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Year-End Tax Planning

A closed leather folio, a fountain pen and a desk calendar turned to December

Year-End Tax Planning

By Dave Allen, CFP® · Managing Partner, Security Financial Management · CRD #1210763
Reviewed by Frank Lovaglio, RFC® · CRD #1299700 · Published October 2026 · Last reviewed October 2026
Securities offered through Kestra Investment Services, LLC, member FINRA/SIPC (Kestra IS). Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS). Security Financial Management, Bluespring Wealth Partners, LLC, Kestra IS and Kestra AS are affiliated through common ownership by Kestra Holdings.

Year-end tax planning is the review of income, investments, retirement accounts and charitable giving that a household completes before the tax year closes on December 31. Tax year 2026 has new charitable deduction rules,1,2 a joint standard deduction of $32,200,3 and a temporary deduction for people 65 and older in effect from 2025 through 2028.4 This page is written for households approaching or in retirement. It sets out what each decision requires, the date it stops being available, and where the decisions overlap.

What You’ll Learn

What Year-End Tax Planning Is

Year-end tax planning is the coordinated review, before December 31, of a household’s investment gains and losses, retirement account decisions, charitable gifts and income timing, to decide which to complete in the current tax year and which to leave for a later one. It differs from preparing a return because the decisions it covers change the income that other decisions are measured against.

Four year-end planning decisions shown as four closed folders: loss harvesting, Roth conversion, charitable giving and income timing

Tax Loss Harvesting Deadline

Under IRS Publication 550, the trade date generally decides the tax year for an ordinary stock sale, not the settlement date, so a sale made on or before December 31, 2026 counts for 2026.5 A realized loss first offsets capital gains, then up to $3,000 of other income ($1,500 if married filing separately), and any remainder carries to later years.6

The wash-sale rule can disallow the loss. A loss is generally not deductible when substantially identical stock or securities are bought within 30 days before or after the sale; what counts as substantially identical is a question of facts and circumstances.7,8 A spouse’s purchase counts,9 and so does a purchase in the seller’s own IRA or Roth IRA, in which case the loss is disallowed and the IRA’s basis does not increase.10 In a taxable account, a disallowed loss is added to the cost of the new shares, which postpones the deduction.8

  • Confirm each sale has a trade date on or before December 31
  • List every account, including IRAs and a spouse’s accounts, that holds or buys the same security
  • Check for automatic purchases of the same security in any of those accounts
  • Record the 2026 net gain or loss and any carryforward
Common mistake
Selling a fund in a taxable account while the owner’s IRA keeps buying it on a schedule within 30 days of the sale. The loss is disallowed, and the IRA’s basis does not rise to make up for it.

Roth Conversion Before Year End

The taxable amount of a Roth conversion is normally reported as income for the year in which the money is converted, so a conversion completed by December 31, 2026 generally belongs to the 2026 return.11 Conversions made after 2017 cannot be recharacterized, so one cannot be reversed.12 The year’s required minimum distribution cannot be converted, so an IRA owner who owes one takes it before converting.13

The taxable part of a conversion also adds to adjusted gross income, and the $6,000 deduction for people 65 and older is reduced by 6 percent of modified adjusted gross income above $75,000, or $150,000 on a joint return.4 Medicare income-related premium adjustments are generally based on the tax return for the tax year two years earlier, so income earned in a given tax year generally affects premiums two years later.14,15

  • Confirm the required minimum distribution for the year has been taken before any conversion
  • Estimate adjusted gross income with the conversion included before it is made
  • Check the effect on the senior deduction and on other income-based thresholds
  • Identify where the tax on the conversion would be paid from
Common mistake
Treating a conversion as reversible. A conversion made in 2026 cannot be recharacterized if income turns out higher than modeled.

Charitable Deduction Strategies

Four 2026 rules shape charitable giving. Beginning in 2026, households that do not itemize can deduct up to $1,000 of cash gifts to qualifying public charities ($2,000 on a joint return), but not gifts to a donor-advised fund, a separately tracked account that a sponsoring organization owns and controls and on which the donor has advisory privileges.1,16 Households that itemize can deduct charitable contributions only to the extent they exceed 0.5 percent of the contribution base, which is generally adjusted gross income.2 A household either itemizes or takes the standard deduction, which for 2026 is $32,200 for joint filers and $16,100 for single filers, before any additional amount for people 65 and older.3,17 An IRA owner age 70½ or older can send money from the IRA directly to a charity as a qualified charitable distribution, up to $111,000 per person in 2026.18 For an owner who has a required minimum distribution that year, it counts toward that distribution, and it cannot go to a donor-advised fund.19,20

  • Compare projected itemized deductions with the standard deduction for 2026
  • List gifts made so far this year by date and recipient type
  • Check whether a planned gift goes to a donor-advised fund
  • Confirm any qualified charitable distribution is paid by the IRA custodian directly to the charity
Common mistake
Counting a donor-advised fund gift toward the non-itemizer deduction, or sending a qualified charitable distribution to one. Both are excluded.

Income Deferral Strategies

Income deferral means moving taxable income into a later year. A pre-tax 401(k) contribution is one form: elective salary deferrals are excluded from taxable income, and the 2026 base employee limit is $24,500, before catch-up contributions.21,22 Long-term capital gains are taxed at 0 percent up to $98,900 of taxable income for joint filers and $49,450 for single filers in 2026.23 A gain is still included in gross income, and the senior deduction’s phase-out and Medicare premium adjustments start from adjusted gross income, so a gain taken in 2026 counts toward the phase-out and, generally, toward premiums two years later.24,4,14,15 Some income has a fixed deadline. For a traditional IRA owner, a required minimum distribution is due by December 31 each year after the first, and the first is due by April 1 of the year after the owner reaches the starting age, 73 now and 75 for owners who reach 74 after 2032.25,26

  • Project 2026 taxable income with and without each item of income being realized or deferred
  • Compare the result with the 0 percent line
  • Confirm each account owner’s required minimum distribution and the date it is satisfied
  • Note income already scheduled for 2027
Common mistake
Deferring income into 2027 without checking what that year already holds, such as a required distribution, a conversion or a planned sale.

Year-End Tax Planning FAQ

What is the last day I can sell stock for tax-loss?

The sale has to be made on or before December 31 to count for that tax year. For an ordinary stock sale the trade date generally governs, not the settlement date, so a stock sale made on December 31 and settled in January is reported in the year it was made.5

Can I do a Roth conversion for the prior tax year?

Generally no. A conversion is reported as income for the year in which the money is converted, so it cannot be assigned to an earlier year.11 IRA contributions follow a different clock: they can be made for a tax year at any time during that year or until the filing deadline for that year, not counting extensions.27 Conversions made after 2017 also cannot be undone.12

When should you not do a Roth conversion?

There is no single answer. A conversion calls for care when the year’s income is uncertain, because a conversion made after 2017 cannot be reversed;12 when the year’s required minimum distribution has not been taken, because it cannot be converted;13 or, for people 65 and older, when the added taxable income would reduce the senior deduction.4

Is tax-loss harvesting even worth it?

It depends on the household. Net capital losses offset gains, and up to $3,000 a year ($1,500 if married filing separately) of any excess offsets other income.6 The replacement investment starts from its own purchase price, so some of the tax saved now can return as a larger gain later,28,29 and a wash sale postpones the loss instead.8

Can I take an RMD anytime during the year?

Generally yes, because the rule sets a deadline, not a particular day. For a traditional IRA, each year’s required distribution after the first must be taken by December 31. The first can be delayed until April 1 of the year after the owner reaches the starting age, and if it is delayed, two distributions fall in that year.25

Schedule with Security Financial Management

If you want help putting year-end planning decisions into one sequence, alongside your own tax professional, contact Security Financial Management. If you would like to review your own plan, our team is available.

Schedule a 15-minute call →

Continue with the October year-end pillar

Earlier SFM resources on this topic

Next in the October pillar: the Conversation episode, then the Market Commentary.

Sources

  1. 26 U.S.C. §170(p): for a taxpayer who does not itemize, the deduction is limited to cash contributions of not more than $1,000 ($2,000 on a joint return), and not to a §509(a)(3) organization or “for the establishment of a new, or maintenance of an existing, donor advised fund.” law.cornell.edu Accessed October 5, 2026.
  2. 26 U.S.C. §170(b)(1)(H): “the term ‘contribution base’ means adjusted gross income,” and §170(b)(1)(I) allows itemized contributions “only to the extent that the aggregate of such contributions exceeds 0.5 percent of the taxpayer’s contribution base.” law.cornell.edu Accessed October 5, 2026.
  3. IRS, tax inflation adjustments for tax year 2026: “the standard deduction increases to $32,200 for married couples filing jointly” and “the standard deduction rises to $16,100 for tax year 2026” for single taxpayers. irs.gov Accessed October 5, 2026.
  4. 26 U.S.C. §151(d)(5)(C): the $6,000 amount “shall be reduced (but not below zero) by 6 percent of so much of the taxpayer’s modified adjusted gross income as exceeds $75,000 ($150,000 in the case of a joint return).” law.cornell.edu; IRS: “For tax years 2025-2028, taxpayers who are age 65 or older may be eligible to claim an additional $6,000 deduction per person.” irs.gov Accessed October 5, 2026.
  5. IRS Publication 550 (2025): “Do not confuse the trade date with the settlement date,” with the example of a stock sale on December 31 settled in January: “Report your gain or loss on your 2025 return.” irs.gov Accessed October 5, 2026.
  6. 26 U.S.C. §1211(b): capital losses are allowed “to the extent of the gains from such sales or exchanges, plus (if such losses exceed such gains) the lower of— (1) $3,000 ($1,500 in the case of a married individual filing a separate return).” law.cornell.edu; IRS Topic no. 409: a larger net loss “can be carried forward to later years.” irs.gov Accessed October 5, 2026.
  7. 26 U.S.C. §1091(a): no deduction for a loss where, “within a period beginning 30 days before the date of such sale or disposition and ending 30 days after such date,” the taxpayer acquires substantially identical stock or securities. law.cornell.edu Accessed October 5, 2026.
  8. IRS Publication 550 (2025): whether stock is substantially identical depends on “all the facts and circumstances”; “If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities” (the IRA case is excepted). irs.gov Accessed October 5, 2026.
  9. IRS Publication 550 (2025): “If you sell stock and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale.” irs.gov Accessed October 5, 2026.
  10. Rev. Rul. 2008-5: where a taxpayer’s IRA or Roth IRA buys substantially identical stock within 30 days of a loss sale, the loss is disallowed under §1091 and the account’s basis “is not increased.” irs.gov Accessed October 5, 2026.
  11. IRS Publication 590-A (2025): conversion amounts “are normally included in income on your return for the year that you converted them from a traditional IRA to a Roth IRA.” irs.gov Accessed October 5, 2026.
  12. IRS Publication 590-A (2025): a conversion “made in tax years beginning after December 31, 2017, cannot be recharacterized as having been made to a traditional IRA.” irs.gov Accessed October 5, 2026.
  13. IRS Publication 590-A (2025): “You can’t convert amounts that must be distributed from your traditional IRA for a particular year (including the calendar year in which you reach age 73) under the required distribution rules.” irs.gov Accessed October 5, 2026.
  14. Social Security Administration, Premiums: Rules for Higher-Income Beneficiaries: “To determine your 2026 income-related monthly adjustment amounts, we use your most recent federal tax return the IRS provides to us. Generally, this information is from a tax return filed in 2025 for tax year 2024.” ssa.gov Accessed October 5, 2026.
  15. Medicare.gov, Fact Sheet: 2026 Medicare costs: income-related adjustments depend on “your modified adjusted gross income as reported on your IRS tax return from 2 years ago.” medicare.gov Accessed October 5, 2026.
  16. 26 U.S.C. §4966(d)(2): a donor advised fund is a fund or account “which is separately identified by reference to contributions of a donor or donors,” owned and controlled by a sponsoring organization, with donor advisory privileges over distributions. law.cornell.edu Accessed October 5, 2026.
  17. IRS Topic no. 501: “The standard deduction is a flat amount based on your filing status”; taxpayers aged 65 and older “may get an additional deduction.” irs.gov Accessed October 5, 2026.
  18. IRS Notice 2025-67: the aggregate amount of qualified charitable distributions not includible in gross income “is increased from $108,000 to $111,000.” irs.gov Accessed October 5, 2026.
  19. IRS Publication 590-B (2025): a qualified charitable distribution counts toward the required minimum distribution. irs.gov Accessed October 5, 2026.
  20. 26 U.S.C. §408(d)(8): a qualified charitable distribution, up to the annual dollar limit, “shall not be includible in gross income”; it is a distribution made directly by the trustee to an organization described in §170(b)(1)(A), other than a §509(a)(3) organization or a §4966(d)(2) fund or account (a donor-advised fund). law.cornell.edu Accessed October 5, 2026.
  21. IRS, 401(k) plans: elective salary deferrals are excluded from the employee’s taxable income (except for designated Roth deferrals), and distributions are includible in taxable income at retirement. irs.gov Accessed October 5, 2026.
  22. IRS news release IR-2025-111 (November 13, 2025): the employee contribution limit for 401(k) plans “is increased to $24,500, up from $23,500 for 2025.” irs.gov Accessed October 5, 2026.
  23. Rev. Proc. 2025-32, §3: for 2026 the maximum zero rate amount for long-term capital gains is $98,900 (joint returns and surviving spouses) and $49,450 (single filers). irs.gov Accessed October 5, 2026.
  24. 26 U.S.C. §61(a)(3): gross income includes “Gains derived from dealings in property”; §62(a): adjusted gross income is gross income minus the listed deductions. law.cornell.edu Accessed October 5, 2026.
  25. IRS, Retirement plan and IRA required minimum distributions FAQs: first distribution due April 1 of the following year, later ones by December 31; an RMD not withdrawn “may be subject to an excise tax of 25%, 10% if the RMD is timely corrected within two years.” irs.gov Accessed October 5, 2026.
  26. 26 U.S.C. §401(a)(9)(C)(v): “the applicable age is 73” for an individual who attains age 72 after December 31, 2022 and age 73 before January 1, 2033; “the applicable age is 75” for an individual who attains age 74 after December 31, 2032. law.cornell.edu Accessed October 5, 2026.
  27. IRS Publication 590-A (2025): “Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions.” irs.gov Accessed October 5, 2026.
  28. 26 U.S.C. §1012(a): “The basis of property shall be the cost of such property.” law.cornell.edu Accessed October 5, 2026.
  29. Michael Kitces, “When NOT To Use Tax-Loss Harvesting During Market Downturns”: tax-loss harvesting “does not permanently reduce taxes, but effectively just defers them.” kitces.com Accessed October 5, 2026.

About the Author

Dave Allen, CFP® · Managing Partner, Security Financial Management. CRD #1210763. Verify credentials at BrokerCheck by FINRA or SEC IAPD.

Disclosures

The information presented is for educational purposes only and does not constitute legal, tax, or investment advice. The deductions, limits, thresholds and deadlines referenced are set by the Internal Revenue Code and IRS guidance for the tax years named, several of them adjust each year, and all are subject to legislative and regulatory change. Decisions about selling securities, converting retirement accounts, giving to charity and the timing of income should be reviewed with a qualified tax professional familiar with your specific situation. Nothing here is a recommendation to sell, convert, give, withdraw or defer any asset or income. Past performance is not indicative of future results. Securities offered through Kestra Investment Services, LLC, member FINRA/SIPC (Kestra IS). Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS). Security Financial Management, Bluespring Wealth Partners, LLC, Kestra IS and Kestra AS are affiliated through common ownership by Kestra Holdings. Verify advisor credentials at BrokerCheck by FINRA or SEC Investment Adviser Public Disclosure.