With summer coming to an end, I always look forward to the fall season—the cooler weather, changing leaves, and, of course, the beginning of football season!
Fall is also an excellent time to review your tax situation and begin thinking about opportunities to potentially reduce your tax bill. While taxes may not be the most exciting topic, taking the time to plan ahead may sometimes result in meaningful savings.
Over the past several years, there have been significant legislative changes—including the SECURE 2.0 Act and the One Big Beautiful Act—that have created new tax-efficient planning opportunities. Below are a few deductions and strategies you may want to consider as we approach the end of the year.
Additional Deduction for Seniors
If you are age 65 or older, you may be eligible for an additional $6,000 deduction on your tax return. However, this deduction begins to phase out for single filers with modified adjusted gross income (MAGI) of $75,000 or more and married couples filing jointly with MAGI of $150,000 or more.
Increased State and Local Tax (SALT) Deduction
For those who itemize deductions, the state and local tax deduction has increased from $10,000 to as much as $40,400. This deduction may be reduced for taxpayers with incomes above $505,000.
Qualified Charitable Distributions
If you are required to take Required Minimum Distributions (RMDs) and regularly give to charity, a Qualified Charitable Distribution may be worth considering.
Rather than taking your RMD as taxable income and then making a charitable donation separately, you may be able to contribute directly from your IRA to a qualified charity. You can give up to $111,000 from your IRA, potentially reducing the amount of your RMD reported as taxable income.
Education Expenses for Teachers
Teachers who purchase supplies and other items for their classrooms may be eligible for valuable deductions. If you itemize, you may be able to deduct an unlimited amount of qualifying expenses. For those who do not itemize, the deduction is $350 for an individual or $700 for married couples filing jointly if both spouses qualify.
Overtime Pay Deduction
If you earn overtime pay, you may be eligible to deduct up to $12,500 of qualifying overtime income, or up to $25,000 for married couples filing jointly. This deduction begins to phase out for individuals with incomes above $150,000.
Tax-Loss Harvesting
As we approach the end of the year, it is a good time to review your investment portfolio. If you have investments with unrealized losses, selling those positions may provide an opportunity to offset realized capital gains.
In addition, capital losses can potentially offset up to $3,000 of ordinary income each year, with additional unused losses generally carried forward to future years.
Tax-loss harvesting is not appropriate for every investment or every situation, but it can be an effective tax-efficient planning tool when incorporated into an overall investment strategy.
Maximize Your 401(k) Contributions
If you are still working, maximizing contributions to your retirement plan can be an effective way to save for the future while potentially reducing your current taxable income.
You can contribute up to $24,500 to your 401(k) plan in 2026. If you are age 50 or older, you may be able to contribute an additional $8,000 as a catch-up contribution. For individuals with income above $150,000, catch-up contributions must be made to a Roth 401(k) account.
If retirement is still a few years—or even a few decades—away, your future self may thank you for taking advantage of every opportunity to save today.
The Importance of Planning Ahead
These are just a few of the tax-efficient planning opportunities that may be available to you. Every client's financial situation is different, and tax laws can be complex, so it is important to review potential strategies with a qualified tax professional to determine what may be appropriate for you.
As part of our commitment to supporting you in all areas of your financial life, we are always happy to review your tax return and help identify potential planning opportunities. While we do not prepare tax returns, we can work alongside you and your tax professional to help ensure your investment, retirement, charitable giving, and tax strategies are working together.
Please feel free to contact us to schedule a time to review how taxes interact with your investments.
Tax-efficient planning may not be quite as exciting as a fall afternoon at a football game, but neither is discovering in April that there were opportunities to save money that you missed. Taking a little time now to review your tax situation may potentially lead to meaningful savings and help put you in a stronger position for the game of life!