Last-Minute Tax Moves to Make Before December 31: 2026 Guide

Start by checking how much federal income tax has been withheld from your paychecks during 2026.

If you changed jobs, received a bonus, started additional work, or experienced a significant income change, your withholding may no longer match your financial situation.

Review your latest pay statement and compare your year-to-date income and withholding with your expected annual income.

You can use the IRS Tax Withholding Estimator to check whether your withholding is appropriate.

If an adjustment is needed, discuss an updated Form W-4 with your employer. Keep in mind that a late-December adjustment may have limited time to affect your 2026 withholding.

The 2026 tax year includes several deductions introduced or expanded under the Working Families Tax Cuts legislation.

Depending on your circumstances, you may qualify for deductions related to:

• Qualified tips received during the year.
• The eligible premium portion of qualified overtime compensation.
• Qualified passenger vehicle loan interest.
• The additional deduction available to eligible seniors aged 65 and older.

These deductions have specific eligibility requirements, income limits, and documentation rules. For example, qualified tips and overtime deductions have separate requirements, while the vehicle loan interest deduction applies only to qualifying loans and vehicles.

Do not assume that receiving tips, overtime, or having a car loan automatically makes you eligible.

Review the IRS guidance on deductions for individuals and workers to understand the applicable requirements.

If you plan to donate to charity, review your contributions before December 31.

Generally, eligible charitable contributions must be made within the tax year to count toward that year's deduction. However, the rules depend on the type of donation, the recipient organization, and your tax situation.

Keep records such as:

• Donation receipts.
• Bank or credit card statements.
• Written acknowledgments for qualifying contributions.
• Records of donated property, where applicable.

Not every donation qualifies for a federal tax deduction. Check that the organization is eligible and that you meet the applicable documentation requirements.

Retirement contributions and workplace benefits can be important parts of year-end tax planning.

Review your employer-sponsored retirement plan and check whether you have remaining opportunities to make eligible contributions during 2026.

For traditional 401(k) plans, employee salary deferrals generally need to be taken from pay during the calendar year to count for that year. Traditional and Roth IRA contributions generally have a different deadline and may be made by the applicable tax return filing deadline.

Also review your Health Savings Account (HSA), if eligible, and check your Flexible Spending Account (FSA) balance.

Some FSA plans have use-it-or-lose-it provisions, although certain plans may offer a grace period or limited carryover. Check your employer's plan documents before making decisions.

Freelancers, independent contractors, and small business owners should review their financial records before the end of the year.

Check the following:

• Total business income received during 2026.
• Outstanding invoices and customer payments.
• Business expenses and supporting receipts.
• Payroll and contractor payments.
• Equipment purchases and other business assets.
• Estimated federal tax payments.

Make sure every claimed expense is legitimate, properly documented, and eligible under applicable tax rules. Buying something unnecessary simply to create a deduction may cost more than the potential tax benefit.

If you operate an LLC, partnership, or corporation, review your business tax classification and filing responsibilities.

You can explore Mo Better Tax's business tax services to learn about available support.

If you sold investments during 2026 or are considering selling before the year ends, review the possible tax consequences.

Selling an investment for a profit may create a capital gain. Selling an eligible investment at a loss may create a capital loss that can offset certain capital gains, subject to applicable rules.

However, tax-loss harvesting requires careful attention to the wash-sale rules. Generally, a loss may be disallowed if you acquire substantially identical securities within the 30-day period before or after the sale.

Before selling an investment for tax reasons, consider your overall financial goals and consult a qualified professional if needed.

If you receive income without enough tax withholding, such as freelance income, business profits, or certain investment income, you may need to make estimated tax payments.

Review the payments you have already made during 2026 and compare them with your expected tax liability.

For most calendar-year individual taxpayers, the fourth-quarter estimated tax payment for 2026 is due January 15, 2027. This is an important date to remember, even though it falls after December 31.

Special rules may apply to certain taxpayers. Review IRS Publication 505 for estimated tax requirements and payment rules.

You can also use the Mo Better Tax Tax Estimator as a starting point for reviewing your estimated tax situation.

One of the simplest tax saving tips before year end is organizing your financial records early.

Start collecting documents such as:

• W-2 forms and recent pay statements.
• 1099 income records.
• Business income and expense reports.
• Mortgage interest statements.
• Charitable contribution receipts.
• Retirement contribution records.
• Investment statements.
• Estimated tax payment confirmations.

Some official tax forms may not arrive until January. You can still organize the records you already have and identify any missing information.

Use the Mo Better Tax Tax Checklist to help prepare your documents for the upcoming filing season.