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Year-end tax strategies for high-net-worth individuals in 2026
Year-end tax season is here. If you’re a high-net-worth individual, now is your last chance to develop and deploy an effective year-end tax planning strategy to help you reduce your taxable income, maximize your tax-efficient charitable giving or protect your assets on your 2026 taxes. Keep reading to learn how your goals determine which strategies make the most sense, plus key action steps that you and your tax advisor should take. You can also download the top year-end tax action steps as a checklist to review with your tax advisor. What are the top year-end tax planning strategies for high-net-worth individuals in 2026? Individuals with high income or valuable assets can typically reduce their tax exposure by deploying one or more tax planning strategies. The most effective approach depends on your specific tax goals, which may include: Reducing your taxable income: Deploy tax strategies like maximizing pretax contributions, making charitable donations, offsetting capital gains with tax-loss harvesting, shifting assets to younger generations and claiming any applicable tax deductions. Preparing for a future asset sale: Identify tax opportunities well before a buyer is involved, as many of the best strategies won’t work if a sale is already in progress. These may include transferring assets to family members or a trust, as well as leveraging gain-deferral strategies like installment sales. Maximizing your charitable giving: Make your giving more tax-efficient by donating securities rather than cash, bunching several years of giving and taking qualified charitable distributions (QCDs) from your IRA. Taking advantage of a temporary income dip: Turn a lower-than-average income year into a tax advantage by doing a Roth IRA conversion, recognizing long-term capital gains and leveraging tax benefits only available at lower incomes. Let’s explore more about how you can pursue each of these tax goals in greater detail. How to reduce your taxable income If you expect 2026 to be a high-income year — especially if your income reaches $1 million or above — the right year-end individual tax planning strategies can significantly reduce your overall income tax exposure. Here are key action steps to consider: 1. Use tax-loss harvesting opportunities to offset capital gains Review your investment portfolio for tax-loss harvesting opportunities to offset capital gains realized during the year. This may also be a good time to discuss whether tax-focused investment strategies, such as direct indexing or tax-aware long/short investments, could enhance your future tax-loss harvesting opportunities. 2. Reevaluate your tax residency Review your state residency situation, especially if a business sale, liquidity event, retirement or relocation may be on the horizon. Establishing residency in a lower-tax state before a significant income event can produce substantial state tax savings, but proper documentation and advance planning are critical. 3. Shift future income and appreciation to descendants Consider opportunities to shift future income and appreciation to younger generations through gifts of income-producing assets or transfers to trusts . In addition to reducing future estate taxes, these strategies may lower your overall family tax burden by moving income to taxpayers in lower tax brackets. 4. Leverage your charitable giving Accelerate your charitable giving into 2026, particularly through gifts of appreciated securities or contributions to a donor-advised fund. Donating appreciated assets can generate a charitable deduction while also allowing you to avoid paying capital gains tax on the appreciation. 5. Maximize your pretax opportunities Maximize your pretax opportunities such as 401(k) contributions, cash balance plans, HSAs and other deductible retirement contributions before year-end. For business owners and professionals, cash balance plans can often create substantially larger deductions than traditional retirement plans alone, so consider this option if applicable. 6. Explore discretionary deductions Evaluate whether your discretionary deductions can be accelerated into the current year. Such deductions may include business expenses, state taxes (subject to limitations) and certain investment-related costs. 7. Coordinate year-end tax planning with succession and estate planning If you own a closely held business, coordinate year-end tax planning with your long-term succession and estate planning goals . Your highest-income years often present the greatest opportunities to combine income tax savings, wealth transfer planning and future estate tax reduction into one unified strategy. How to prepare for selling a high-value asset Selling a business or other high-value asset creates new tax exposure. However, by starting your tax planning process well in advance of a sale, you can often notably reduce that exposure. Explore these strategies: 1. Start planning before a buyer is involved Before you begin talking to a potential buyer, review your asset’s tax basis and ownership structure now to identify planning opportunities. Coordinate with legal, tax and valuation advisors early, as many of the most valuable opportunities disappear once a sale becomes imminent. 2. Make transfers to trusts or family members before selling If you plan to transfer portions of your asset to trusts or family members, consider doing so before entering into a transaction. For stock that qualifies for qualified small business stock (QSBS) treatment , early gifting (when done as part of an overall estate plan) may create opportunities to leverage multiple Section 1202 gain exclusions and reduce the overall tax burden on a future sale. 3. Evaluate charitable giving opportunities Evaluate whether a charitable planning strategy, such as gifting part of your asset to a donor-advised fund or charitable trust before a sale, could reduce or eliminate tax on a portion of the gain. 4. Consider deferring gains Explore whether installment sale treatment, Opportunity Zone investments or other gain-deferral strategies may fit your objectives. In addition, coordinate the timing of the transaction with tax-loss harvesting opportunities elsewhere in your investment portfolio to help offset a portion of the gain. How to maximize the tax value of your charitable giving If you are charitably inclined, effective tax strategies can boost the tax efficiency of your giving. These strategies often have the added benefit of making your giving more impactful as well. Try options like: 1. Donate securities rather than cash Donate appreciated securities rather than cash whenever possible. This allows you to receive a charitable deduction while permanently eliminating the built-in capital gain. 2. Bunch several years’ worth of giving into a single year Consider bunching several years of charitable giving into a donor-advised fund to maximize deductions while maintaining flexibility over future grants. Beginning in 2026, many taxpayers may receive a reduced benefit from charitable deductions due to the new 0.5% of AGI floor for charitable contributions and additional deduction limitations for high-income taxpayers. By combining multiple years of charitable gifts into a single year, you may be able to maximize the deductible amount, overcome these new thresholds, and then distribute funds to your favorite charities over time through the donor-advised fund. 3. Make qualified charitable distributions from your IRA Individuals over age 70½ may benefit from making qualified charitable distributions (QCDs) directly from IRAs, which can satisfy required minimum distributions without increasing taxable income. Married couples can each make QCDs from their own IRAs, effectively doubling the available benefit when both spouses qualify, making this one of the most tax-efficient ways to support charitable causes in retirement. 4. Name charities as IRA beneficiaries Review your beneficiary designations and consider naming charities as beneficiaries of traditional IRAs. These are often among the most tax-efficient assets to leave to charity. 5. Consider estate planning as a part of this process Align charitable goals with your estate plan to ensure assets are directed in the most tax-efficient manner for both charitable organizations and family beneficiaries. How to take advantage of a temporary income dip From a tax perspective, a year where you earn less income than you typically do can offer meaningful advantages. If you’re having a lower income year, here’s how to make the most of it: 1. Make Roth IRA conversions Consider Roth IRA conversions while your marginal tax rate is lower than normal. A temporary dip in income can create an opportunity to move retirement assets into a tax-free environment at a lower tax cost than may be available in future years. 2. Recognize long-term capital gains Evaluate recognizing long-term capital gains during the year, particularly if you may qualify for a lower capital gains tax rate than in future years. In some cases, intentionally harvesting gains while remaining in a favorable tax bracket can be more tax-efficient than waiting until income increases. 3. Accelerate income into the current tax year Where feasible, accelerate income into the current year, since future tax rates may be higher if income rebounds. Examples may include exercising stock options, accelerating bonus payments, recognizing deferred income, or converting traditional retirement assets to Roth accounts while lower tax brackets are available. 4. Consider additional IRA distributions Review whether it makes sense to take additional IRA distributions beyond required minimum distributions while remaining in a favorable tax bracket. Strategic withdrawals today may reduce future required distributions and help smooth taxable income over multiple years. 5. Claim lower-income tax benefits Take advantage of tax benefits that phase out as income increases. Lower-income years may create opportunities to benefit from provisions such as the qualified business income (QBI) deduction for specified service businesses, the enhanced deduction available to qualifying seniors, education-related credits, or other tax benefits that may be unavailable in higher-income years. 6. Defer charitable deductions Reassess charitable deductions and other itemized deductions as part of your broader tax-bracket strategy. In some situations, it may be advantageous to defer deductions to a future higher-income year when those deductions provide a greater tax benefit. Download the year-end tax planning strategy checklist Get the key action steps from this article as a downloadable checklist . You can use this checklist to guide your year-end tax planning or review it with your tax advisor as you discuss strategies. Read more How the higher lifetime gift tax exemption helps estate planning Key benefits of a trust versus a family limited partnership? New 0.5% income threshold adds a wrinkle to charitable deductions
