As 2026 comes to a close, now is the time to review your financial picture and identify tax planning opportunities that could benefit you both today and in the years ahead.
Between holiday shopping, family gatherings, and preparing for a new year, tax planning may not be at the top of your to-do list. But waiting until April to think about taxes could mean missing opportunities that disappear when the calendar turns to January.
At Paragon Wealth Management, we believe tax planning should be part of an ongoing financial strategy, not simply something you think about when it’s time to file your return.
Here are seven year-end tax planning strategies worth discussing with your financial advisor and tax professional.
1. Maximize Your Retirement Contributions
One of the simplest ways to potentially reduce your current taxable income is by contributing to a tax-advantaged retirement account.
If you participate in a traditional 401(k), 403(b), or similar workplace retirement plan, review your contributions before year-end.
For 2026, the IRS contribution limits include:
- 401(k), 403(b), and most governmental 457 plans: $24,500 for eligible employee elective deferrals.
- Age 50 and older: An additional $8,000 catch-up contribution is generally available.
- Ages 60–63: An enhanced catch-up contribution of $11,250 may be available instead of the regular catch-up amount.
If you haven’t reached your contribution limit, consider whether increasing your contributions for the remaining pay periods makes sense.
Remember that traditional and Roth contributions receive different tax treatment, and certain higher-income employees must make their 2026 catch-up contributions on a Roth basis.
Traditional and Roth IRA contributions may generally be made until the applicable tax-filing deadline in 2027, but eligibility and deduction rules apply.
2. Explore Tax-Loss Harvesting Opportunities
Market fluctuations aren’t always welcome, but they can create opportunities for tax planning.
Tax-loss harvesting involves selling investments in a taxable brokerage account that have declined in value to realize losses.
These losses can potentially offset realized capital gains. If losses exceed gains, individuals may generally deduct up to $3,000 against ordinary income annually, with unused eligible losses carried forward to future tax years.
However, there are important considerations.
The IRS wash-sale rule can disallow a loss if you purchase substantially identical securities within 30 days before or after the sale.
And selling an investment solely for tax purposes may not align with your long-term strategy.
The goal isn’t simply to create a tax deduction. It’s to make tax-efficient decisions while maintaining an appropriate investment portfolio.
3. Review Your Charitable Giving Strategy
If supporting charitable organizations is important to you, year-end giving may offer both personal satisfaction and potential tax advantages.
Depending on your circumstances, strategies may include:
- Making cash contributions to qualified charitable organizations.
- Donating appreciated securities held for more than one year.
- Exploring donor-advised funds for longer-term charitable planning.
- Using qualified charitable distributions from an IRA if you’re eligible.
For individuals age 70½ or older, a qualified charitable distribution (QCD) allows eligible IRA funds to be transferred directly to a qualified charity.
QCDs can be particularly useful because eligible distributions are generally excluded from taxable income and may count toward required minimum distributions.
For 2026, the annual QCD exclusion limit is $108,000 per eligible individual.
Tax benefits depend on factors such as your age, income, deduction eligibility, and the type of gift.
4. Consider Whether a Roth Conversion Makes Sense
A Roth conversion involves moving funds from a traditional retirement account into a Roth IRA.
Generally, the taxable portion of the conversion is included in your income for the year.
So why would someone voluntarily pay taxes now?
Because qualified Roth IRA withdrawals can be tax-free in retirement, and Roth IRAs do not require lifetime RMDs for the original owner.
A Roth conversion may be worth exploring if:
- You’re currently in a lower tax bracket than you anticipate in the future.
- You’ve recently retired and your taxable income has temporarily decreased.
- You want to diversify the tax treatment of your retirement savings.
- You’re thinking about the tax implications of leaving retirement assets to beneficiaries.
However, conversions can affect Medicare premiums, taxation of Social Security benefits, and other income-based calculations.
A Roth conversion generally must be completed by December 31 to count for that tax year, and conversions completed after 2017 cannot be undone through recharacterization.
That’s why it’s important to evaluate the entire financial picture before making a decision.
5. Don’t Overlook Required Minimum Distributions
If you’re subject to required minimum distributions, or RMDs, make sure you’ve satisfied the applicable requirement.
Generally, traditional IRA owners must begin RMDs at age 73 under current rules, although the starting age depends on birth year and certain exceptions apply.
The deadline for most annual RMDs is December 31.
Individuals taking their first RMD may have until April 1 of the following year, but delaying that first distribution can result in two taxable distributions during the same calendar year.
Failing to take an RMD can result in an excise tax, although reductions and corrections may be available under IRS rules.
It’s also important to remember that inherited retirement accounts may have their own distribution requirements.
6. Review Health Savings Account Contributions
If you’re enrolled in an eligible high-deductible health plan, a Health Savings Account (HSA) can be a valuable tax planning tool.
HSAs offer three potential federal tax advantages:
- Eligible contributions may be deductible or excluded from income.
- Account earnings can grow tax-free.
- Withdrawals for qualified medical expenses are tax-free.
For 2026, the HSA contribution limits are $4,400 for self-only coverage and $8,750 for family coverage, with an additional $1,000 catch-up contribution available for eligible individuals age 55 and older.
HSA contributions for 2026 can generally be made until the 2027 tax-filing deadline, subject to eligibility and contribution rules.
If you’re approaching Medicare eligibility, it’s especially important to review how Medicare enrollment affects your ability to contribute to an HSA.
7. Coordinate Your Tax Planning With Your Overall Financial Plan
Perhaps the most important year-end strategy is making sure your tax decisions support your broader financial goals.
For example:
- Approaching retirement? Review how your income, retirement withdrawals, and Social Security decisions may affect your future tax situation.
- Recently retired? Consider whether lower-income years create opportunities for Roth conversions or capital gains planning.
- Own a business? Review retirement plan contributions, business expenses, equipment purchases, and potential deductions with your tax professional.
- Experienced a major life change? Marriage, divorce, the loss of a spouse, or a significant change in income can all affect your tax planning needs.
The right approach will look different for every household.
Why Year-End Tax Planning Matters
Tax planning is about much more than reducing this year’s tax bill.
It’s about understanding how today’s decisions may affect your retirement income, investments, estate planning, and overall financial well-being.
And while some opportunities remain available until the tax-filing deadline, others must be completed before December 31.
At Paragon Wealth Management, we believe financial planning works best when it’s proactive, personalized, and coordinated with your other trusted professionals.
As we head into 2027, now is an excellent time to review your financial strategy and make sure you’re taking advantage of opportunities that align with your goals.
If you have questions about how year-end financial decisions fit into your overall plan, our team is here to help.
About Phil Rosenau
As a graduate of Germantown Academy, Phil Rosenau earned his bachelor’s degree in economics at Drew University, while also earning a minor in business management. His passion for creating and maintaining business relationships drove him to join the Prudential Advisors team, where he met Charlie and Ricardo before starting Paragon Wealth together.
Phil is a lifelong resident of Bucks County and the son of a local entrepreneur. He understands the unique needs of small business owners, takes pride in providing his clients with the knowledge to understand their unique financial situation, and helping them navigate their financial future with confidence. He enjoys spending time with his wife, Caroline, and two children, he is the current president of the MDM networking group, and he is active with the local CrossFit community. Phil is also proud to be part of the Drew University Lacrosse Legacy where he played all four years. You can find Phil here on LinkedIn, or here on Facebook.
Advisors associated with Paragon Wealth Management may be either (1) registered representatives with, and securities offered through LPL Financial, Member FINRA/SIPC, and investment advisor representatives of Great Valley Advisor Group, or (2) solely investment advisor representatives of Great Valley Advisor Group, and not affiliated with LPL Financial. Investment advice offered through Great Valley Advisor Group, a registered investment advisor. Great Valley Advisor Group and Paragon Wealth Management are separate entities from LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
No strategy assures success or protects against loss.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
Contributions to a Roth IRA are taxed in the contribution year. The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.