11 Clever Tax Moves to Make in 2026

It's been a crazy year so far, with a lot of changes in personal finances, retirement planning, and tax planning, as well as business finances. Another year, another tax season. With 2025 is in the rearview, it's a great time to start understanding what you can do to maximize tax efficiency over the next year.

Tax efficiency is all about figuring out how to minimize your legal tax liability. It's about making decisions that can help you reduce your tax bill, whether that means making the right money moves while the stock market is volatile, choosing the best tax software for your needs, or just tweaking the way you spend on business costs.

Let's take a look at some of the things you can do right now to ensure you're on track for a tax-efficient 2026.

Check your current withholding

Your withholding is how much is being withheld from your paycheck to pay state and federal income tax, as well as your payroll taxes, which include Social Security and Medicare taxes.

When you filled out your employment paperwork, you filled out a W-4, which allowed you to share your filing status and choose the level of withholdings from your paycheck. Now is a good time to review your withholding and make sure it's accurate.

If you've lost income, any extra withholding might be more than you should be paying, and though you might get a bigger tax refund later, you could improve your cash flow today by making an adjustment. The IRS even has a tax withholding calculator that can help you make a better estimate.

Pay your estimated taxes

If you're an independent contractor or business owner, you need to know how to pay your quarterly estimated taxes. Generally, your estimated taxes are due by September 15, but if you've forgotten, get them paid ASAP. When figuring out how to manage your money as a business owner, understanding and planning for estimated taxes is one of the most important things you can do.

Realize, too, that those collecting unemployment but who choose not to have it taxed also owe estimated taxes. Review your unemployment payment to see whether tax has been withheld. If it hasn't, make a plan to pay your estimated taxes.

Penalties and interest can add up when you miss estimated tax payments, so paying as soon as possible can help you avoid bigger costs.

Organize your deductions

I work from home and have a dedicated office space, so I can deduct that. If you're self-employed and had to set up a home office, you might have tax deductions that you can use.

There are other costs you might be able to claim as well, depending on your usage and your business use.

• Mileage driven for business
• Portion of your home internet costs, based on how much of your internet is used for business purposes
• Equipment used for your business, including a laptop
• Other business expenses

Start organizing your receipts and getting this info together for your tax filing. Just make sure that what you're deducting is for strictly business use.

When it comes to the amount you can deduct, the IRS offers two different methods for figuring your deduction:

• With the simplified method, you can claim $5 per square foot, up to 300 square feet. So, that's a deduction of up to $1,500. In my case with a home office that is about 10 feet by 10 feet (100 square feet total), I can claim $500.
• The regular method requires that you add up your expenses related to mortgage or rent, utilities, insurance, and other costs and then figure your deduction based on the percentage of your home that your office takes up. If you have a home that's 2,000 square feet, and your home office takes up 100 square feet (as mine does), that amounts to 5% of the space. Therefore, I could claim 5% of the costs associated with my home.

You can run the numbers to see which method of figuring your deduction makes the most sense for you, and whether you could make a bigger claim based on the regular method.

Check your medical expenses

If you had a low-income year with high medical expenses you might qualify for a medical deduction. You can deduct out-of-pocket medical and dental costs above 7.5% of your adjusted gross income. Additionally, you have to be eligible to itemize on Schedule A in order for this to work.

Let's say your adjusted gross income is $50,000 per year. If that's the case, 7.5% would be $3,750. Anything you spend on medical and dental expenses out-of-pocket above that threshold would be deductible. So if you spent $5,000 on these costs, you could deduct $1,250.

Double-check the standard deduction and your other deductions. You'll need to take a look at Schedule A and make sure all of your totals are more than the standard deduction in order for this to be of benefit to you.

Adjust your 401(k) contributions

Are you making contributions to an employer-sponsored 401(k)? If so, you could lower your taxable income. Current 401(k) contribution limits allow you to contribute up to $24,500 in 2026 — with a catch-up contribution limit of up to $8,000 if you're at least 50.

Your contributions to a traditional 401(k) come out of your paycheck before taxes, so if you still have some contribution room, you can increase how much is taken out of your paycheck and reduce your taxable income. That means a lower tax bill because you have less income to tax.

Explore tax-loss harvesting

Assess your investing portfolio and see whether there are opportunities to take advantage of tax-loss harvesting. With this strategy, you use losses from your investments to offset the gains you would normally pay taxes on.

If your portfolio took a hit and you sold some investments over the year, or if you have some stocks that you're unloading because of underperformance, you can use those losses to reduce your taxes in other areas.

If you benefited from stock market gains this year, you can use your losses to reduce those gains — and your capital gains tax. For example, if you sold investments for a profit of $2,000, but you had losses amounting to $1,000, you can use those losses to reduce your gains. Now you have to pay only capital gains taxes on $1,000.

If your losses are bigger than your capital gains, you can move that excess to your income. You're allowed to reduce your taxable income each year by $3,000 using investment losses. Even better? If you have even bigger losses, you can carry them to another year.

Keep good records and work with a tax professional to help you document your investment losses so you can use them this year and in years to come.

Convert your IRA

If your income was lower this year, you might convert your IRA to a Roth IRA and see a long-term advantage. When you convert a traditional IRA to a Roth, you have to pay taxes on a portion of the conversion, as your traditional contributions might have resulted in a tax deduction.

Paying taxes now, when you're in a lower bracket, can make sense if you think your tax bill will be higher in the future. Earnings from a Roth IRA are tax-free, so your money can grow without you worrying about paying taxes when you withdraw it later.

Evaluate your current situation and consider consulting with a professional to see whether it makes sense to take a bit of a tax hit today in order to reduce your overall taxes down the road.

Make a charitable donation

Many people might not have been as fortunate as you. If you want to help others, you can donate to charity — and help yourself with a potential tax deduction.

You can deduct the amount of your donation from your taxes using Schedule A. Again, this is one of those deductions that you list out on Schedule A along with other deductions to see if it all adds up to an amount that exceeds the standard deduction.

For example, back in 2019, I had a lot of medical expenses. I qualified for the medical deduction, and, when combined with my charitable contributions, my total on Schedule A was bigger than the standard deduction offered to head-of-household filers. So I was able to get a larger deduction because of my charitable contributions.

If you have available funds and you want to make a donation to a good cause, you can make a substantial contribution and claim the deduction. Verify that your donation is actually tax-deductible by checking the organizations 501(c)(3) status. Donations to political parties and political candidates are not tax-deductible.

Spend your FSA money

Money in your Flexible Savings Account is a use-it-or-lose-it situation in many cases. You can still use that tax-free money to pay for medical expenses for the remainder of this year, so if there's a procedure you've been holding off on, or even if you just need new contact lenses or some other eligible item, you might consider making those purchases now.

It's important to note that some employers allow for a rollover of up to $550 to the next plan year, but any amount you have left above that will go to waste (and your associated tax savings too) if you don't spend it. The IRS has a list of qualified expenses that can help you figure out how to use your FSA dollars so they don't end up lost.

Invest your savings

Depending on your goals and what you qualify for, there are some great places to put extra cash:

• Roth IRA: If you meet the income criteria and still have the contribution room, you can put more money into a Roth IRA and see tax-free earnings growth in the future. It won't reduce your taxable income today, but it can provide you with tax savings in the future.
• Traditional IRA: If you're looking for the tax deduction today, a traditional IRA can be one way to go. As long as you haven't maxed out your IRA contributions and you aren't in the area of a phase-out, you should be able to claim a deduction for an IRA contribution.
• SEP IRA: Business owners can make larger contributions to a SEP IRA. If you've already maxed out your traditional or Roth IRA contributions, you could use a SEP if you're self-employed.
• Health Savings Account (HSA): For those who are eligible, it's possible to put money into an HSA and claim a tax deduction. Even better? Your money grows tax-free as long as you use it for qualified medical expenses later. It's one way to get more bang for your healthcare buck down the road.
• 529 plan: If you're saving for college, whether for your child or even yourself, you can contribute to a 529 plan and see tax-free growth. You won't get a federal tax deduction for your contribution, but some states offer deductions. Check to see if you can get a break on your state income taxes for making a contribution, and remember that your investment earnings are tax-free as long as the money is used for qualified education expenses.

I've used all of these accounts at various points to increase my tax efficiency. Work with a professional to run the numbers and see what makes sense. One year, I reduced my tax bill by maxing out my HSA contributions and boosting my SEP IRA contributions. Not only does this offer a potential benefit for now, but it also provides the potential for tax-efficient investment earnings.

Plan for your tax filing

Figure out how you're going to file your taxes so you know how to best prepare. Don't wait until the last minute, as you might miss some important deadlines. By planning ahead, you can make your moves now, and increase your tax efficiency.

Consider hiring a professional or using some of the best tax software to help you with your taxes. I use an accountant, and it's worth every penny. They can help you strategize and make better financial choices.

Bottom line

By paying attention to your personal and business finances, and knowing how your choices impact your tax bill, you can tweak the way you do things and make the most of your financial resources to improve your tax efficiency and get more bang for each buck.

Just be sure to consult a tax professional before moving forward so you're more likely to make the best decisions for you.