Year-End Tax Planning for 2026: Brackets, Limits and New Deductions

Year-end tax planning means taking steps before Dec. 31 that lower the tax you’ll owe when you file your 2026 return in 2027. The biggest levers for most households are maxing out pre-tax retirement and HSA contributions, harvesting investment losses, timing charitable gifts under the new 2026 rules, and making sure you claim the new deductions for tips, overtime, car loan interest and seniors if you qualify.

2026 is the first full year many provisions of the One Big Beautiful Bill Act (OBBBA), which the IRS now calls the Working Families Tax Cuts, are in effect. Some rules changed in your favor and some, such as the new charitable floor for itemizers, did not. Here’s what the numbers are and how to use them before the year ends.

2026 federal tax brackets and standard deduction

The IRS published these figures in Revenue Procedure 2025-32. Brackets apply to taxable income, which is your income after the standard or itemized deduction.

The 2026 standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly and $24,150 for heads of household. Taxpayers 65 or older or blind add $1,650 each if married, or $2,050 if unmarried.

Max out tax-advantaged accounts

Pre-tax 401(k) deferrals cut your taxable income dollar for dollar, so the savings equal your top bracket rate. If you’re behind, ask HR now to raise your deferral for the last paychecks of the year. Roth IRA eligibility phases out at modified AGI of $153,000 to $168,000 for single filers and $242,000 to $252,000 for joint filers in 2026. For help choosing, see 401(k) vs. Roth IRA.

HSAs are the only account with a triple tax break: deductible contributions, tax-free growth and tax-free withdrawals for qualified medical costs. You need a high-deductible health plan with a deductible of at least $1,700 (self-only) or $3,400 (family) in 2026. Compare options in our HSA vs. FSA guide.

Tip: Check your year-to-date withholding against your expected 2026 tax now. If you’re short, increasing withholding from your last paychecks counts as if it were paid evenly all year, which can help you avoid an underpayment penalty. Our take-home pay calculator shows the effect on each check.

Claim the new deductions (if you qualify)

These deductions, created by the OBBBA for tax years 2025 through 2028, are available whether or not you itemize. They’re claimed on the new Schedule 1-A.

• Qualified tips: up to $25,000 a year for workers in occupations that customarily receive tips. The deduction phases out above $150,000 of MAGI ($300,000 joint). Certain specified service businesses are excluded.
• Qualified overtime: up to $12,500 ($25,000 joint) of the premium portion of FLSA-required overtime (the “half” in time-and-a-half), with the same $150,000/$300,000 phase-out.
• Car loan interest: up to $10,000 a year on a loan taken out after Dec. 31, 2024, to buy a new personal-use vehicle with final assembly in the U.S. Leases and used cars don’t qualify. The phase-out starts at $100,000 of MAGI ($200,000 joint). See our auto loans guide.
• Senior deduction: an extra $6,000 per person 65 or older by Dec. 31 ($12,000 if both spouses qualify), on top of the regular additional standard deduction. It phases out above $75,000 of MAGI ($150,000 joint).

All four require a valid Social Security number, and married couples must file jointly. Because the phase-outs are based on MAGI, a year-end 401(k) or HSA contribution that lowers your income can also help you keep more of these deductions.

Itemizing and the 2026 SALT cap

The state and local tax (SALT) deduction cap is $40,400 for 2026 ($20,200 if married filing separately). The cap phases down once MAGI exceeds $505,000 ($252,500 married filing separately) but never drops below $10,000. With a higher cap, more homeowners in high-tax states may now itemize, so compare your mortgage interest, SALT and charitable gifts against the standard deduction before year-end.

If you’re in the 37% bracket, note that beginning in 2026 the tax benefit of itemized deductions is limited to 35 cents per dollar.

Charitable giving under the 2026 rules

• Non-itemizers: starting with 2026 returns, you can deduct up to $1,000 ($2,000 married filing jointly) of cash gifts to qualifying charities. Gifts to donor-advised funds and supporting organizations don’t count.
• Itemizers: only charitable gifts above 0.5% of AGI are deductible. At $200,000 of AGI, the first $1,000 of giving produces no deduction.
• Appreciated stock: donating shares you’ve held more than a year generally lets you deduct the market value (if you itemize) and avoid capital gains tax on the growth.
• Bunching: itemizers can combine two or more years of gifts into one year, often through a donor-advised fund, to clear the standard deduction and the 0.5% floor.
• Qualified charitable distributions: IRA owners 70½ or older can give directly from an IRA to charity; the gift isn’t taxable income and can count toward required minimum distributions.

Harvest investment losses (and gains)

In a taxable brokerage account, selling investments at a loss lets you offset capital gains, and up to $3,000 of net losses a year can offset ordinary income, with the rest carried forward. To keep the loss, don’t buy the same or a “substantially identical” security within 30 days before or after the sale (the wash-sale rule).

The opposite move can also work. In 2026, long-term gains and qualified dividends are taxed at 0% up to $49,450 of taxable income for single filers and $98,900 for joint filers. If you’re below those levels, consider selling winners to “harvest” tax-free gains and reset your cost basis. For broader context, see our investment strategies guide.

Worked example: a single filer’s year-end moves

Maria is single, earns $95,000 in wages and takes the standard deduction. Her taxable income is $95,000 − $16,100 = $78,900, and her 2026 federal income tax is $12,070.

Before Dec. 31 she:

1. Adds $5,000 to her 401(k) through her final paychecks,
2. Harvests $3,000 of net capital losses, and
3. Gives $1,000 in cash to a qualifying charity, deductible under the new non-itemizer rule.

Every dollar came off income taxed at 22%, so the moves saved her $1,980 in federal tax, and the $5,000 is still hers for retirement. Project the long-term value with our retirement calculator.

More year-end checks

• Self-employed or side income: make your fourth-quarter estimated payment by Jan. 15, 2027, and consider buying needed equipment before Dec. 31. Our side hustle guide covers the tax basics, including the $2,000 Form 1099-NEC threshold for 2026.
• Use-it-or-lose-it accounts: spend down health or dependent-care FSA balances if your plan has no grace period or carryover.
• Required minimum distributions: if you’re 73 or older, take your RMD by Dec. 31 to avoid a penalty.
• Gifts to family: you can give up to $19,000 per recipient in 2026 without filing a gift tax return.

Tip: Keep receipts and records for the new deductions. You’ll need your W-2 or other statements showing tips or overtime, and the vehicle identification number (VIN) for the car loan interest deduction.

Sources: IRS Revenue Procedure 2025-32 (2026 brackets, standard deduction, 0% capital gains thresholds, gift exclusion); IRS news release IR-2025-111 (2026 retirement limits); IRS, “Correction to state and local income tax deduction amount in the 2026 Form 1040-ES” (2026 SALT cap); IRS Working Families Tax Cuts pages on deductions for working Americans and seniors and on charitable gifts by non-itemizers (2026); Thomson Reuters Tax & Accounting on the 0.5% floor and 35% limit (2026); HealthEquity summary of 2026 HSA limits. Calculations by FinInfoBlog. This article is for educational purposes and isn’t financial or tax advice.

Written by Chanchala

Founder & Lead Writer · B.Sc. Mathematics (Honors) · 9 years in banking & lending

Chanchala is the founder and lead writer of FinInfoBlog. She holds a B.Sc. in Mathematics (Honors) and has 9 years of experience in banking and lending. She writes plain-English guides on savings, CDs, loans, credit and personal finance for U.S. readers, and makes sure every example shows the math behind the money decision. How we research and fact-check.