Five Tax Strategies to Reduce Your 2026 Tax Bill Before Year-End

AVM DeMars

6 days ago

3 min read

Woman in a blue shirt holds a pencil over bills and papers beside a pink calculator at a desk, suggesting focused budgeting.

Cutting your tax bill comes down to a handful of choices, and all of them have to happen before December 31st.

This year carries even more urgency than usual, as new limits from the One Big Beautiful Bill (OBBB) reset several key numbers for 2026, like SALT caps, the standard deduction, and retirement contribution limits— some of which are only changed for a limited time. Any strategy built on last year's thinking won't lower your tax bill like it did before.

In this blog, we're giving you the top tax strategies to take before the end of the year to lower your 2026 bill.

1. Max Out Your Retirement Contributions

The OBBB increased the amount that you can contribute to your retirement accounts, both for W-2 employees and self-employed people.

401(k)s contribution limits have gone up to:

$24,500 for regular employees
$32,500 (with an additional $8,000 catch-up contribution) for workers 50 and older
$35,750 (with an additional $11,250 super catch-up contribution) for workers 60-63

Note: If you made over $150,000 in 2025, any catch up contributions need to be made on an after-tax basis (Roth).

IRA contribution limits have gone up to:

$7,500 for most contributors
$8,600 (with a $1,100 catch-up contribution) for those 50 and older

Contributing the max can lower your taxable income for a better return.

2. Take Advantage of SALT Savings

The federal SALT deduction cap jumped to $40,000 in 2025 and is set at $40,400 for 2026. The cap phases down once you start making $500,000, reaching the minimum of $10,000.

With such high property taxes across New York, New Jersey, and Connecticut, these deductions can significantly reduce the amount of tax you owe come filing season. However, if you reach the high income threshold, you'll want professional guidance to ensure you're still taking the maximum deduction you can under this new limit.

3. Manage Your Investment Income

If you experienced investment losses, selling those positions before the year’s end can help you offset any realized capital gains dollar-for-dollar. You can also claim up to $3,000 of net losses against ordinary income each year and carry any excess into the following year.

On the other hand, if you've had a year with unusually low income, it may be worth partially converting your Roth savings. Since this depends on your current tax bracket, expected future bracket, and available cash to cover the tax, you’ll want to model this with a professional tax advocate before making any decisions.

4. Give Donations Strategically

With the OBBB raising the standard deduction to $16,100 for an individual filer and $32,200 for joint filers, it can make taking that deduction over itemizing the more strategic choice. However, you can still claim deductions for charitable donations by bundling 2 to 3 years of giving into one tax year via a donor-advised fund.

For IRA owners at least 70 1⁄2 in age, a Qualified Charitable Distribution sent directly from your IRA to a charity counts toward your required minimum distributions without first adding to your adjusted gross income, keeping your tax liability low.

5. Make Business Decisions Early

As a business owner, you have additional decisions to make in building your tax strategy.

These can include planning for:

Section 179 Deductions: Any equipment, software, or vehicle purchases you make must be fully in service by December 31st to be claimed as an expense. Consider making upcoming purchases sooner.
QBI Deductions: Qualified business income depends on timing, your entity structure, and W-2 wages paid. Especially if you meet high earning thresholds, you need to get aligned well before the year-end.

AVM DeMars is Your Trusted Long Island Tax Team

The clock is ticking if you want to take advantage of these tax strategies.

AVM DeMars has been helping individuals and business owners across the tri-state area optimize their tax filings for decades. We can help you ensure these opportunities become an action plan that lower your tax liability and keep the most money in your pocket come tax season.