Year-End Tax Planning for 2026: The First December Under the New Rules

This is the first year-end under the One Big Beautiful Bill Act, and several of its provisions bind for the first time this December, which means the year-end checklist that worked in prior years is incomplete for 2026. Three changes matter most. Charitable deductions now face a 0.5% of AGI floor and, for top-bracket taxpayers, a 35% cap on the deduction's value, both of which reward concentrating gifts rather than spreading them. The expanded $40,400 SALT cap phases out between roughly $505,000 and $606,000 of income, creating a band where the timing of income is unusually expensive. And the alternative minimum tax reaches further down than it did in 2025, catching taxpayers who have never owed it. The perennial moves still apply, Roth conversions, loss harvesting, qualified charitable distributions, annual exclusion gifts, and required minimum distributions, but each now interacts with the new rules, and most of them share the same hard deadline: December 31.

Why is 2026 different from prior year-ends?

Because the One Big Beautiful Bill Act, signed in July 2025, wrote several provisions to take effect in tax years beginning in 2026, and a provision that takes effect in 2026 is felt for the first time in December 2026, when the last window to respond to it closes. Generic year-end checklists recycled from earlier years do not reflect the charitable floor, the SALT phase-out band, or the lower AMT thresholds, and following them can cost real money. What follows is organized by decision rather than by statute: giving, income timing, portfolio moves, retirement accounts, and gifts to family, with the deadlines gathered at the end.

How should the new rules change your charitable giving?

Two provisions took effect this year, and both point in the same direction: concentrate.

The 0.5% AGI floor means itemizers may deduct charitable contributions only to the extent they exceed half a percent of adjusted gross income. A household with $1,000,000 of AGI loses the deduction on its first $5,000 of giving, every single year it gives. Spread $50,000 of annual giving across five years and the floor bites five times; concentrate several years of giving into one December and it bites once. The 35% cap on the value of itemized deductions for top-bracket taxpayers modestly reduces what each deducted dollar is worth, which strengthens the same logic.

The practical playbook for December: bunch planned gifts into this year using a donor-advised fund, so the deduction lands now while grants to charities continue on their normal schedule; fund the gift with appreciated securities held more than a year rather than cash, which adds avoidance of the capital gain to the deduction; and if you are 70 and a half or older, use qualified charitable distributions, which are excluded from income entirely, bypass the floor and the cap, and can satisfy required minimum distributions up to $111,000 per person in 2026. The full mechanics are in the charitable giving playbook. Note that donor-advised fund contributions of securities take processing time; initiating them in December is fine, initiating them the last week of December is risky.

Where does income timing matter most this year?

In two specific bands of income, and if you are in or near either one, December decisions carry unusual weight.

The first is the SALT phase-out band. The $40,400 SALT cap shrinks by 30 cents for every dollar of modified AGI above roughly $505,000, hitting the $10,000 floor near $606,000. Inside that band, an extra dollar of income is taxed and simultaneously destroys 30 cents of deduction, producing an effective marginal rate well above the stated bracket. If a bonus, a Roth conversion, or a discretionary asset sale can land on either side of the band rather than inside it, the timing is worth real money. Business owners in pass-through entities have an additional lever: the pass-through entity tax election sidesteps the individual cap entirely, but most states require the election and the payment inside the tax year, which makes this a December deadline, not an April one.

The second is the AMT. For 2026 the exemption phases out beginning at $500,000 of alternative minimum taxable income for single filers and $1,000,000 for joint filers, thresholds far lower than 2025's, and the exemption now disappears at 50 cents per dollar rather than 25. Taxpayers with large state tax deductions or incentive stock option exercises are the usual candidates. If you exercised ISOs earlier this year and the stock has fallen, evaluate a disqualifying disposition before December 31, which can unwind the AMT consequence; if you are contemplating an exercise, model it first. The mechanics are in our AMT guide.

Should you convert to a Roth before December 31?

A Roth conversion must be completed by December 31 to count for 2026; unlike IRA contributions, there is no grace period into the new year, and conversions can no longer be undone. That makes late fall the natural time to decide, when most of the year's income is known and the remaining bracket room can be measured rather than guessed.

The candidates are familiar: retirees in the gap years before required minimum distributions, anyone in a temporarily low-income year, and families converting deliberately for estate reasons. The 2026 wrinkles are the interactions. Conversion income counts toward the SALT phase-out band and toward the AMT calculation, so a conversion that looks attractive on bracket math alone can be expensive if it drags you through either. It also raises Medicare IRMAA surcharges two years later and, for early retirees on marketplace coverage, can eliminate ACA premium tax credits in the conversion year. None of this argues against converting; it argues for modeling the full picture, as we describe in Roth conversions for high earners.

What portfolio moves belong in December?

Three, and they are mostly unchanged by the new law, which makes them easy to overlook amid the noise.

Harvest losses. Selling positions at a loss and reinvesting in similar but not substantially identical holdings banks deductible losses without changing market exposure, subject to the 30-day wash-sale rule. Losses offset realized gains this year and carry forward indefinitely. Check for capital gain distributions from mutual funds, which are typically declared in November and December and can create taxable income even in a flat year; harvested losses absorb them.

Rebalance tax-efficiently. If the year's markets have pushed the portfolio off target, year-end is a natural checkpoint, and the sequence matters: rebalance inside retirement accounts first, direct any December cash flows to underweight assets, and pair unavoidable taxable sales with harvested losses, as covered in portfolio rebalancing.

Give the winners away. The most appreciated taxable positions are the best candidates for charitable gifts, which rebalances and eliminates embedded gain in one step.

What are the retirement account deadlines?

Several, and they are not all the same date.

Required minimum distributions for those 73 and older must generally be taken by December 31; the penalty for missing one is severe, and custodians get slow in late December. If you intend a qualified charitable distribution to count against the RMD, the funds must leave the IRA and reach the charity in time, so start early. Withdrawal ordering across account types is its own discipline, covered in tax-smart withdrawal sequencing.

Employee 401(k) deferrals must be in by December 31 through payroll, which means the last chance to adjust is your final pay cycle, not the last week of the year. The 2026 limits: $24,500 in elective deferrals, an $8,000 catch-up at 50 and older, and the larger $11,250 catch-up for ages 60 to 63, with high earners above $150,000 of prior-year wages required to make catch-ups as Roth. HSA and IRA contributions, by contrast, can be made until the April 2027 filing deadline, so they are not December emergencies, though funding the HSA earlier puts the money to work sooner; the 2026 HSA limits are $4,400 self-only and $8,750 for family coverage.

Business owners considering a cash balance plan for 2026 should be in design conversations now. Although adoption deadlines have loosened, the plan design, actuarial work, and funding decisions do not compress well into late December.

What about gifts to family?

The 2026 annual gift exclusion is $19,000 per recipient, $38,000 from a married couple, and it expires December 31 with no carryover; an unused exclusion is simply gone. For families making systematic use of annual exclusions, December is the enforcement deadline. Checks should be deposited, not merely written, and gifts of securities take transfer time.

Wisconsin families funding an Edvest 529 have more room: contributions through April 15, 2027 can count toward the 2026 state deduction of up to $5,280 per beneficiary. The lifetime estate exemption of $15,000,000 per person is now permanent, which has removed the artificial year-end urgency of prior years from large gifts; those decisions can be made deliberately, though appreciating assets still argue for transferring sooner, as discussed in high-income tax planning for 2026.

A worked example: one household's December

The following is a hypothetical illustration. A married couple, both 58, expect $560,000 of income this year, most of it salary, plus a $60,000 discretionary bonus their employer will pay in December or January at their election. They give $40,000 a year to charity and hold a taxable portfolio with both embedded gains and roughly $50,000 of harvestable losses.

Their income sits inside the SALT phase-out band, so the bonus decision is not neutral: taking it in January keeps $60,000 out of a year where each dollar also erodes the SALT deduction. They defer it. On giving, rather than writing $40,000 of checks this year and next, they contribute $120,000 of their most appreciated stock to a donor-advised fund in early December, three years of giving concentrated into one, clearing the 0.5% floor once, avoiding the embedded capital gain, and itemizing substantially this year with the standard deduction of $32,200 available for the next two. They harvest the $50,000 of losses, which absorbs their mutual funds' December capital gain distributions. They decide against a Roth conversion this year, because conversion income would compound the SALT band problem, and pencil it in for their lower-income year next year instead.

No single move is dramatic. Together they are worth tens of thousands of dollars, and every one of them had to happen, or be deliberately declined, before December 31. The example is hypothetical and simplified.

Key deadlines at a glance

Frequently asked questions

What is different about year-end tax planning in 2026?It is the first December under the One Big Beautiful Bill Act. The new 0.5% charitable floor and 35% deduction cap reward bunching gifts, the SALT cap's phase-out between roughly $505,000 and $606,000 of income makes income timing unusually consequential, and lower AMT thresholds catch taxpayers who have never owed it.

When is the deadline for a 2026 Roth conversion?December 31, 2026, with no extension into the new year and no ability to undo it. Deciding in late fall, when your income for the year is largely known, is the practical approach.

Should I bunch my charitable gifts this year?If you itemize and give regularly, probably yes. The 0.5% AGI floor applies every year you give, so concentrating several years of gifts into one, typically through a donor-advised fund holding appreciated stock, absorbs the floor once instead of repeatedly.

What year-end items can wait until April?IRA and HSA contributions for 2026 can be made until the April 2027 filing deadline, and Wisconsin's Edvest 529 deduction allows contributions to April 15, 2027. Nearly everything else, conversions, harvesting, RMDs, QCDs, and gifts, closes December 31.

Do I need to worry about the AMT this year?More people do than in 2025, because the exemption phase-out thresholds dropped to $500,000 single and $1,000,000 joint and the phase-out rate doubled. If you have large state tax deductions, exercised incentive stock options, or income near those thresholds, run the calculation before year-end rather than at filing.

When should I start year-end planning?October is the practical start: late enough that the year's income is mostly known, early enough that securities transfers, QCDs, plan design work, and state PTET payments can all be executed without racing the calendar.