2026 Year-End Tax Planning: Important Changes and Smart Moves Before December 31
Published: November 4, 2026
By Garrick D. Gookin, AAMS®, Enrolled Agent
South Placer Tax & Bookkeeping Services | Rocklin, California
Don't Wait Until Tax Season to Start Thinking About Your Taxes
As we approach the end of 2026, many individuals and business owners are focused on holiday plans, wrapping up projects, and preparing for the new year. But November and December are also two of the most important months for tax planning.
At South Placer Tax & Bookkeeping Services, one of the things we regularly remind our clients is that preparing a tax return and planning for taxes are two very different things.
Tax preparation tells us what happened. Tax planning gives us an opportunity to make informed decisions before the year ends.
With significant federal tax law changes now in effect, 2026 is an especially important year to review your financial situation.
1. New Federal Tax Deductions Could Affect Your 2026 Return
Recent federal tax legislation introduced several deductions that may benefit qualifying taxpayers.
Qualified overtime pay: Eligible workers may deduct up to $12,500 of qualified overtime compensation, or $25,000 for married couples filing jointly. Generally, only the qualifying overtime premium is deductible—not all overtime wages.
Qualified tip income: Workers in eligible occupations may qualify for a deduction of up to $25,000 in qualified tips.
Additional deduction for seniors: Eligible taxpayers age 65 and older may qualify for an additional deduction of up to $6,000 per person, subject to income limitations.
Vehicle loan interest: Some taxpayers may deduct up to $10,000 of qualifying interest on loans for new, eligible personal-use vehicles that meet U.S. final-assembly and other requirements.
These deductions have specific qualifications, income limitations, and reporting requirements. They also generally affect federal taxes, and California treatment may differ.
If any of these situations apply to you, reviewing your eligibility before filing could make a difference.
2. The 2026 Standard Deduction Has Increased
For tax year 2026, the federal standard deduction is:
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$32,200 for married couples filing jointly
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$16,100 for single taxpayers and married individuals filing separately
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$24,150 for heads of household
These amounts may affect whether itemizing deductions makes sense.
For homeowners, retirees, and families with charitable contributions, mortgage interest, or significant state and local taxes, comparing the available deduction methods is an important part of year-end planning.
3. Business Owners: Review Your Tax Strategy Before December 31
If you own an LLC, S corporation, partnership, or sole proprietorship, now is an excellent time to review your projected business income.
Depending on your situation, potential planning opportunities may include:
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Reviewing deductible business expenses
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Evaluating equipment purchases and depreciation elections
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Considering retirement plan contributions
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Reviewing S corporation owner compensation
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Evaluating Qualified Business Income deductions
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Reviewing estimated tax payments
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Identifying bookkeeping corrections before year-end
One area we pay particular attention to is California's Pass-Through Entity (PTE) elective tax.
California has extended this program through the 2030 tax year. Beginning in 2026, qualifying entities that miss or underpay the required June 15 payment may still be able to make the election, although the owners' available tax credits are reduced under the applicable rules.
This is an important planning consideration for eligible California S corporations and partnerships.
4. Retirement Planning Can Have Significant Tax Consequences
Retirement accounts remain one of the most valuable areas for tax planning.
For 2026, the employee contribution limit for most 401(k) plans is $24,500, with additional catch-up contributions available for eligible participants.
The IRA contribution limit is $7,500, with an additional catch-up contribution for individuals age 50 and older.
Other retirement-related strategies worth reviewing include:
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Traditional versus Roth IRA contributions
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Roth IRA conversions
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Required Minimum Distributions
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Retirement income tax projections
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Qualified Charitable Distributions for eligible IRA owners
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Tax-efficient retirement withdrawals
Not every retirement contribution must be completed by December 31, but many important decisions and transactions have calendar-year deadlines.
A Roth conversion, for example, generally must be completed during 2026 to be included in your 2026 taxable income.
5. Real Estate Investors Should Review Their Properties Before Year-End
If you own rental properties or investment real estate, your tax situation may involve more than simply reporting rental income and expenses.
Depending on your circumstances, important considerations include:
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Rental property depreciation
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Cost segregation studies
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Passive activity loss limitations
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Real estate professional status
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Short-term rental activity
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Property improvements versus repairs
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Capital gains and depreciation recapture
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Section 1031 exchanges
These strategies can have different federal and California tax consequences.
Planning before a property sale, major improvement, or new investment can help avoid surprises.
6. Don't Overlook Estimated Taxes and Withholding
One of the most common frustrations we hear from taxpayers is:
"Why do I owe so much when I file my return?"
This can happen when withholding or estimated tax payments do not keep pace with income.
If you received a raise, sold investments, completed a Roth conversion, earned additional business income, or experienced another significant financial change during 2026, your tax payments may need to be reviewed.
A year-end tax projection can help identify a potential balance due and determine whether additional withholding or estimated payments may be appropriate.
7. Why We Recommend Year-Round Tax Planning
At South Placer Tax & Bookkeeping Services, we believe tax planning should be proactive, not reactive.
Our approach is to understand the complete financial picture, including income, business ownership, retirement accounts, real estate, and future goals.
Whether you're a business owner in Roseville, a retiree in Lincoln, a real estate investor in Granite Bay, or a family in Rocklin, your tax strategy should reflect your individual circumstances.
The best time to identify many tax-saving opportunities is before the year ends—not after your tax documents arrive.
Schedule Your 2026 Year-End Tax Planning Consultation
There is still time to review your 2026 tax situation before December 31.
Our team can help evaluate your projected tax liability, identify potential planning opportunities, and prepare for the upcoming filing season.
South Placer Tax & Bookkeeping Services
Rocklin, California
Serving Rocklin, Roseville, Lincoln, Granite Bay, Auburn and surrounding communities.
Call 916-259-1402
Schedule Your Tax Planning Appointment
This article is provided for general educational purposes and is not individualized tax or legal advice. Tax rules, eligibility requirements, and deadlines vary based on individual circumstances. Federal and California tax treatment may differ. Consult a qualified tax professional regarding your specific situation.