 total).

Household	22%	24%	32%	35%	37%
Single, $31,900	$7,018	$7,656	$10,208	$11,165	$11,803
Married, $60,750	$13,365	$14,580	$19,440	$21,263	$22,478

Potential federal tax effects only, assuming the full amount shown is taxed at the listed marginal rate and no capital gains need to absorb the loss first. Excludes state tax and any HSA payroll-tax savings, which apply only to contributions made through payroll. Backdoor and mega backdoor Roth contributions aren't included; they provide no current deduction.

For retirees

Consider a Roth conversion in a lower-income year

If you have room left in the 12% bracket this year, converting just enough to fill it can make sense when Social Security and future required minimum distributions are likely to push your income into the 22% bracket or higher down the road. Paying 12% now instead of 22% or more later can lower lifetime tax, even though it raises this year's bill. Check the effect on ACA marketplace subsidies this year and Medicare IRMAA two years out before converting. Deadline: December 31; conversions can't be undone.

Use qualified charitable distributions, if you're 70½ or older

Directing up to $111,000 per person from your IRA straight to a qualifying charity satisfies some or all of your RMD, and the amount never shows up in your AGI, unlike taking the distribution and deducting a gift afterward. Deadline: December 31, no extensions; the transfer must go custodian-to-charity.

For business owners

Review expense timing and retirement plan deadlines

Compare this year's bracket to next year's expected bracket before accelerating deductible expenses into 2026. The 2026 Section 179 limit is $2,560,000 (phasing out above $4,090,000), with bonus depreciation at 100%. A Solo 401(k) generally must open by December 31 for S-corp, C-corp, or partnership owners deferring 2026 wages; sole proprietors and SEP IRA owners generally have until their filing deadline, with extensions. Deadline: December 31 for most expense timing and Solo 401(k) setup.

Frequently asked questions

Which year-end tax moves have a December 31 deadline?

Payroll retirement contributions, investment trades, Roth conversions, QCDs, and most charitable gifts. HSA and IRA contributions, including the backdoor Roth IRA, are the main exceptions, with room until the 2027 filing deadline.

Can I fund my 2026 HSA after year-end?

Yes, if it's not through payroll. Direct contributions designated for 2026 generally have until the 2027 filing deadline; payroll contributions must run through your employer by December 31.

Does a backdoor Roth lower this year's taxes?

No. The contribution is nondeductible, and converting to Roth doesn't create a deduction either. The benefit is tax-free growth, not a smaller bill this year.

How much investment loss can offset ordinary income?

Up to $3,000 a year ($1,500 married filing separately), only after losses offset any gains. The rest carries forward.

Who qualifies for the 0% capital gains rate in 2026?

Only long-term gains that fit within your remaining 0% bracket room, up to $49,450 of taxable income (single) or $98,900 (married filing jointly) for 2026. Starting the year below that threshold doesn't mean every gain qualifies; the portion that pushes you above it is taxed at the next bracket's rate instead.

Does a Roth conversion save taxes this year?

No, it increases the year's taxable income. It can be worthwhile in a low-income year, but the benefit is tax-free growth later, not a smaller bill now.

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Sources for 2026 figures

Educational content only, not personalized financial, legal, or tax advice. Dollar examples use full 2026 contribution and deduction limits and illustrative marginal tax rates for demonstration only; they exclude state taxes, the Net Investment Income Tax, and phase-outs, and aren't a projection of any individual's savings. Limits and deadlines reflect 2026 IRS figures as of the publish date and are subject to change; confirm current rules with your CPA, tax professional, or plan administrator before acting. Novak Financial Partners provides forward-looking tax planning and coordination but does not prepare or file tax returns. Advisory services are offered through Core Planning LLC, a Registered Investment Advisor. For additional disclosures please visit corepln.com/disclosures.

Max Novak