Get Ahead: Five Tax Planning Steps You Can Take Before the New Year
1. Develop a tax baseline
As a first step, ask your tax advisor to prepare a pro forma 2026 tax return. This information will help you understand your current tax situation – and how it might change if you realize more income or take additional deductions this year.
2. Consider these tax-smart strategies
• Harvest tax losses: For investors who have realized gains this year, it may be possible to reduce what you owe by realizing any losses before year-end. Tax-loss harvesting, a classic strategy to reduce tax liabilities, entails selling an investment at a loss to offset already-realized gains or embedded gains that can be realized either now or in the future.
• Deduct charitable contributions: Well-timed charitable donations can ensure the associated deductions are effective in an intended tax year.
• Minimize estimated payments: The U.S. tax system requires you to pay as you go, with most taxpayers meeting their tax obligation through regular withholding from their compensation. However, many high-income earners may need to pay quarterly estimated taxes to avoid underpayment penalties on those amounts, as well as any balance that is due on April 15 of the following year.
3. Optimize compensation and benefits
• Fund retirement accounts: If you can contribute to a retirement account, it generally makes sense to contribute up to the full dollar amount you can before year-end.
• Take required minimum distributions: If you are subject to the required minimum distribution (RMD) rules, plan to take any required distributions by the applicable deadline to avoid steep penalties.
• Defer compensation: If your employer allows you to defer compensation, you must elect to defer your 2027 fixed salary and other non-performance-based compensation by Dec. 31, 2026, if not earlier (as specified by your employer).
• Exercise stock options: A key first step is determining what you hold – non-qualified stock options (NQSOs), incentive stock options (ISOs) or other equity awards – as the tax treatment and planning considerations for each can differ significantly.
4. Make tax-wise gifts to your children
• Use your lifetime exclusion amount now: In 2026, an individual can transfer up to $15 million free of federal gift and estate taxes during their lifetime; married couples can transfer up to $30 million
• Put annual tax-free gifts to good use: In 2026, individual taxpayers are permitted to give up to $19,000 to each recipient free of gift taxes, and married couples can give up to $38,000 per donee.
5. Get professional tax planning advice
Rick Barragan is the Managing Director,
Los Angeles Market Manager, for
J.P. Morgan Private Bank.
[email protected] | (310) 860-3658
privatebank.jpmorgan.com/los-angeles
Source: Ludman, A., & Sprechman, J. (Oct. 19, 2026). Get ahead: 5 Tax planning steps you can take before the new year. Jpmorgan.Com; J.P. Morgan Private Bank.
