Updated September 2026 to reflect current law.
As the year comes to a close, individuals and families in Long Island need to take proactive steps to optimize their tax situation. Effective year-end tax planning can significantly reduce your tax liabilities, enhance your financial health, and set you up for success in the coming year. Below are several practical strategies to consider before the December 31st deadline.
Maximize Retirement Contributions
Contributing to your retirement accounts is one of the most effective ways to lower your taxable income. For 2026, individuals can contribute up to $24,500 to a 401(k) plan, with an additional $8,000 catch-up contribution allowed for those aged 50 and above. Contributions to Traditional or Roth IRAs can be made up to $7,500, or $8,600 if you're 50 or older. These limits adjust most years, so confirm the current figure before you top up. These contributions reduce your taxable income and help you build a more secure retirement.
Charitable Giving: A Dual Benefit
Charitable contributions are a great way to give back to the community while enjoying tax benefits. Cash donations to qualified charities can be deducted up to 60% of your adjusted gross income (AGI). If you plan to itemize deductions, consider making your donations before the end of the year so they count toward this year's return. Two changes took effect for 2026: itemizers can only deduct the part of their gifts above 0.5% of adjusted gross income, and people who take the standard deduction can now deduct up to $1,000 of cash gifts ($2,000 on a joint return). Another effective strategy is donating appreciated stock, which allows you to avoid paying capital gains taxes while still benefiting from a deduction on the stock's full market value.
Harvest Investment Losses
If you have investments that have decreased in value, consider selling them before year-end to offset any capital gains you've realized during the year. This strategy, known as tax-loss harvesting, can help reduce taxable income. Be mindful of the "wash-sale" rule, which requires you to wait 30 days before repurchasing the same or a substantially identical investment to maintain the tax benefits of the loss.
Consider Roth Conversions
For those expecting to be in a higher tax bracket in the future, converting a Traditional IRA to a Roth IRA can be a smart move. Although you'll pay taxes on the converted amount now, the Roth IRA allows for tax-free growth and tax-free withdrawals in retirement, assuming all conditions are met. This strategy is particularly beneficial if your income is lower this year or if your traditional IRA has dropped in value.
Manage Required Minimum Distributions (RMDs)
If you are 73 or older, you must take minimum distributions from your retirement accounts, such as Traditional IRAs and 401(k)s. Failure to do so results in a substantial penalty. If these distributions push you into a higher tax bracket, consider making a Qualified Charitable Distribution (QCD), allowing you to donate your RMD directly to a charity, lowering your taxable income.
Take Advantage of Health Savings Accounts (HSAs)
If you have a high-deductible health plan, contributing to a Health Savings Account (HSA) offers triple tax benefits: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. For 2026, the contribution limit is $4,400 for individuals and $8,750 for families, with an additional $1,000 catch-up contribution for those aged 55 and older.
Bundle Deductions
With the standard deduction at $16,100 for single filers and $32,200 for married couples filing jointly in 2026, fewer taxpayers itemize. The higher SALT cap of $40,000 changes that math for many Long Island homeowners, so it is worth running both ways. However, if your itemized deductions are close to the standard deduction amount, consider "bundling" two years’ worth of deductions into one year. This could involve accelerating medical expenses, property taxes, or charitable donations into the current year to exceed the standard deduction threshold and maximize your tax savings.
Contact TaxMaster Today
Year-end tax planning is crucial to optimizing your financial situation and minimizing your tax liabilities. Whether you need assistance with retirement planning, charitable giving, or managing investments, TaxMaster, Inc. is here to help. To discuss your tax situation and how we can assist you, contact our Glendale office at 718-326-0500 or our Melville office at 631-673-0617. You can also send us a message through our contact form.