7 Essential Year-End Tax Moves to Make Before 2026

As the calendar year winds down, it's not just a time for holiday planning—it's the most critical period for strategic tax planning. Waiting until April can cost you thousands. For U.S. taxpayers, the window to legally minimize your 2025 tax liability slams shut on December 31st. We've compiled the seven most impactful, essential tax moves you must execute before the clock strikes midnight on January 1st.

1. Maximize Your Retirement Contributions

This is often the easiest and most powerful tax break available. Contributions to traditional 401(k)s and IRAs are typically made with pre-tax dollars, immediately reducing your Adjusted Gross Income (AGI). Ensure you’ve maxed out your contributions for the year, or at least contributed enough to capture the full employer match.

• 401(k): Check your final paycheck deductions to hit the annual limit (e.g., $23,000 for 2024, plus an additional catch-up amount for those 50 and over).
• Traditional/SEP/SIMPLE IRA: Contributions for 2025 can actually be made up until the April 2026 tax deadline, but funding it before year-end gives you immediate peace of mind.

2. Harvest Investment Losses (Tax-Loss Harvesting)

If you have taxable investment accounts, review your portfolio for any holdings that have declined in value. By selling these losing investments, you can offset any capital gains you realized throughout the year, plus an additional up to $3,000 against ordinary income.

Crucial Rule: Be mindful of the **Wash Sale Rule**, which prevents you from buying a "substantially identical" security 30 days before or after the sale. (For more on investment strategy, see: Smart Investing for Beginners).

3. Accelerate Deductions and Defer Income

The goal of this year-end move is simple: push income into the next tax year (2026) and pull deductions into the current tax year (2025).

• Pay 2026 Estimated State Taxes: If you're not subject to the Alternative Minimum Tax (AMT), prepay your first quarter 2026 state or local income taxes in December 2025.
• Prepay Property Taxes: If your local jurisdiction allows, pay the property taxes due early in 2026 before year-end 2025.
• Hold Off on Invoicing: If you are self-employed, consider delaying sending client invoices until early January 2026 to defer the income recognition.

4. Utilize Your Flexible Spending Account (FSA)

If you have a health FSA, check your plan's rules immediately. Most FSAs operate on a "use it or lose it" basis, meaning any funds left in the account after December 31st are forfeited. Purchase needed prescriptions, dental work, or eligible medical supplies now.

5. Make Charitable Donations

Charitable contributions are a powerful way to reduce taxable income, provided you itemize your deductions. For maximum tax benefit, consider making donations of appreciated stock instead of cash. You avoid paying capital gains tax on the appreciation, and you get a deduction for the stock’s full market value.

Tip: Even if you don't itemize, check if your plan allows for a Qualified Charitable Distribution (QCD) from an IRA if you are over 70.5 years old.

6. Review and Top Off Your Health Savings Account (HSA)

An HSA is the most tax-advantaged account in the U.S. (triple-tax advantage). If you have a high-deductible health plan, ensure you contribute up to the annual limit. Like IRAs, 2025 contributions can be made until the 2026 filing deadline, but acting now is prudent.

7. Check Alternative Minimum Tax (AMT) Triggers

The AMT is a separate tax system designed to ensure high-income earners pay a minimum amount of tax. Certain year-end moves, particularly accelerating state and local taxes, can inadvertently trigger the AMT. Consult a Certified Public Accountant (CPA) if you anticipate a high income year or complex tax situation.

Don't let valuable tax savings slip away. These seven moves are the foundation of smart year-end financial management. Take action now to position yourself for a successful and lower-tax 2026.

Ready to get your finances in order? Stop losing money to avoidable taxes. Start your side hustle today with FinRise Pro USA!