Year-End Tax Planning

September 23, 2026

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By: John McDonald

As the leaves turn brown and the year winds down, it’s easy to get caught up in holiday planning and family gatherings. However, there is another important date fast approaching: December 31st.

It’s important for taxpayers to be proactive with their finances before the clock strikes midnight. Navigating your 2026 taxes may require a fresh playbook, given certain provisions finalized under the One Big Beautiful Bill Act (OBBBA).

Here are some year-end tax moves you can consider making before the end of 2026.

Max Out Your Pre-Tax Accounts

A simple way to drop your adjusted gross income (AGI) is by fully funding your tax-advantaged accounts. Every dollar that goes into these accounts is a dollar the IRS can’t touch this year.

• Workplace Retirement Plans: The employee contribution limit for a 401(k) is $24,500. For anyone ages 50 to 59, you can also take advantage of an $8,000 catch-up contribution. You should ensure your payroll department processes these adjustments timely (e.g.: before your final paycheck in December). Review official requirements outlined in the IRS’s 2026 401(k) and IRA Limit Announcement.
• Health Savings Accounts (HSAs): If you are enrolled in a high-deductible health plan (HDHP), an HSA can be a financial Swiss Army knife. Contributions are pre-tax, growth is tax-free, and withdrawals are tax-free for medical expenses, as an example. You can save up to $4,400 for self-only coverage or $8,750 for families (plus $1,000 if you're 55+).
• Traditional IRAs: You have until April 15^th, 2027, to make your 2026 traditional IRA contributions up to $7,500 (or $8,600 for those  age 50+), but calculating your baseline now prevents any surprises when you actually file. You can check income thresholds using the IRS Retirement Contributions Tracker.

Fund the New "Trump Accounts" for Children

Introduced as part of the OBBBA, Section 530A Accounts (colloquially known as Trump Accounts) offer a brand-new tax-deferred wealth-building tool for children who have not turned age 18 before the end of the calendar year.

Unlike traditional IRAs, children do not need earned income to qualify for these accounts. If you are looking to build long-term savings for your dependents, keep these year-end rules in mind:

• Contribution Limits: For the 2026 tax year, the total annual contribution limit across all sources is $5,000. This combined cap includes any personal deposits made by parents or family members but excludes the federal government's $1,000 pilot program payment "seed money" provided to eligible children born between 2025 and 2028.
• Employer Tax Perks: Under the new law, employers can contribute up to $2,500 per year tax-free directly into the Section 530A Account of an employee's dependent. You should check with your Human Resources Department for more information.

While traditional IRAs allow you to contribute up until the April filing deadline, Section 530A Accounts operate on a strict calendar year basis. All 2026 contributions must be completed by December 31, 2026. If you haven't opened one yet, you must register by submitting IRS Form 4547.

Optimize Your Philanthropy

Charitable giving is highly encouraged under the current federal tax code, making this time of the year a perfect time to do some good while doing well for your wallet.

Even if you plan to take the standard deduction, you may not be entirely locked out of charitable breaks. Non-itemizers can claim an above-the-line deduction for cash donations up to $1,000 ($2,000 for married couples filing jointly) directly on their tax returns.

Check Your Flexible Spending Accounts (FSAs)

Don't let your hard-earned money vanish! Unlike HSAs, healthcare FSAs generally operate under a strict "use-it-or-lose-it" framework. The maximum contribution limit for voluntary salary reductions is capped at $3,400.

While some employer plans offer a small grace period or a carryover option of up to $680 into next year, many require you to exhaust the account by December 31st. Take time to check your balance. If you have remaining funds, schedule overdue medical appointments, update your prescription eyewear, or even consider stocking up on eligible over-the-counter medical supplies.

Act Before the Clock Strikes

Tax planning is not a task meant for April, it’s something you should be thinking about throughout the year. Schedule an hour to pull your year-to-date pay stubs, thoroughly review all of your investment accounts, and estimate your 2026 income. A few deliberate shifts over the next few months can leave you with a significantly lower tax liability and a much healthier financial start to 2027.

For tax related matters, it’s always recommended to consult with your tax advisor regarding your specific situation. 

John McDonald is a Commercial Lender and Certified Public Accountant. He joined the New Tripoli Bank team in 2026. He has degrees in Business Administration, Management, and Taxation, and has worked with the IRS. He is also a veteran and has been part of the Weisenberg Township community for over twenty years, where he currently lives with his family.

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