2026 Tax Planning Guide: What to Do After Filing Your 2025 Taxes

Most people stop thinking about taxes the moment they file. However, the best time to reduce this year’s tax bill isn’t next March.

It’s right now.

Proactive tax planning is one of the highest-return activities you can spend time on.

Here’s your 2026 tax planning guide:

Start With a Tax Estimate (And Keep Updating It)

Run a rough projection of what you'll owe in 2026. Use your salary, expected bonuses, investment income, and anything else on the horizon. A ballpark number is enough to see whether you're on track or heading for a gap.

If there's a shortfall, close it now. W-2 employees can adjust withholding by submitting an updated W-4. Adding a few hundred dollars a month is far less painful than one large April payment. If you have income outside a paycheck, plan for quarterly estimated payments: April 15 for Q1, June 16 for Q2, September 15 for Q3, and January 15 for Q4.

Then revisit the estimate each quarter. Income changes. Small adjustments throughout the year beat a last-minute scramble every time.

Know your safe harbor number

Pay at least 100% of last year's tax bill, or 110% if your income exceeded $150,000, and the IRS cannot penalize you for underpaying, even if you still owe in April. Pull your 2025 return, find the total tax owed and confirm you're on track.

Reduce Taxable Income with the Right Tools

Once you know your projected bill, look for ways to reduce it. These are the most effective moves:

• Max out your 401(k) or 403(b). Every dollar reduces taxable income this year. If you're 50 or older, don't leave catch-up contributions on the table, but be aware of new rules that require Roth catch-up contributions if you earned over $150,000 last year. Consider a Roth 401(k) split if you expect higher taxes in retirement

  
  

• Fund your HSA if you're eligible. The Health Savings Account is the only account that gives you a tax deduction on the way in, tax-deferred growth, and tax-free withdrawals for medical expenses. If you can pay current healthcare costs out of pocket, invest the funds and let the HSA grow. It's one of the best tools for retirement healthcare planning.

  
  

• Use a dependent care FSA. If you have qualifying childcare or elder care expenses, a dependent care FSA lets you set aside up to $7,500 pre-tax. It's straightforward and often overlooked.

  
  

• Charitable deduction — even without itemizing. For 2026, an above-the-line deduction for charitable contributions is available to taxpayers who take the standard deduction. Single filers can deduct up to $1,000, and married filing jointly up to $2,000. If you give to charity, make sure you're capturing this.

  
  

• Consider deferred compensation if your employer offers it. A non-qualified deferred comp plan lets you defer salary or bonus income before it's taxed and pay it out in a potentially lower-income year. Enrollment windows are typically once a year, often in the fall, so evaluate it before the deadline. Just remember unlike a 401(k), deferred comp is an unsecured obligation of your employer. Be thoughtful about how much you accumulate.

  
  

Expecting a high-income year? Plan before the money arrives

Some of the biggest tax surprises are actually predictable.

A large bonus, stock vesting, the sale of a business or investment property, required minimum distributions starting, or a deferred comp payout can all push your taxable income significantly higher in a single year.

The key is planning before the income hits.

A few strategies to consider:

• Donor-advised fund (DAF). If charitable giving is part of your life, a DAF lets you make a large contribution, in appreciated stock or cash, in the same year as a big income event and take the full deduction now. You can then recommend grants to your favorite charities over time, at your own pace. It's one of the most flexible and tax-efficient ways to give.

  
  

• Qualified Charitable Distributions (QCDs). If you're 70½ or older, you can direct up to $111,000 per year from your IRA to a qualified charity. It counts toward your RMD but is excluded from taxable income entirely. This is more tax-efficient than taking the RMD and donating separately.

  
  

• Tax-Aware Long-Short strategies (TALS™). If you're facing a large capital gain from selling a concentrated stock position, a business, or real estate, a TALS™ strategy is worth knowing about. These investment approaches are designed to generate tax losses that can be used to offset capital gains. They work best when you have lead time to build up offsetting losses before the gain is realized, so the earlier you start, the better.

  
  

• Installment sales. If you're selling a business or significant asset, structuring the deal as an installment sale spreads the taxable gain across multiple years, potentially keeping you out of the highest bracket in any single year.

  
  

• Maximize every deductible account. In a high-income year, every deductible dollar is worth more than usual. Make sure your 401(k), HSA, and any other pre-tax accounts are fully funded. Business owners should also review retirement plan contributions and other available deductions before year-end.

Expecting a lower-income year? Use the window

A lower-income year, whether from a career transition, partial retirement, a sabbatical, or a lighter bonus, could be a tax planning opportunity. Here's how to use it.

• Roth conversions. Move money from a traditional IRA or pre-tax 401(k) to a Roth while you're in a lower bracket. You'll pay tax now at a reduced rate and every dollar converted grows tax-free going forward, with no future RMDs.

  
  

• Tax gain harvesting. If your income is low enough to land you in the 0% or 15% long-term capital gains bracket, you may be able to sell appreciated investments and pay little or no tax on the gains. You can also sell the position for a gain and buy it back to reset your cost basis at the higher value and reduce future taxable gains when you eventually sell again.

  
  

• Roth 401(k) contributions. If your bracket is lower right now than you expect it to be in retirement, shifting your current 401(k) contributions from pre-tax to Roth makes sense. You pay the tax at today's lower rate and get tax-free growth from that point forward.

  
  

• Time your deferred comp payouts. If deferred comp is scheduled to pay out in future years, a lower-income window, before Social Security, RMDs, or other income sources kick in, can be the right time to receive distributions at the most favorable rate.

Final thoughts for the 2026 tax planning guide

Most tax surprises are preventable. The people who consistently avoid large April bills aren't lucky, they're proactive. They run estimates in the spring, adjust throughout the year, and use the tools available to them.

The key is starting now. Run an estimate. Understand what income is coming. Identify whether you're heading into a higher-income year, a lower-income window, or a steady year. Then build a plan around it.

A few smart moves made today are worth far more than a scramble next March.

If you'd like help building a tax plan for your specific situation, I'm happy to walk through it with you.

 - Steve Balch, CFP®

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