Year-End Tax Planning Calculator 2026 — Optimize Before Dec 31

The five highest-impact year-end moves are: (1) Maximize retirement contributions — 401(k) salary deferrals must be elected before December 31 (though you have until April 15 to make IRA contributions); (2) Harvest capital losses to offset gains; (3) Make charitable donations before year-end, or bunch multiple years into a Donor-Advised Fund; (4) Defer year-end bonuses or invoices to January if you expect to be in a lower bracket next year; (5) Check Roth conversion opportunities — any remaining space in your current bracket is forever lost after December 31.

Tax loss harvesting means selling investments that are currently below their cost basis to realize a capital loss. These losses can offset capital gains dollar-for-dollar, and up to $3,000 of excess losses can offset ordinary income annually. Losses beyond $3,000 carry forward indefinitely. Key rules: (1) Watch out for the wash sale rule — you cannot buy a "substantially identical" security within 30 days before or after the sale; (2) Short-term losses (assets held <1 year) first offset short-term gains, then long-term; long-term losses first offset long-term gains, then short-term. Review all taxable accounts in October-November to plan effectively.

Bunching is a strategy where you contribute two or more years of charitable giving in a single year to itemize deductions in that year, then take the standard deduction in alternate years. This works best if: your charitable giving is significant (e.g., $10,000+/year), your other itemized deductions (mortgage interest, state taxes) are below the standard deduction ($16,100 single / $32,200 married). Use a Donor-Advised Fund (DAF) to bunch a large donation now (getting the full deduction this year) and then distribute to charities over multiple years.

A Roth conversion converts traditional IRA or 401(k) funds to a Roth account, triggering current ordinary income tax on the converted amount but enabling tax-free growth forever. The optimal approach: (1) Estimate your 2026 taxable income in November/December; (2) Calculate how much room remains in your current tax bracket; (3) Convert up to the top of that bracket — especially the 12% bracket ($0–$48,475 single) or 22% bracket ($48,475–$103,350 single); (4) Stop before jumping to the next bracket. The conversion must be completed by December 31 — there are no extensions.

Defer income to next year when: you expect to be in a lower bracket in the next year (retirement, job change, large deductions planned); you have already hit your income threshold for certain phase-outs this year; deferring keeps you below AMT thresholds. Accelerate income into the current year when: you expect significantly higher income next year (new job, asset sale); tax rates are scheduled to increase; you want to "fill up" a lower bracket. Common income to defer: year-end bonuses, consulting invoices, stock option exercises. Common income to accelerate: Roth conversions, realizing capital gains in 0% bracket.