As the year winds down, many people begin thinking about holidays, travel, and family plans. But this season is also one of the most important windows for tax planning. Some strategies require more time and analysis than others, so the order matters. The first steps offer the most flexibility: Roth conversions and tax loss harvesting.
These moves help shape your taxable income for the year, reduce future tax burdens, and create opportunities for charitable giving later in the season.
1. Roth Conversions: Your Most Flexible Year-End Strategy
A Roth conversion allows you to move money from a traditional IRA into a Roth IRA, paying taxes now to reduce taxes later.
The IRS publishes annual tax brackets, and according to the 2026 IRS tax tables, the 24% bracket tops out at $105,700 for single filers and $211,400 for married couples filing jointly. Comparing your income to these thresholds helps you determine how much you can convert without moving into a higher bracket.
Action steps:
- Review your projected 2026 income, including wages, Social Security, pensions, and investment income.
- Identify “bracket space” you can fill with a Roth conversion.
- Consider whether this year is a lower income year due to retirement, business slowdown, or a life transition.
- Complete conversions by December 31.
Roth conversions also reduce future Required Minimum Distributions (RMDs), which can help lower future taxable income and reduce the chance of Medicare IRMAA surcharges. The Social Security Administration (SSA) notes that higher income can increase Medicare premiums, making early planning especially valuable.
2. Tax-Loss Harvesting: Pairing Losses with Gains for Smart Year-End Planning
Tax loss harvesting involves selling investments at a loss to offset gains or reduce taxable income. This strategy is especially helpful for business owners, investors with concentrated positions, and anyone who realized gains earlier in the year.
Harvested losses can offset capital gains dollar for dollar and up to $3,000 of ordinary income, according to IRS Publication 550.
Action steps:
- Review taxable investment accounts for positions trading below cost.
- Coordinate sales with your broader tax picture, especially if you realized gains earlier in the year.
- Avoid wash-sale rules by not repurchasing the same security within 30 days.
- Use harvested losses to create “room” for Roth conversions without increasing your overall tax bill.
Tax loss harvesting also sets the stage for charitable giving. If you have appreciated stock you don’t want to sell, donating it directly to a charity or donor advised fund (DAF) can eliminate capital gains tax entirely.
3. Donating Appreciated Stock to Charity or a Donor-Advised Fund (DAF)
After reviewing your gains and losses, you may find appreciated positions that are ideal for charitable giving. Donating appreciated stock allows you to support causes you care about while avoiding capital gains tax.
Action steps:
- Identify appreciated positions held for more than one year.
- Donate shares directly to a qualified charity or DAF.
- Keep documentation from the charity for tax reporting.
- Stock transfers to a charity can take days to weeks, so start by early December.
- Complete transfers before year-end to ensure processing.
Start Early to Maximize Your Year-End Tax Plan
Roth conversions, tax loss harvesting, and donating appreciated stock are the first steps in a smart year-end tax strategy. They give you flexibility, help shape your taxable income, and set the stage for charitable giving and RMD planning this season.
If you want help modeling your tax bracket, reviewing your investments, or planning charitable gifts, schedule a conversation with Longview Insurance and Investments.
Sources
- Internal Revenue Service. “Tax Brackets and Rates for 2026.” irs.gov.
- Internal Revenue Service. “Publication 550: Investment Income and Expenses.” irs.gov.
- Morningstar. “2026 Retirement Tax Outlook.” morningstar.com.
- Charles Schwab. “Tax-Loss Harvesting Guide.” schwab.com.