7 of My Favorite Year End Tax Strategies to Consider Before 2026 Ends
Tax season is approaching, but there's still time to make moves that could save you thousands!
The year is wrapping up, the holiday season is approaching, and unfortunately, that means tax season is right around the corner! The good news is that the year isn't over yet, and you still have roughly 60 days to make strategic moves that could help reduce your 2026 tax bill.
At Wiggs CPA Tax & Accounting, we're here to help you avoid any surprises when tax season arrives. We offer one time CPA consultations and ongoing tax planning services for small business owners and individuals with multiple streams of income. If you want to get your finances evaluated and explore potential tax saving opportunities before year end, don't hesitate to reach out!
Below are seven of my favorite tax strategies worth considering before December 31.
1. S-Corp: Are You Paying More in Taxes Than You Need To?
If you're a business owner generating consistent profits, it may be time to consider an S-Corp election.
One of the biggest advantages of an S-Corp is the potential to reduce self employment taxes. Instead of paying self employment taxes on all your business profits, you generally pay payroll taxes on your reasonable salary, while the remaining profits may avoid self employment taxes.
For example, if your business generates $150,000 in profit, an S-Corp structure could potentially save you thousands annually, even after paying yourself reasonable compensation.
Here's the catch: An S-Corp isn't for everyone. You have to consider payroll requirements, additional tax preparation fees, bookkeeping, and ongoing compliance.
If you're consistently generating $75,000 to $100,000 or more in annual business profits, it's worth having a conversation with your CPA.
2. Purchase Business Equipment or a Vehicle
Thinking about purchasing a new business vehicle, computer, or equipment? The end of the year may be a great time to make that investment.
Depending on the asset and your business use, you may qualify for Section 179 deductions or bonus depreciation, allowing you to deduct a significant portion or potentially the entire eligible purchase in the first year.
For example, purchasing $30,000 in qualifying business equipment could potentially generate a $30,000 deduction if all the requirements are met.
Here's something else worth knowing: You don't necessarily have to pay cash for the entire purchase to qualify for the deduction!
Let's say you finance a $50,000 piece of equipment that helps your business generate additional revenue. Depending on the asset and applicable depreciation rules, you could potentially deduct the entire $50,000 in the first year, even though you're making monthly payments on the loan.
This can be a great opportunity to invest in an asset that generates income for your business while also reducing your taxable income.
But here's something I always tell my clients: Don't spend $30,000 just to save $9,000 in taxes!
Only purchase assets that your business actually needs. The goal is to grow your business while taking advantage of available tax deductions.
Also, remember that simply purchasing an asset isn't always enough. Generally, it must be placed in service before December 31 to qualify for a 2026 depreciation deduction. Vehicle deductions may also be subject to additional limitations.
3. Maximize Your Retirement Contributions
One of my favorite strategies for both business owners and individual taxpayers is contributing to retirement accounts.
Why? Because you're potentially reducing your current tax bill while investing in your future.
Depending on your situation, consider:
- Traditional IRA: Potentially deductible contributions depending on your income and retirement plan coverage.
- 401(k): Traditional employee contributions can reduce your taxable income.
- Solo 401(k): A great option for eligible self employed business owners without employees other than a spouse.
- SEP IRA: Another option for business owners looking to make potentially significant retirement contributions.
For 2026, the standard employee 401(k) contribution limit is $24,500, while the maximum combined employee and employer contribution is $72,000, excluding eligible catch up contributions.
However, that doesn't mean everyone can contribute $72,000. Your actual contribution limit depends on your compensation, business structure, and the type of retirement plan you have.
Keep in mind that some retirement contributions can be made after December 31, but certain elections and employee deferrals have earlier deadlines.
My advice: Don't wait until tax season to start thinking about retirement. Review your projected income now so you can determine which retirement account makes the most sense.
4. Audit Your Business Expenses and Clean Up Your Bookkeeping
This might be the least exciting strategy on the list, but it's one of the most important!
You'd be surprised how many business owners miss deductions simply because their bookkeeping isn't accurate.
Before the year ends, review your business transactions and ask yourself:
- Did I accidentally pay for business expenses using my personal account?
- Are there legitimate business expenses that haven't been recorded?
- Have I properly categorized my meals, travel, subscriptions, and other expenses?
- Are my bank and credit card accounts reconciled?
- Have I reviewed my financial statements for errors?
Sometimes saving money on taxes doesn't require a complicated strategy. It simply requires making sure you're claiming the deductions you're already entitled to.
Remember: Accurate bookkeeping is the foundation of effective tax planning. It's difficult to make smart tax decisions when you don't know how much money your business is actually making.
5. Charitable Donations and Donor Advised Funds
If you're planning to donate to charity, consider whether making those contributions before December 31 could help reduce your tax bill.
For individuals who itemize deductions, charitable contributions may provide a tax benefit, subject to applicable limitations.
One strategy worth exploring is a Donor Advised Fund (DAF).
A Donor Advised Fund allows you to make an eligible charitable contribution now, potentially receive a tax deduction in the year of contribution, and recommend grants to qualifying charities over time.
This can be especially beneficial for individuals experiencing an unusually high income year, such as receiving a large bonus, selling investments, or selling a business.
Another strategy is donating appreciated stocks instead of cash. Depending on your situation, this may allow you to avoid recognizing capital gains while receiving a charitable deduction.
Important: Charitable contributions should be driven by your desire to give back, not just the tax deduction. Also, the 2026 charitable deduction rules include new limitations and opportunities, including a 0.5% adjusted gross income floor for individuals who itemize. Make sure you understand how these rules apply to your situation.
6. Health Savings Accounts (HSA)
If you have an HSA eligible health insurance plan, this is one of my favorite tax advantaged accounts.
An HSA offers three major tax benefits:
- Contributions may reduce your taxable income.
- Your investments can potentially grow tax free.
- Withdrawals for qualified medical expenses are tax free.
For 2026, the HSA contribution limits are $4,400 for self only coverage and $8,750 for family coverage, with an additional $1,000 catch up contribution for eligible individuals age 55 or older.
Unlike a Flexible Spending Account (FSA), your HSA balance generally rolls over from year to year.
You can even invest your HSA funds for long term growth!
My advice: If you're eligible for an HSA and have the financial flexibility, consider maximizing your contributions before the applicable deadline. You generally have until April 15, 2027, to make eligible contributions for the 2026 tax year.
7. Sell Losing Investments to Offset Capital Gains
Have investments in your portfolio that have declined in value?
Before December 31, consider reviewing whether tax loss harvesting makes sense.
Tax loss harvesting involves selling investments at a loss to offset realized capital gains from other investments.
For example, let's say you sold a stock earlier this year and generated a $25,000 capital gain.
If you sell another investment and realize a $10,000 capital loss, that loss could potentially reduce your net taxable capital gain to $15,000.
If your capital losses exceed your capital gains, individuals can generally deduct up to $3,000 of additional net capital losses against ordinary income annually, with unused losses carried forward.
And remember, never make an investment decision solely for tax purposes. Your overall financial goals should always come first.
Final Thoughts: Don't Wait Until Tax Season!
The biggest mistake I see taxpayers make is waiting until January, February, or March to start thinking about reducing their taxes.
By that point, many of the best tax planning opportunities are already gone.
Whether you're a business owner generating six figures in revenue, a real estate investor, or an individual with multiple streams of income, there may be opportunities to reduce your tax bill before December 31.
At Wiggs CPA Tax & Accounting, our mission is simple: Help taxpayers save money on taxes, save time, and stay compliant.
We offer one time CPA consultations and ongoing tax planning services to help you make informed decisions before the year ends.
Don't wait until tax season to find out what you could have done differently. Contact WiggsCPA today to explore your year end tax planning opportunities!
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