How to Reduce Your Tax Bill Before December 31st
Year-end tax planning can legally reduce what you owe the IRS by thousands. Here are the moves to make before the calendar flips.
Financial Writer
Max Out Your 401(k)
If you haven't hit the $23,000 limit ($30,500 if 50+), increase your contributions before year-end. Every dollar reduces your taxable income by that amount. At the 22% bracket, maxing out saves you $5,060 in federal taxes alone.
Tax-Loss Harvesting
If you have investments that have declined in value, sell them to realize the loss. Capital losses offset capital gains dollar-for-dollar, and up to $3,000 of net losses can offset ordinary income annually. "Harvested" losses can be carried forward indefinitely.
Bunch Charitable Donations
The standard deduction ($14,600 single / $29,200 married in 2026) is high enough that most people don't benefit from itemizing individual years. Strategy: donate two years' worth of charitable contributions in December of even-numbered years, then take the standard deduction in odd years.
Make HSA Contributions
HSA contributions are deductible even if you don't itemize. You have until the tax filing deadline (April 15) to make the prior year's contribution, so you still have time even after December 31st.
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