7 Tax Moves to Consider Early in 2026
January 21, 2026
As 2026 gets underway, uncertainty is everywhere. Investors are watching the global economy, wondering whether market volatility will resurface, and speculating about where interest rates go next. While none of us can predict the future, there are areas where preparation still pays off—tax planning chief among them.
Taxes may be unavoidable, but overpaying is not. With several tax law changes now in effect, taking a proactive approach early in the year can help you retain more of what you earn and position your savings for long-term growth.
Here are seven tax-focused strategies worth reviewing sooner rather than later.
1. Understand Which Deductions May Apply to You
There is some welcome news for taxpayers this year. Inflation adjustments have expanded tax brackets and increased the standard deduction, which could translate into lower effective tax rates for many households.
For 2026, the standard deduction rises to $32,200 for married couples filing jointly and $16,100 for single filers. Because tax brackets have also widened, it may take more income than in prior years to push you into a higher marginal rate.
If you do not itemize
Taxpayers age 65 or older may qualify for a new senior deduction worth $6,000 for single filers and $12,000 for married couples. This deduction is available from 2025 through 2028 and does not require itemizing. It does begin to phase out once modified adjusted gross income exceeds $75,000 for single filers and $150,000 for joint filers.
Importantly, this new deduction is in addition to the long-standing age-based deduction already available to taxpayers over 65, which remains $2,000 for single filers and $3,200 for married couples where both spouses qualify.
Non-itemizers can also take advantage of a new charitable deduction in 2026, allowing up to $1,000 in cash donations to be deducted ($2,000 for married couples filing jointly).
If you itemize
Itemized deductions may still make sense if your total exceeds the standard deduction. Common categories include state and local taxes, medical expenses, mortgage interest, charitable contributions, and certain casualty losses tied to federally declared disasters.
One strategy to consider is “bunching” charitable gifts—combining multiple years’ worth of donations into a single tax year to cross the itemization threshold. This approach may be more relevant now that charitable deductions are subject to a new 0.5% income floor beginning in 2026, which could reduce the benefit of smaller annual gifts.
High-income taxpayers should also be aware that the value of itemized deductions is capped at an effective rate of 35% for those in the top tax bracket. The long-standing limit allowing cash gifts to public charities of up to 60% of adjusted gross income is now permanent.
Another option for itemizers is donating appreciated assets held longer than one year. Doing so can allow you to deduct the fair market value while avoiding capital gains taxes, subject to a 30% AGI limitation, with excess deductions carried forward for up to five years.
2. Take Advantage of Increased Contribution Limits
You still have until April 15, 2026, to make IRA and HSA contributions for the 2025 tax year, and earlier contributions generally mean more time for tax-advantaged growth. Some taxpayers affected by federally declared disasters may have extended deadlines, and 529 contribution deadlines vary by state.
For 2026, contribution limits have increased:
● IRAs: Up to $7,500 per individual, plus an additional $1,100 catch-up contribution for those age 50 or older.
● HSAs: $4,400 for self-only coverage and $8,750 for family coverage. Individuals age 55 or older may contribute an extra $1,000.
● 529 plans: While lifetime limits are set by state rules, individuals may generally gift up to $19,000 per beneficiary ($38,000 per married couple) without triggering gift taxes.
529 plans also allow for accelerated gifting—up to five years’ worth of annual exclusions in a single year—which can be a powerful estate planning tool, though it comes with important rules if the donor passes away within the five-year window.
Traditional IRA and HSA contributions may reduce current taxable income if eligibility rules are met. Roth IRA contributions are not deductible, but qualified withdrawals can be tax-free, making them an important long-term planning option.
3. Be Intentional About Where You Hold Investments
If you accumulated additional savings over the past few years, where those dollars are invested can be just as important as how they are invested.
Tax-efficient asset placement means aligning certain investments with the right account types. Interest-generating assets, such as bonds and CDs, may be better suited for tax-deferred accounts like IRAs, while growth-oriented assets that benefit from favorable capital gains rates may be more appropriate in taxable accounts.
With interest rates potentially shifting, some investors may also consider locking in yields on individual bonds or CDs. Evaluating the tax impact alongside portfolio allocation can help improve after-tax results.
4. Use Tax-Loss Harvesting Thoughtfully
In taxable accounts, realized investment losses can be used to offset realized gains and, in many cases, up to $3,000 of ordinary income each year. Excess losses can be carried forward indefinitely.
Tax-loss harvesting does not require abandoning your investment strategy. You may be able to sell a losing position and replace it with a similar—but not substantially identical—investment. Care must be taken to avoid wash-sale violations, so professional guidance is often advisable.
5. Evaluate Whether a Roth Conversion Makes Sense
A Roth conversion involves moving assets from a pre-tax IRA to a Roth IRA and paying taxes on the converted amount. While that creates a current tax bill, future growth may be tax-free if distribution rules are met.
Roth accounts also offer estate planning advantages, as they are not subject to required minimum distributions during the original owner’s lifetime. With tax rates scheduled to rise unless Congress acts, converting at today’s rates may be worth evaluating for some households.
6. Perform a Midyear Tax Checkup
A periodic review of tax withholding can help prevent unpleasant surprises at filing time. The IRS provides tools to help assess federal withholding, and state tax agencies offer similar resources.
Accurate recordkeeping is also essential. Deductions and credits are only valuable if they are properly documented and claimed.
Remote work has added another layer of complexity. If your work location and residence are in different states, reviewing residency rules and long-term domicile planning may uncover meaningful tax savings.
7. Revisit Your Estate Planning Strategy
Recent legislation increased the lifetime estate and gift tax exemption to $15 million per individual, with inflation adjustments beginning in 2027. Annual gifting remains a valuable tool, allowing $19,000 per recipient in 2026 without gift tax consequences.
An updated estate plan can help ensure that these exemptions are used effectively and aligned with your broader financial objectives.
Final Thoughts
Effective tax planning is ongoing, not seasonal. Reviewing your strategy early—and revisiting it throughout the year—can help reduce taxes over time and keep more of your wealth working for you. A qualified tax professional or financial advisor can help integrate these ideas into a cohesive plan tailored to your circumstances.
Sources:
https://www.fidelity.com/learning-center/personal-finance/tax-moves
Disclosure:
This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.
This material is provided as a courtesy and for educational purposes only.
These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.