Retirement accounts
Fill your 401(k), 403(b), or TSP before the last paycheck
The 2026 limit is $24,500, plus $8,000 if you are 50 or older, and $11,250 for ages 60 through 63. Every dollar comes off this year’s taxable income. Because contributions come out of payroll, the only way to catch up is to raise your percentage on the paychecks that remain, so this is a November decision, not a December one.
Get every dollar of the employer match
If your employer matches, say, 50 cents on the dollar up to 6% of pay, contributing less than 6% leaves part of your pay on the table. Some plans match per paycheck, so front-loading and then stopping can forfeit match in the later months. Check your plan’s rule.
Fund an IRA, and decide traditional or Roth
$7,500 for 2026, plus $1,100 at 50 or older. A traditional IRA may be deductible now, depending on income and whether you have a plan at work; a Roth is not deductible but is never taxed again. The right one depends on your bracket this year against your expected bracket later. You have until April 15, 2027 to deposit, but the traditional-versus-Roth decision is easier while you can still see the whole year.
The backdoor Roth, if your income is too high for a Roth
Make a non-deductible contribution to a traditional IRA, then convert it to a Roth. It works cleanly only if you have no other pre-tax IRA money; if you do, the conversion is partly taxable under the pro-rata rule, and the arithmetic needs a look first.
Convert to a Roth in a low-income year
A gap between jobs, the first years of retirement before Social Security and required distributions begin, a year with a large loss: these are the years to move money from a traditional IRA to a Roth and pay the tax at a low rate. The conversion is taxable this year and cannot be undone, so the amount should be chosen to fill a bracket, not blow through it. Conversions also raise the income Medicare looks at two years later.
Take your required minimum distribution
At 73 and older, the IRS requires a withdrawal from traditional IRAs and most workplace plans every year, and the penalty for missing it is 25% of the shortfall. The total can come from any one IRA, but it must be out by December 31. Inherited IRAs have their own schedule.
Give from your IRA instead of your checkbook
A qualified charitable distribution sends money straight from your IRA to a charity. It is never counted in your income, it satisfies your required distribution, and it keeps your income lower for Social Security taxation, Medicare premiums, and the new senior deduction. For a retiree who gives anyway, this almost always beats a deductible cash gift.
Health accounts
Fill the Health Savings Account
$4,400 for self-only coverage, $8,750 for family, plus $1,000 at 55 or older. The HSA is the only account that is deductible going in, untaxed while it grows, and untaxed coming out for medical costs, with no deadline to spend it. Contributions through payroll before December 31 also skip Social Security and Medicare tax; a direct contribution before April 15 still gets the income-tax deduction.
Spend the flexible spending account
Health FSA money is forfeited at year end except for a small carryover or a short grace period, depending on the plan. Prescriptions, glasses, dental work, and most over-the-counter medicines qualify. Check the balance in November.
Bunch medical expenses into one year
Medical costs are deductible only above 7.5% of income, and only if you itemize. If you are facing a large elective bill, scheduling it in the same year as other big medical costs, or in a year when you already itemize, is the difference between a deduction and nothing.
Income and withholding
Fix your withholding for the last paychecks
A raise, a bonus, a second job, a spouse starting or stopping work, or investment income can all leave you under-withheld. A new W-4 with an extra amount on line 4(c) for the remaining paychecks avoids an April bill and the underpayment penalty, because the IRS treats withholding as paid evenly through the year regardless of when it came out.
Make the fourth estimated payment, or hit the safe harbor
If you pay estimates, the last 2026 payment is due January 15, 2027. The penalty disappears if your payments total at least 100% of last year’s tax, or 110% if your income was over $150,000. Paying to the safe harbor and settling the rest in April is often the cheapest path.
Time a bonus or other income you control
If you expect a lower bracket next year, ask whether a bonus can be paid in January. If you expect a higher one, take income now. The same logic applies to a retirement withdrawal you can take in either year, or a Roth conversion sized to fill this year’s bracket.
Protect the senior deduction
For 2025 through 2028, taxpayers 65 and older get an extra $6,000 deduction ($12,000 for a couple both over 65), on top of the standard deduction. It shrinks once income passes $75,000 ($150,000 joint) and is gone at $175,000 ($250,000 joint). A large IRA withdrawal, Roth conversion, or capital gain in December can cost part of it.
Watch the Medicare premium cliffs
Medicare Part B and D premiums for 2028 are set by your 2026 income, and the surcharges jump at fixed thresholds rather than sliding. A few thousand dollars of extra income in December can cost a couple over $1,000 a year in premiums two years from now. Roth conversions, IRA withdrawals, and capital gains all count.
Investments
Harvest losses
Selling a holding that is below what you paid creates a loss that offsets gains you have already taken this year, and then up to $3,000 of ordinary income; the rest carries forward. You can buy something similar right away, but not the same security within 30 days before or after, or the loss is disallowed. The trade must settle in 2026.
Harvest gains at the zero rate
Long-term capital gains are taxed at 0% for couples with taxable income under roughly $98,000 in 2026 (about $49,000 single). If you are under that line this year, selling a winner, paying nothing, and buying it back resets your cost basis for free. There is no wash-sale rule on gains.
Don’t buy a fund right before it pays out
Mutual funds distribute their capital gains in December, and you are taxed on the distribution even if you bought the fund the week before. Check the fund’s distribution date and buy after it, or buy the ETF version, which rarely has this problem.
Give appreciated stock, not cash
Donate shares you have held more than a year, and you deduct the full market value while nobody ever pays tax on the gain. Give the stock, then use the cash you would have given to buy the stock back at today’s price. A donor-advised fund makes this a single transaction.
Deductions and giving
Know which side of the standard deduction you are on
For 2026 the standard deduction is $16,100 single and $32,200 joint, more with the age-65 additions. Itemizing only helps if mortgage interest, state and local taxes, charity, and medical costs add up to more than that. Everything in this section depends on knowing the answer, and most people don’t.
Bunch two years of giving into one
If your deductions hover near the standard deduction, giving two years’ worth in one year and nothing the next lets you itemize in the big year and take the standard deduction in the other, which beats giving evenly. A donor-advised fund takes the deduction now and lets you send the money to charities on your own schedule.
Understand the two new charitable rules for 2026
Two changes this year. If you don’t itemize, you can now deduct up to $1,000 of cash gifts ($2,000 joint) anyway. If you do itemize, only gifts above 0.5% of your income count, so a couple earning $200,000 loses the first $1,000 of their deduction. For itemizers, this makes bunching more valuable, not less: the floor is taken once per year, not once per gift.
Use the larger state and local tax deduction
The cap on deducting state income and property taxes is $40,400 for 2026 (it phases back toward $10,000 once income passes about $505,000). If you itemize and are under the cap, paying a property tax bill in December rather than January moves the deduction into this year. Prepaying state income tax works the same way, within limits.
Document the new 2025–2028 deductions
Three temporary deductions are available whether or not you itemize: up to $25,000 of qualified tips, up to $12,500 of overtime pay ($25,000 joint), and up to $10,000 of interest on a loan for a new car assembled in the United States. Each has income limits and paperwork: tips and overtime must be reported separately by the employer, and the car deduction needs the VIN on the return. Make sure your employer and lender are set up to report them.
Don’t count on the home energy credits
The credits for heat pumps, windows, insulation, solar, and electric vehicles ended for purchases after 2025. If a contractor is still quoting the federal credit, the quote is wrong. Colorado and Xcel have their own rebates, which are a different question.
Family and education
Contribute to a Colorado 529 plan
Colorado lets you deduct 529 contributions on your state return, within an annual limit, and the money grows untaxed for tuition, K–12, apprenticeships, and now a wider list of expenses. Grandparents can contribute and take the Colorado deduction too. Leftover money can be rolled to the beneficiary’s Roth IRA, within limits, so overfunding is less of a risk than it used to be.
Pay spring tuition in December
The American Opportunity Credit is worth up to $2,500 per student per year, but only for four years and only on what you pay in the calendar year. If you haven’t paid enough this year to reach the full credit, paying the spring bill in December can get you there. If you have already maxed it, wait until January.
Use the annual gift exclusion
You can give $19,000 per person in 2026 to as many people as you like, $38,000 from a couple, with no tax, no return, and no effect on your lifetime exemption. Gifts count in the year the check clears, so a December check should be deposited in December. Paying a school or a hospital directly for someone else is unlimited and separate.
Use the larger dependent care account
The dependent care FSA limit rose to $7,500 for 2026. If you are paying for daycare or after-school care, this is a better deal than the child-care credit for most families, but it is set during open enrollment, so if you missed it for 2026, set it for 2027 now.
Life events
Marriage and divorce: the December 31 rule
Your filing status for the whole year is whatever it is on December 31. A December wedding makes you married for all of 2026, which helps some couples and hurts others. A divorce that could finalize in late December or early January is worth running both ways before you choose the date.
Selling a home
Up to $250,000 of gain ($500,000 joint) on a home you owned and lived in for two of the last five years is tax-free. Gains above that, a second home, a rental you converted, or a home you lived in less than two years all need planning before the closing, not after.
Starting retirement or Social Security
The first year of retirement is the year people are most surprised in April. Up to 85% of Social Security can be taxable, pensions and IRA withdrawals often have too little withheld, and the income you report this year sets your Medicare premiums for 2028. Running a projection in November, while there is still time to adjust withholding or a withdrawal, is the single most useful planning hour for a new retiree.
That is the list. Most of these are not complicated; the hard part is knowing which three apply to you and getting them done before the calendar closes. If you want someone to go through it with your numbers, that is what the planning conversation is for.
Want to talk it through?
Todd Mata, JD, LLM, CPA · Tax planning at the Tax Shop
Thirty years in tax, from Fortune 500 tax departments to small business owners in Highlands Ranch, and ten years teaching corporate income taxation at Metropolitan State University of Denver. The same kind of planning the big companies get, at the Tax Shop’s prices.
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Dollar limits are IRS and federal figures for tax year 2026. General information for Colorado taxpayers, not advice about your return. Published October 24, 2026.