Year-End Tax Moves: 7-Point Decision Checklist for Q4 2026

The year-end tax calendar most people get wrong

Here's the myth: “I have until April 15 to handle my taxes.” That's true for filing. It's not true for most of the moves that actually reduce your bill. Roth conversions, tax-loss harvesting, charitable contributions, 401(k) deferrals, FSA spending, and estimated-tax safe harbors all lock on December 31. By the time you sit down with your tax software in February, the window is closed.

The exceptions: Traditional and Roth IRA contributions can be made until April 15 of the following year. HSA contributions made directly (not through payroll) can also be made until April 15. Everything else on this list is a December 31 hard stop.

Who this checklist is for

Households with $200,000–$1,000,000 in combined income (W-2, 1099, investment). This is the range where year-end planning has the highest dollar-per-hour return: you're above the thresholds where NIIT, IRMAA, and bracket management matter, but below the level where a full-time family office handles it for you. Filing status: primarily married filing jointly, but single and head-of-household filers face the same deadlines at lower thresholds.

Move 1: Fill your current bracket with a Roth conversion

Deadline: December 31. Under IRC § 408A, the conversion must settle by year-end. TCJA eliminated recharacterization — once converted, you cannot undo it.

The 2026 MFJ brackets (IRS Rev. Proc. 2025-32):

The play: estimate your 2026 taxable income as of October. If you're sitting at $340,000 MFJ, you have $54,600 of room before hitting the 32% bracket ($394,600 − $340,000). Converting $54,600 from a Traditional IRA to Roth fills the 24% bracket. You pay 24% now instead of 32%+ later when RMDs, Social Security, and portfolio income stack up in your 70s.

Watch out for: Roth conversion income increases MAGI. If that pushes you above the NIIT threshold ($250,000 MFJ under IRC § 1411), you'll owe an additional 3.8% on net investment income. If it pushes your 2026 MAGI above an IRMAA tier, your 2028 Medicare premiums increase. Model both before converting.

Move 2: Harvest tax losses before the wash-sale window closes

Deadline: December 31 (practically, mid-December to allow settlement).

Under IRC § 1091, a loss is disallowed if you buy a “substantially identical” security within 30 days before or after the sale. For losses realized in late December, the replacement window extends into late January — so the loss is valid as long as you don't repurchase the same security in that 61-day window.

The math that matters: harvested losses offset capital gains dollar-for-dollar. After gains are netted, up to $3,000 of excess losses can offset ordinary income per year (IRC § 1211(b)), with unlimited carry-forward. At a 24% bracket, $3,000 of losses saves $720 in federal tax. But the real value is offsetting large realized gains — a $50,000 harvested loss against a $50,000 realized gain saves $9,400 at the 15% LTCG + 3.8% NIIT rate.

The part most people miss: the wash-sale rule does NOT apply to cryptocurrency. IRS has not extended § 1091 to digital assets (confirmed through 2025 IRS guidance). You can sell crypto at a loss and immediately repurchase the same token. This makes crypto the most flexible asset class for year-end loss harvesting.

Move 3: Max retirement account contributions

Deadline: December 31 for 401(k)/403(b)/457(b) deferrals. April 15 for IRA/HSA direct contributions.

The SECURE 2.0 super catch-up (§ 109) is new and widely overlooked: if you're age 60–63 in 2026, your 401(k) catch-up is $11,250 instead of $8,000 — a total deferral of $35,750. At the 32% bracket, that extra $3,250 saves $1,040 in federal tax.

Roth IRA income phase-out (2026): Single $150K–$165K; MFJ $236K–$246K. Above those thresholds, use the backdoor Roth: contribute to a non-deductible Traditional IRA, then convert. Still legal — no income limit on conversions. But the pro-rata rule under IRC § 408(d)(2) applies if you have any pre-tax IRA balance.

Move 4: Bunch charitable contributions via a DAF

Deadline: December 31.

The 2026 standard deduction is $31,500 MFJ ($15,750 single). If your non-charitable itemized deductions (SALT + mortgage interest + medical) fall below that threshold, your annual charitable giving produces $0 in tax benefit. Bunching two or three years of giving into a Donor-Advised Fund in a single year pushes total itemized deductions above the standard deduction, creating a net benefit in the bunch year.

Appreciated stock doubles the benefit. Contributing long-term appreciated securities to a DAF lets you deduct the full fair market value under IRC § 170(e)(1)(B)(i) and avoid the embedded capital gain. The deduction is capped at 30% of AGI for appreciated property (vs 60% for cash), with a five-year carry-forward.

Move 5: Manage the NIIT threshold

The Net Investment Income Tax under IRC § 1411 adds 3.8% on the lesser of net investment income or the amount MAGI exceeds $200,000 (single) / $250,000 (MFJ). These thresholds have not been indexed for inflation since 2013 — they hit more households every year.

Year-end moves that increase MAGI — Roth conversions, realized capital gains, large bonuses — widen NIIT exposure. Moves that reduce it — Traditional 401(k) deferrals, HSA contributions, contributing appreciated stock to a DAF instead of selling — narrow it. The NIIT is a purely additive tax: it stacks on top of your LTCG rate, producing an effective top federal rate of 23.8% on long-term gains for high-income filers.

Move 6: Check your IRMAA exposure two years forward

Medicare Part B and Part D premiums for 2028 are based on your 2026 MAGI. The base Part B premium is projected at $185/month (2026). IRMAA surcharges begin at $206,000 MFJ:

For a couple, double the surcharge. A couple at $260,000 MAGI pays $4,440/year more in Part B premiums than a couple at $205,000. If a year-end Roth conversion pushes your 2026 MAGI from $200,000 to $210,000, the $10,000 conversion costs you $888 in extra Medicare premiums per person in 2028 — on top of the income tax on the conversion itself. Model the IRMAA cliff before deciding how much to convert.

Move 7: State-residency planning (if you're moving)

If you're moving from a high-tax state to a no-income-tax state (Florida, Texas, Nevada, Wyoming, Tennessee, and four others), the timing of that move relative to December 31 can shift your entire year's income. Most states tax based on residency for the portion of the year you were resident. Establishing residency in a no-tax state before year-end means income earned or realized after the move date avoids state tax.

The part most people miss: California, New York, and a few other states have “safe harbor” rules and aggressive audit postures for departing high-income residents. California's top rate is 13.3%; New York's is 10.9%. If you're selling a business, exercising stock options, or realizing large capital gains, the state-residency question can be a six-figure decision. Get it right before December 31 — not after.

Worked example: Dallas couple, $420K combined income

A Dallas couple, both 52, married filing jointly. He earns $260,000 as a software engineering director; she earns $160,000 as a healthcare administrator. They have $1.4M in his Traditional 401(k), $180,000 in her Traditional IRA, $120,000 in a joint taxable brokerage, and $40,000 in two HSAs. Texas — no state income tax. It's October 2026.

Their current position

• Combined W-2 income: $420,000
• Standard deduction (MFJ 2026): $31,500
• Taxable income before adjustments: ~$388,500
• Federal bracket: 24% (MFJ $206,701–$394,600)
• MAGI: ~$420,000 — well above the $250,000 NIIT threshold

The Q4 checklist, applied

1. Roth conversion — skip this year. Their taxable income is already near the top of the 24% bracket. Converting would push them into 32%. No bracket-fill opportunity. Flag for future: if either leaves their job or takes a sabbatical, the gap-year conversion window opens.

2. Tax-loss harvesting — $18,000 available. Their brokerage holds $22,000 in unrealized losses across three positions (purchased during the 2025 market correction). Selling those positions harvests $18,000 in net losses after netting against $4,000 of unrealized gains. They offset $3,000 against ordinary income (saving $720 at 24%) and carry forward $15,000 for future gains. They replace the sold positions with similar-but-not-identical index funds to maintain market exposure. Total 2026 tax savings: $720, plus $15,000 of loss carry-forward.

3. Max 401(k) deferrals. He's contributed $18,000 year-to-date. He increases his deferral rate for November–December paychecks to hit the $24,500 limit — $6,500 more at 24% = $1,560 in tax savings. She's already on track to max out. Both contribute to Roth 401(k) buckets since they're above the 24% bracket and expect lower retirement income — but that's a Traditional vs Roth call they model separately.

4. HSA top-up. Family coverage, 2026 limit: $8,750. They've contributed $6,000 via payroll. They increase the payroll deduction to hit $8,750 by December 31. The extra $2,750 reduces MAGI (above-the-line deduction), saving $660 at 24% — plus avoiding FICA if contributed through payroll. $660+ saved.

5. Charitable bunching. They give $12,000/year to three charities. Their non-charitable itemized deductions: $10,000 SALT (capped) + $9,000 mortgage interest = $19,000. Total with charity: $31,000 — below the $31,500 MFJ standard deduction. They bunch three years ($36,000) into a DAF this December. Itemized deductions in 2026: $55,000. Excess over standard deduction: $23,500 × 24% = $5,640 in tax savings over three years. In 2027 and 2028, they take the standard deduction.

6. NIIT — no avoidance available. At $420,000 MAGI, they're $170,000 above the $250,000 MFJ NIIT threshold. Their investment income (dividends, interest, harvested gains): ~$14,000. NIIT: $532. The only way to reduce it further would be increasing above-the-line deductions — already maxed via 401(k) and HSA.

7. IRMAA — not applicable yet. Both are 52. Medicare starts at 65. But their 2026 MAGI will set their 2028 IRMAA tier — irrelevant at 54. Flag for age 63+.

Combined Q4 savings

That's $8,580 in identified savings from four moves executed in Q4. None required exotic planning. None required a change in lifestyle or giving pattern. The only input was timing.

The December 31 deadline stack

Every move above has a specific cutoff. Here's the full stack for reference:

Where the opposite is right: when to skip year-end moves

Don't force a Roth conversion into a higher bracket. If converting pushes you from 24% to 32%, the 8-percentage-point jump costs $8,000 per $100,000 converted. That's not arbitrage — that's overpaying now. Only convert into the current bracket or a bracket you're confident is lower than your future retirement bracket.

Don't harvest losses you'll immediately need to replace. If your portfolio is down 15% and you're planning to stay fully invested, harvesting and replacing with similar funds is smart. But if you're about to need the cash (house down payment, tuition), realizing the loss and not reinvesting means you're actually selling — not harvesting.

Don't bunch charity if you're already itemizing. Bunching creates value by toggling between the standard deduction and itemized deductions across years. If your non-charitable itemized deductions already exceed $31,500 MFJ, you're itemizing every year regardless — bunching adds no toggle benefit. You still get the charitable deduction, but you get it every year anyway.

Don't ignore the ACA premium cliff. If you're on a marketplace plan (early retiree, self-employed, between jobs), year-end income that pushes your MAGI above the premium subsidy cliff can cost more in lost subsidies than the tax move saves. Model ACA impact before converting or realizing gains.