Year-End Planning
Year-End Tax Planning Checklist for 2026: Moves to Review Before December 31
Just as navigators look to the stars to chart their course across uncharted waters, families and business owners must look ahead to align their financial strategy before the calendar year closes. Our structured year-end tax planning checklist is designed to help you organize your wealth, coordinate your actions, and work in harmony with your long-term multi-generational goals.
What Is Year-End Tax Planning?
Year-end tax planning is the proactive process of reviewing your financial situation, transactions, and investment portfolios before December 31 to implement strategies that may reduce your federal and state tax liabilities. Common moves include maximizing retirement contributions, executing tax-loss harvesting, utilizing charitable giving accounts, and coordinating estate plans before year-end deadlines.
At a Glance
The 2026 Year-End Financial Checklist at a Glance
Review these six essential areas with your advisory team and CPA to seek opportunities to optimize your tax position before the tax year ends on December 31, 2026.
Section 1
1. Aligning Your Retirement Plan with 2026 Contribution Limits
One of the most straightforward methods to manage your adjusted gross income is to fully utilize your tax-advantaged accounts. According to the Internal Revenue Service, retirement contribution limits have adjusted upward for tax year 2026. Reviewing your year-to-date salary deferrals now allows you to make necessary adjustments with your payroll department before your final paycheck of the year.
Maximizing pre-tax contributions can significantly reduce your current-year federal tax burden. However, we advise clients to balance this benefit against the fact that these contributions reduce short-term liquidity. Furthermore, early withdrawals from pre-tax retirement accounts before reaching age 59 and a half may trigger a 10% IRS penalty in addition to ordinary income taxes.
Key 2026 Contribution Limits
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Employer-Sponsored Plans (401(k), 403(b), 457) The individual employee contribution limit is $24,500. Catch-up contributions for employees aged 50 and over allow an additional $8,000 (for a total of $32,500).
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SECURE 2.0 Catch-Up Expansion For retirement savers who turn 60 to 63 during calendar year 2026, the higher catch-up limit increases to $11,250, enabling a total potential contribution of $35,750.
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Traditional and Roth IRAs The annual limit is $7,500, with a catch-up limit of $1,100 for those aged 50 and older, totaling $8,600. Note that while IRA contributions can technically be made until the tax-filing deadline in April 2027, planning your funding before December 31, 2026, helps ensure a coordinated strategy.
Source: IRS Announcement, Nov. 13, 2025. For complete details, consult the IRS Retirement Limits Release.
Section 2
2. Balancing Your Portfolio: Tax-Loss Harvesting and Roth Conversions
Integrating your tax situation with your investment strategy requires active monitoring of taxable gains and bracket structures. At The Stellarix Group, we collaborate with our clients CPAs to examine portfolio activity and seek ways to offset income through tax-loss harvesting or lock in future tax-free growth through Roth conversions.
Colorado tax planning must also account for our state's flat income tax rate, which remains a key variable when analyzing the combined federal and state tax impact of realized gains or conversion income. Always consult a tax advisor and financial planner to model these decisions before taking action.
Tax-Loss Harvesting
Selling select taxable investments that have experienced a decline can help offset realized capital gains and write off up to $3,000 of ordinary income in 2026. Any unused losses may be carried forward into future tax years.
Risk Qualifier: This approach must be performed carefully to avoid violating the IRS wash-sale rule, which disallows the tax deduction if you purchase a substantially identical security within 30 days before or after the sale. Furthermore, transaction fees and shifting market conditions during the transition may impact overall performance.
Roth Conversions
Converting a portion of your traditional IRA assets to a Roth IRA can be a tax-efficient move, especially if you are currently in a lower tax bracket than you expect to be in retirement. Once converted, the funds have the potential to grow tax-free and are not subject to federal Required Minimum Distributions (RMDs) during your lifetime.
Risk Qualifier: The converted amount is treated as taxable ordinary income in the year of the conversion. This additional income could temporarily push you into a higher federal marginal bracket, trigger higher Medicare premium surcharges, or affect eligibility for specific deductions.
"In the universe of financial planning, tax efficiency is not an isolated event. It is a constellation of coordinated, deliberate moves that align your investments with your values and legacy."
— Ryan Griffin, CFP®, Financial Planning Manager at The Stellarix Group
Section 3
3. Coordinating Charitable Giving and Legacy Planning
For philanthropic and charitably-inclined families, the closing months of the year offer a critical window to combine charitable intent with tax planning strategies. Because standard deductions have adjusted to $16,100 for single filers and $32,200 for married filing jointly for the 2026 tax year (as released by the IRS on Oct. 9, 2025), claiming itemized deductions can be more challenging for many households.
Implementing structured vehicle solutions like Donor-Advised Funds (DAFs) or executing direct transfers can help bridge this gap, ensuring your wealth supports the causes you cherish while optimizing your eligible deductions.
Donor-Advised Fund Bunching
Rather than making small annual donations that do not exceed the standard deduction threshold, you can bunch multiple years of charitable contributions into a single tax year. Contributing cash or appreciated securities to a Donor-Advised Fund can provide an immediate itemized deduction for 2026, while allowing you to distribute grants to charities over several years.
Risk Qualifier: Contributions to a Donor-Advised Fund are legally irrevocable. Once assets are committed, you cannot retrieve them for personal use, and the timing of grants is subject to the sponsoring organization's final approval.
Qualified Charitable Distributions (QCDs)
Retirees aged 70 and a half or older may direct tax-free transfers from their traditional IRA directly to an eligible 501(c)(3) organization. A QCD counts toward satisfying your annual Required Minimum Distribution (RMD) but is excluded from your adjusted gross income, preventing you from being pushed into a higher tax bracket.
Risk Qualifier: The distribution must go directly from the custodian to the charity. If the funds are distributed to you first, they will be taxable, and subsequent donations may be subject to itemized deduction limitations.
Annual Gift Tax Exclusion
For 2026, the annual gift tax exclusion is $19,000 per recipient (or $194,000 for gifts to a non-U.S. citizen spouse), as established by the IRS on Oct. 9, 2025. This exclusion allows you to systematically transfer wealth to children, grandchildren, or others, potentially reducing the eventual size of your taxable estate.
Risk Qualifier: Gifting permanently removes assets from your control. Over-gifting can compromise your retirement security if your own long-term care and lifestyle expenses increase unexpectedly.
Section 4
4. Colorado-Specific and Business Owner Year-End Actions
For Colorado families and corporate leaders, state-level guidelines and business structures present distinct opportunities to optimize your year-end planning. Coordinating these local rules with your business planning strategies can build a more integrated overall plan. Owners anticipating a sale may also want to confirm holding periods and eligibility for any qualified small business stock.
Whether you are building a legacy for your family in Denver or managing a growing enterprise, localized tax nuances should be reviewed with an advisor before December 31, 2026.
Colorado CollegeInvest 529 Contribution Limits
Colorado taxpayers who contribute to CollegeInvest 529 accounts before December 31, 2026, can claim a state income tax deduction. According to CollegeInvest, the state deduction limit for tax year 2026 contributions is up to $26,200 per taxpayer, per beneficiary for single filers, and up to $39,200 per tax filing, per beneficiary for joint filers.
Risk Qualifier: Funds must be used for qualified higher education expenses to maintain tax-free status. Non-qualified withdrawals are subject to federal income tax, a 10% penalty, and potential recapture of previously claimed Colorado state income tax deductions.
Colorado Retirement Income Subtraction
The state of Colorado allows taxpayers to subtract a portion of their qualifying retirement income (including pensions, taxable Social Security, and retirement account withdrawals) from state taxable income. The subtraction limit is up to $20,000 for eligible taxpayers under age 65 and up to $24,000 for those aged 65 and older, according to the Colorado Department of Revenue.
Risk Qualifier: Qualification rules depend on taxable status at the federal level and age thresholds. Any adjustments in state laws could change eligible parameters in future years.
Business Planning: S-Corporations and Form 1099-K
Business owners should review year-end S-Corp compensation structures to ensure reasonable salary-to-distribution ratios and plan capital expenditures under Section 179 before the year closes. High-earning owners may also evaluate retirement plan contributions, such as a cash balance plan. Additionally, business owners processing payments must monitor the federal Form 1099-K threshold. For 2026, third-party payment apps (such as Venmo and PayPal) are required to report goods-and-services payments exceeding $20,000 and 200 transactions, according to IRS guidelines.
Risk Qualifier: While utilizing equipment write-offs can enhance your current cash flow, over-allocating capital to depreciating business assets can restrict your necessary operating capital.
Answering Your Questions
Frequently Asked Questions About Year-End Tax Planning
Understand the foundational rules and nuances surrounding year-end wealth coordination.
What Are Some Effective Year-End Tax Planning Strategies?
Effective strategies include maximizing tax-deferred retirement accounts, executing tax-loss harvesting to offset capital gains, bunching charitable donations via a donor-advised fund, and utilizing state-specific deductions like the Colorado CollegeInvest 529 program. Every strategy should be evaluated based on your current tax bracket, potential future tax rates, and overall liquidity needs.
What Is the Most Overlooked Tax Break?
One of the most frequently overlooked tax breaks is the Health Savings Account (HSA) contribution. HSAs offer a triple-tax advantage: tax-deductible contributions, tax-free growth inside the account, and tax-free withdrawals when used for qualified medical expenses. However, to avoid tax penalties, funds must be used strictly for eligible medical care, and your primary health plan must meet High Deductible Health Plan (HDHP) criteria.
What Is the Venmo Tax Limit for 2026?
For the 2026 tax year, the federal Form 1099-K reporting threshold for payment processors like Venmo and PayPal is set at more than $20,000 in gross payments and more than 200 transactions, according to the IRS guidelines. This threshold applies only to goods-and-services payments; personal transactions such as splitting a meal or gifting funds to family members are not taxable or reportable under these rules.
Align Your Stars
Chart Your Path to Financial Clarity
Navigating the complexities of tax planning requires a team that understands the intersection of investments, insurance, business, and estate planning. Let us help you coordinate your finances and align your long-term wealth strategy before the year ends.
Call us at (303) 692-8183 or visit our Denver office.
The Stellarix Group | 2000 S Colorado Blvd, Tower 2, Ste 800, Denver, CO 80222