Year-End Tax Planning: 6 Strategies to Consider Before December 31

As the year winds down, it’s worth taking a little time now to review your finances in time to meet the December 31. A few decisions now could help lower your tax bill, make your investments more tax efficient or put you in a better position for retirement.

The best opportunities depend on your income, investments, family situation, and how close you are to retirement.

Here are six year-end tax moves worth considering before the calendar turns.

1. Make the Most of Your Retirement Contributions

If you’re in your peak earning years, contributing to a traditional 401(k) or similar workplace retirement plan can reduce your taxable income while helping you save for the future.

For 2026, the employee contribution limit for most 401(k) plans is $24,500. If you’re age 50 or older, you may be eligible to contribute an additional $8,000. Those ages 60 through 63 may qualify for an even higher catch-up contribution limit.

If you haven’t reached your contribution goal, check whether you can increase your remaining paychecks’ contributions before year-end.

Keep in mind that Roth 401(k) contributions work differently: they generally don’t reduce your taxable income today, but qualified withdrawals can be tax-free in retirement.

2. Review Your Investment Portfolio for Tax-Loss Harvesting Opportunities

If you own investments in a taxable brokerage account, take a look at any positions currently worth less than you paid for them (i.e. you have a loss).

Selling an investment at a loss can help offset capital gains elsewhere in your portfolio. If your losses exceed your gains, you may also be able to deduct up to $3,000 of net capital losses against ordinary income each year, with unused losses generally carried forward.

But tax-loss harvesting isn't simply about selling investments that have declined. You’ll want to consider whether the investment still belongs in your portfolio, how to maintain your desired asset allocation and whether buying it back could trigger the wash-sale rule.

The goal is to make your portfolio more tax-efficient without losing sight of your long-term investment strategy.

3. Consider Whether a Roth Conversion Makes Sense

A Roth conversion involves moving money from a traditional IRA to a Roth IRA and paying income tax on the amount converted.

Why consider paying taxes now? Roth conversions can be useful when you expect your tax rate to be higher in the future, have a year with unusually low income or want to reduce future required minimum distributions from traditional retirement accounts.

For people in their 50s and early 60s, the years leading up to retirement can present an opportunity to evaluate this strategy. However, a conversion can also push you into a higher tax bracket or affect other income-based costs (like the two year Medicare look back).

Rather than converting a large amount all at once, consider whether converting a portion of your retirement savings makes sense within your broader tax plan.

4. Be Strategic About Charitable Giving

If charitable giving is part of your year-end plans, the way you donate can matter as much as how much you give.

For example, if you own stocks or mutual funds in a taxable account that have increased significantly in value, donating appreciated investments directly to a qualified charity may help you avoid capital gains tax on the appreciation while potentially qualifying for a charitable deduction and keep your cash free for other uses. Stocks or funds that you may have a large position in could be a good candidate for donating since you’ll serve a dual purpose of giving…including diversifying your portfolio.

You might also consider bunching several years of charitable contributions into one year, sometimes through a donor-advised fund. You can estimate your itemized deductions to determine the potential tax benefit. (Note that many became eligible for itemized deductions again once the SALT deduction was increased for 2025.)

Tax rules for charitable contributions are changing in 2026, so it's especially important to review how the current rules apply to your situation before making a large gift.

5. Check Your Tax Withholding and Estimated Payments

A year-end review can help you avoid an unpleasant surprise when you file your tax return.

Did you receive a substantial bonus, exercise stock options, sell investments, earn additional business income or experience another significant financial change this year? Your tax withholding may not have kept pace.

Reviewing your year-to-date income, withholding and estimated tax payments can help you determine whether you need to make an adjustment before the year ends.

This is particularly important for business owners, high-income households, and anyone with substantial investment income.

6. Look at Your Taxes Over the Next 5 to 10 Years, Not Just This Year

One of the most valuable tax-planning opportunities is to look beyond your next tax return.

If you're in your 40s, 50s, or early 60s, you may be balancing college expenses, a high household income, retirement savings, and the possibility of retiring within the next decade or two.

Decisions made today can affect your future tax bills. For example, traditional retirement account withdrawals are generally taxable, while Roth withdrawals may be tax-free if the requirements are met. The timing of Social Security benefits, retirement account withdrawals, and Roth conversions can also influence how much tax you pay throughout retirement.

A strategy that saves you money this year isn't always the strategy that saves you the most over your lifetime.

Looking at the bigger picture can help you make better decisions about when to save, when to convert, and when to withdraw.

Make Time for a Year-End Review

You don't need to make every financial decision before December 31. But it's worth identifying which opportunities have a deadline and which deserve more careful planning.

Start by reviewing your retirement contributions, taxable investments, charitable giving, and estimated tax payments. If your income or financial circumstances changed significantly this year, consider whether your current strategy still makes sense.

At Coriander Financial Group, we bring investment management and tax planning together to help clients understand how today's financial decisions can affect their long-term plans.

A year-end review can be a good place to start.