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Although it’s important to take steps to reduce your taxable income before the end of the year due to looming deadlines, you don’t have to wait until the last minute. Employing tax-smart strategies throughout the course of the year can help save you money. And the money you save on taxes can help drive other financial goals, like saving for retirement or donating to charity.

You have the opportunity to take proactive steps now that could save you money on next year’s tax bill. Here are several tax-saving strategies you can implement before year’s end – and throughout the year. As always, consult your tax advisor before attempting to execute these strategies. And remember, the earlier you start on these strategies the better.

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HOW CAN I LOWER MY TAXABLE INCOME?

RETIREMENT CONTRIBUTIONS FOR INDIVIDUALS

Contribute the maximum to workplace retirement plans and IRAs. For 2026, employees who save for retirement through 401k, 403b, most 457 plans and the federal government’s Thrift Savings Plan can contribute up to $24,500 to those plans during the year. The “catch-up” contribution for those aged 50 or older is $8,000. The “super catch-up" (including the regular catch-up) is $11,250 for those aged 60 to 63.

Those saving for retirement through an IRA can contribute $7,500. The IRA catch-up contribution for those who are 50 and older is $1,100 for 2026. The contribution limit for a Savings Incentive Match Plan for Employees, or SIMPLE IRA, a retirement plan for small businesses with 100 or fewer employees, is $17,000 for 2026, up from $16,500 in 2025.

No matter which of these plans you have, you should try to contribute the maximum – or at least as much as you can – because the money may be tax deductible (except for nondeductible Roth 401k and Roth IRA contributions), thereby reducing your taxable income.

If your 401k plan at work allows you to contribute after-tax dollars and it will not affect your current lifestyle, consider adding more after-tax dollars to your 401k plan and converting those dollars to a Roth (when permitted).

RETIREMENT CONTRIBUTIONS FOR SMALL-BUSINESS OWNERS AS A TAX SAVING STRATEGY

If you’re a business owner with no employees, you could set up and contribute to a solo 401k, or what the IRS calls a one-participant 401k, as a tax-saving strategy. You must set up the account by Dec. 31. When you do, because you are both employer and employee, you can contribute up to $72,000 in 2026, with an additional $8,000 catch-up contribution if you’re 50 or older (plus an additional $3,250 super catch-up for those aged 60-63). You can have a traditional or Roth 401k. If you choose the traditional, your contributions may be pre-tax, reducing your taxable income for the year.

If you own a business, there are several tax-saving strategies you can employ by establishing a retirement plan for your business. Most commonly, this will be a solo 401k or a Simplified Employee Pension IRA. A solo 401k is only available for a business with no employees other than the spouse of the owner. Your tax advisor can help you decide which is the better plan for your needs and how much you can contribute to it. You’ll need to act before the end of the year to establish the plan, but it can be funded up until your tax-filing deadline. However, a SEP IRA can be created and funded up until the tax-filing deadline.

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HOW DO CHARITABLE DONATIONS AFFECT TAXES?

DONATE TO CHARITY

Taxpayers who itemize deductions can continue to deduct cash contributions to qualified public charities of up to 60% of their adjusted gross income. The One Big Beautiful Bill Act makes this 60% limit permanent, preventing it from reverting to the pre-2017 cap of 50% (During 2020 and 2021, Congress temporarily allowed deductions of up to 100% of AGI for cash contributions, but that measure has since expired).

Starting with the 2026 tax year, the OBBBA introduces a new 0.5% AGI floor for charitable contribution itemized deductions. This means that only the portion of charitable contributions that exceeds 0.5% of your AGI will be deductible when you itemize.

The OBBBA also creates a new deduction for taxpayers who do not itemize. Beginning in 2026, those who claim the standard deduction can take a charitable deduction for cash contributions of up to $1,000 for single filers or $2,000 for married couples filing jointly. This new deduction does not apply to donations made to donor-advised funds or private foundations.

Any donations you make must be dated no later than Dec. 31, including stock donations to charities. Tangible gifts must also be received by the charity by Dec. 31. Just make sure you don’t try to overstate a donation; the penalty for doing so is up to 75% of the underpayment. Also, be aware that the IRS requires you to keep a record of any charitable gifts of $250 or more that you write off.

TAKE ADVANTAGE OF A QUALIFIED CHARITABLE DISTRIBUTION

A QCD is a direct transfer of funds from your IRA, payable directly to a qualified charity. You must be at least 70 ½ years old at the time you request a QCD, which can draw down a high-balance IRA to lessen future required minimum distributions that people are now required to take starting at age 73. Amounts distributed as a QCD can be counted toward satisfying your RMD for the year, if you haven’t already taken it, up to $108,000 for 2025 (projected to be $111,000 for 2026) if you meet these rules:

The funds must come out of your IRA by your RMD deadline, usually Dec. 31.

Funds must be transferred directly from your IRA custodian to the charity. If you receive a distribution and then give it to charity, it won’t be counted as a QCD but as taxable income instead. Both traditional and inherited IRAs are eligible for QCDs.

CONSIDER DONOR-ADVISED FUNDS

A DAF is an account in which you can deposit assets for a donation to charity over time. The advantage over direct giving? Say you have appreciated stock but aren’t yet sure to whom you want to donate it. When you open a DAF, you can get a tax deduction for that year but delay making the actual donation to charity for years. You can also donate more complex assets – such as real estate, restricted stock or even cryptocurrencies – to your fund. You won’t have to pay capital gains tax on assets donated directly to a DAF.

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ADDITIONAL TAX SAVING STRATEGIES

There are also some tax-saving strategies related to your health and wellness. For example, schedule medical procedures now. Taxpayers can deduct qualified, unreimbursed medical expenses that exceed 7.5% of their 2025 AGI. That means if your AGI is $100,000, anything beyond the first $7,500 of medical bills – or 7.5% of your AGI – could be deductible.

Perhaps you’re already near that threshold and know that you will soon need a certain costly medical procedure. If you schedule it before the end of this year, you can benefit from a tax deduction when you file an itemized tax return next year.

Lastly, don’t forget to max out your health savings account. If you have an HSA, you can contribute a maximum of $4,300 individually if you have a high-deductible plan or $8,550 if you have a family high-deductible plan in 2025. You’re allowed another $1,000 in catch-up contributions once you reach age 55. In 2026, HSA contribution limits increase to $4,400 individually or $8,750 for a family plan, with a $1,000 per spouse catch-up for anyone age 55 or older.