Now that we’re nearing the end of tax season, it’s a great time to talk about something that can make a big difference going forward: being proactive instead of reactive with your taxes. While most people understand the annual requirement to file with the IRS, the distinction between tax preparation and tax strategy is often overlooked.
Tax preparation involves gathering your financial information and completing your tax return, usually after the tax year has ended. Because filing your return is about reporting what’s already happened, there's limited opportunity to influence the outcome once the year is over. At that point, any adjustments are reactive.
Tax strategy, on the other hand, is about looking ahead and making decisions now that can influence your tax burden going forward. While April 15th is a date we all have marked on our calendars, the real opportunity comes from taking a broader view and treating tax planning as a year-round process that can help you avoid paying more than the law requires. This approach focuses on the ongoing decisions that shape what you pay over time, often involving your financial professional and tax advisor working together to review past decisions and identify future opportunities.
Keep in mind, having a solid tax strategy doesn’t necessarily mean getting the biggest refund. Sometimes it means making thoughtful decisions today that can help position you better for the future. There’s a lot to consider, so let’s take a look at a few common elements of a forward-looking tax strategy, including income timing, tax-advantaged investing, charitable giving optimization, tax-loss harvesting, and estate and gift taxes.”
How Income Timing Works
Income timing focuses on managing your tax liability by shifting taxable income or deductible expenses between calendar years when possible. For example, the goal may be to defer income into a future year while taking deductions in the current year. However, if you expect to be in a higher tax bracket next year, accelerating income into this year might be your goal.1
Not all income can be shifted, but there may be some flexibility with things like bonuses, self-employment income, or retirement plan distributions other than Required Minimum Distributions (RMDs). Because timing can be complex, it’s helpful to talk with your financial and tax professionals so you understand your options before making a decision.1
What Tax-Advantaged Investing Is
Another strategy for managing taxable income is to use tax-advantaged investing when possible. By investing in accounts that offer tax benefits, earnings can grow either tax-deferred or tax-free, reducing or postponing taxes on investment income.
Common examples include traditional IRAs and employer-sponsored retirement plans, such as 401(k)s. Contributions to a traditional IRA are typically tax-deductible (subject to income limits), while 401(k) contributions are pre-tax. These investments grow tax-deferred until withdrawn, at which point withdrawals are taxed as income.1
For 2026, individuals can defer up to $24,500 into a 401(k), with an additional $8,000 catch-up contribution available for those age 50 and older. Under the SECURE 2.0 Act, employees in that age group who earned more than $150,000 in the prior year, however, must make catch-up contributions as after-tax Roth contributions.2
SECURE 2.0 also created a higher “super” catch-up contribution for individuals ages 60 through 63, which began last year. For 2026, eligible participants in that age range can contribute up to $11,250 in catch-up contributions to 401(k), 403(b), and governmental 457(b) plans.2,3
How Charitable Giving Can Support Your Tax Goals
Charitable giving is often motivated by generosity, but it can also play a role in your overall tax strategy. With thoughtful planning, your contributions can help reduce taxable income while also supporting causes that matter to you.
Beginning in 2026, the OBBBA introduced several updates to charitable deduction rules. Non-itemizers can now claim an above-the-line deduction of up to $1,000 for single filers or $2,000 for married couples filing jointly for cash gifts to public charities (excluding Donor-Advised Funds (DAFs) and supporting organizations).3
For taxpayers who itemize, only charitable contributions that exceed 0.5% of Adjusted Gross Income (AGI) will be deductible. In addition, taxpayers in the top income tax bracket will see the value of itemized deductions, including charitable gifts, limited to a 35% benefit.
Another option for some might be Qualified Charitable Distributions (QCDs). Individuals age 70½ and older can donate directly from an IRA to a qualified charity. These distributions are excluded from taxable income and may also satisfy all or part of your required minimum distributions (RMDs). In 2026, the QCD limit increases to $111,000.4
Donor-Advised Funds (DAFs), meanwhile, canoffer a flexible approach to charitable giving, acting as a charitable investment account. Contributions of cash, securities, or other assets are generally eligible for an immediate tax deduction, while grants are then made over time to qualified public charities. DAFs offer ongoing control over your philanthropy, allowing you to contribute when it makes sense from a tax perspective.5
* Some Donor-Advised funds are considered mutual funds and are sold only by prospectus. Charges, risks, expenses, and investment objectives and should be reviewed carefully before investing.
How Roth Contributions & Conversions Fit In
Roth IRAs take a different approach to taxes. Contributions are made with after-tax dollars, but earnings and qualified withdrawals can be tax-free if certain rules are met. Some investors might consider a Roth conversion, which is when you roll over your traditional retirement plan into a Roth IRA. While the converted amount is taxable in the year of the conversion, future qualified withdrawals may be tax-free. To help manage the tax impact, conversions can also be done gradually over multiple years instead of all at once. Because this strategy may not be suitable for everyone, it's important to understand the potential pros and cons before making your decision.6
How Tax-Loss Harvesting Might Be Applied
Tax-loss harvesting uses realized investment losses to offset capital gains on investments that have increased in value. While investment decisions shouldn’t be based solely on tax impact, selling investments at a loss can help manage taxable gains. Because this strategy can be complex, if you are considering employing it, you may want to work with a tax professional. One nuance is that long-term losses must first offset long-term gains before short-term ones. The IRS wash-sale rule also prevents repurchasing the same or substantially identical security within 30 days of the sale.1
Estate and Gift Tax Changes & Wealth Transfer
Under the OBBBA, the estate and gift tax exemption is set at $15 million per individual, or $30 million for married couples, indexed for inflation.7 While these exemption amounts could change in the future, at the current thresholds more than 99 percent of estates should not be subject to the federal estate tax.8 However, some states still impose their own estate or inheritance taxes at lower thresholds, so location remains an important consideration.
A Year-Round Approach to Taxes
A little tax awareness and education can go a long way in helping you avoid common issues. For example, if you have income that isn’t subject to withholding—like self-employment or investment income—you may need to make quarterly estimated payments to the IRS to avoid underpayment penalties.9 And while qualified retirement accounts can help you build a nest egg, withdrawals are generally taxed as ordinary income, making it important to plan ahead. Working with a financial professional can help you coordinate withdrawals and build a retirement income strategy that supports your overall goals.10
One way to stay on track is by following a simple, year-round tax calendar. A regular schedule can help keep taxes top of mind and make planning more manageable. Early in the year, you can focus on filing your return, making final contributions, and reviewing the prior year. In the spring and summer, it may make sense to revisit your income, make estimated payments, and begin identifying tax-saving opportunities like tax-loss harvesting. As the year progresses, you can evaluate charitable giving, consider Roth conversions, and take action on strategies that align with your goals—such as finalizing contributions or timing income.
Both tax preparation and tax strategy play an important role in your financial life, working together to help you stay organized while also planning ahead. As you wrap up this year’s filing season, consider shifting your focus from a once-a-year mindset to a more proactive year-round approach. Taking small steps throughout the year can make tax time feel more manageable and help you stay on track toward your broader financial goals.
* This article is intended for informational purposes only. Please consult your tax, legal, and accounting professionals before modifying your tax strategy.
Sources:
1. Affiance Financial, September 5, 2024
2. BDO.com, November 2025
3. To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a 5-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals can also be taken under certain other circumstances, such as the owner's death. The original Roth IRA owner is not required to take minimum annual withdrawals.
Once you reach age 73, you must begin taking required minimum distributions from traditional IRA, 401(k), or other defined contribution plans in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.
4. IRS.gov, December 16, 2025
5. SilverTaxGroup.com, June 25, 2025
6. BankRate.com, May 12, 2025
7. CPMLaw.com, July 15, 2025
8. TaxSharkInc.com, June 17, 2025
9. IRS.gov, November 2025
10. Jasonfintips.com, October 8, 2025