2026 Year-End Tax Planning Checklist: What Individuals and Small Businesses Should Do Before December 31

The short answer

Before December 31, 2026, check these items: the 401(k) employee limit of $24,500 (plus $8,000 at 50 or older, or $11,250 at ages 60 to 63); required minimum distributions at 73; the new cash charitable deduction of $1,000 ($2,000 joint) for non-itemizers and the 0.5%-of-AGI floor for itemizers; the $40,400 SALT cap, reduced above $505,000 of MAGI; the $19,000 annual gift exclusion; 100% bonus depreciation for property acquired after January 19, 2025 and a $2,560,000 section 179 limit. The fourth-quarter estimated payment is due January 15, 2027, and the Form 1099-NEC/MISC threshold is $2,000 for payments made in 2026.

Who this applies to

W-2 employees, especially RTP tech workers, who can still adjust 401(k) deferrals and realize gains or losses.

Families with homes and investments who need to compare itemizing with the 2026 standard deduction ($32,200 married filing jointly, $16,100 single) and plan gifts and donations.

Small business owners, including restaurants, nail salons, retail shops and S corporation or LLC owners, deciding on equipment, owner salary and 1099 paperwork.

Retirees and families with parents in the U.S., who deal with RMDs, qualified charitable distributions and the extra deduction for those 65 and older.

Individuals: retirement accounts and RMDs

Most workplace contributions must go through payroll by December 31; IRA contributions can wait until April 15, 2027.

401(k), 403(b), governmental 457: the 2026 employee limit is $24,500; catch-up at 50 or older is $8,000; for ages 60 to 63 the catch-up is $11,250. Confirm the percentage with HR now, because only paychecks dated by year-end count.

Roth catch-up rule: if your 2025 FICA wages exceeded $150,000, catch-up contributions in 2026 must be Roth.

IRA: $7,500 for 2026, plus $1,100 at 50 or older, contributed by April 15, 2027. Roth IRA phase-outs: $153,000 to $168,000 single and $242,000 to $252,000 married filing jointly.

SIMPLE IRA: $17,000 employee limit ($18,100 for certain plans).

RMDs: start at 73. The first one can wait until April 1 of the next year; later ones are due by December 31. A shortfall can draw a 25% excise tax, reduced to 10% if corrected in time.

QCDs: at 70 1/2 or older, up to $111,000 per person in 2026 can go directly from an IRA to charity, excluded from income and counted toward the RMD.

Individuals: deductions, gifts and charity

The 2026 charity rules and SALT cap both changed, so rerun the itemize-or-not comparison before year-end.

SALT cap: $40,400 for 2026 ($20,200 married filing separately) for state income or sales tax plus property tax, reduced by 30% of MAGI above $505,000, but not below $10,000.

Non-itemizers: from 2026 you can deduct cash gifts to public charities of up to $1,000, or $2,000 joint. Gifts to donor-advised funds and supporting organizations, and noncash gifts, do not count.

Itemizers: from 2026, charitable gifts are deductible only above 0.5% of AGI. Taxpayers in the 37% bracket also have itemized deductions reduced by a 2/37 factor.

Bunching: if you are near the standard deduction, consider combining two years of gifts into one, after comparing both methods.

Annual gift exclusion: $19,000 per recipient in 2026, $38,000 for a married couple; $194,000 to a non-citizen spouse. Larger gifts require Form 709 but usually no tax; the 2026 lifetime exemption is $15,000,000.

New deductions for 2025 through 2028: an extra $6,000 per person 65 or older; up to $25,000 of qualified tips; and the overtime premium up to $12,500 ($25,000 joint). All have income limits; restaurant and salon workers should check that their W-2 or records show the amounts.

Investments: loss harvesting and estimated tax

Use losses against gains, and top up estimated tax by January 15, 2027.

Loss harvesting: realized losses offset realized gains; up to $3,000 of net loss ($1,500 married filing separately) offsets ordinary income, and the rest carries forward.

Wash sales: buying the same or substantially identical security within 30 days before or after a loss sale defers the loss; purchases in an IRA can count.

Safe harbor: you generally avoid the underpayment penalty if withholding and estimates cover 90% of 2026 tax or 100% of 2025 tax (110% if 2025 AGI exceeded $150,000). The fourth-quarter payment is due January 15, 2027. Extra wage withholding in December is treated as paid evenly through the year.

Small businesses: equipment, owner salary and 1099s

Equipment must be placed in service by December 31, S corporation salary must run through payroll, and 1099 information should be collected now.

100% bonus depreciation: qualified property acquired and placed in service after January 19, 2025, such as kitchen equipment, salon chairs, computers and shelving, can be fully deducted in the year placed in service. Ordering and paying without placing it in service by year-end does not count for 2026.

Section 179: the 2026 limit is $2,560,000, reduced dollar for dollar once section 179 property placed in service exceeds $4,090,000; the SUV limit is $32,000. Section 179 cannot create a business loss, so model how it combines with bonus depreciation.

S corporation reasonable salary: an owner who works in the business should take reasonable wages before distributions. Run them through payroll with withholding by year-end, and include health insurance for more-than-2% shareholders on the W-2.

PTET: North Carolina and many other states let S corporations and partnerships pay state tax at the entity level, outside the individual SALT cap. North Carolina's election is made on the entity return, but model it and plan payments before year-end.

1099 threshold: for payments made after December 31, 2025, the Form 1099-NEC and 1099-MISC threshold rises from $600 to $2,000, indexed from 2027. Collect Forms W-9 now; 2026 Forms 1099-NEC and W-2 are due February 1, 2027, because January 31 is a Sunday.

A simple example

Simplified: ordinary income at a 24% federal marginal rate, ignoring state tax, self-employment tax and limits.

Mr. and Mrs. Chen file jointly with 2026 AGI of about $300,000. He is 52 and works for an RTP tech company; she owns a nail salon taxed as an S corporation.

401(k): he had deferred $15,000. In December he raises his rate to reach $24,500 plus the $8,000 catch-up, $17,500 more, saving about $4,200 of federal tax.

Loss harvesting: he sells stock with an $8,000 loss, offsets $5,000 of realized long-term gains (about $750 saved at 15%), and deducts $3,000 against ordinary income (about $720), roughly $1,470 in total.

Equipment: the salon places $30,000 of new equipment in service in December and deducts it under 100% bonus depreciation, saving about $7,200.

Charity: they give their church about $5,000 a year. Itemizing, the first 0.5% of AGI ($1,500) is not deductible, leaving $3,500; with the $32,200 standard deduction they could deduct $2,000 of cash gifts. Compare both.

Common mistakes

Counting equipment that is paid for but not in service. The test is placed in service by December 31.

Treating IRA and 401(k) deadlines as the same. 401(k) deferrals end with the last 2026 paycheck; IRAs run to April 15, 2027.

Assuming non-itemizers get no charity deduction. From 2026 they can deduct $1,000 or $2,000 of cash gifts with receipts; DAF gifts do not count.

Selling a loser and buying it back right away. Within 30 days, that triggers the wash sale rule.

Dropping 1099 paperwork because of the higher threshold. Keep payment records, and file on time for payees over $2,000.

What to do and when

November: project 2026 tax, compare itemizing with the standard deduction, check 401(k) rates, list contractors and collect W-9s.

By mid-December: confirm final-paycheck 401(k) deferrals and S corporation owner wages with HR or payroll.

By December 31: complete RMDs, QCDs, gifts to charity and family, loss sales and equipment placed in service; run S corporation payroll.

January 15, 2027: fourth-quarter estimated tax due.

February 1, 2027: 2026 Forms W-2 and 1099-NEC due.

March 15, 2027: S corporation and partnership returns due; PTET elections are made with the return.

April 15, 2027: individual returns and 2026 IRA contributions due.

How YCL can help

Before year-end we run 2026 tax projections for families and small businesses: retirement contributions, gifts and charity, capital gains and losses, estimated tax, and comparisons of equipment write-offs, S corporation salary and PTET. See our tax planning service.

For estimated tax calculations, see our estimated tax guide; for S corporation salary and distributions, see the S corporation guide.

YCL Accounting & Consulting is a multi-state CPA firm serving clients across the U.S. in English and Chinese, led by co-founder Gloria (Chenchen) Liu, CPA. You can start with a free 15-minute consultation.

Sources

IRS News Release IR-2025-111: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500

IRS Notice 2025-67, 2026 amounts relating to retirement plans and IRAs

IRS News Release IR-2025-103: tax year 2026 inflation adjustments

IRS Revenue Procedure 2025-32 (2026 inflation-adjusted items)

26 U.S. Code § 164, Taxes (SALT limitation, Cornell LII)

26 U.S. Code § 170, Charitable contributions (Cornell LII)

IRS: Working Families Tax Cuts (charitable deduction for non-itemizers)

IRS Notice 2026-11, Interim guidance on additional first year depreciation under § 168(k)

IRS: Retirement plan and IRA required minimum distributions FAQs

IRS Publication 505 (2026), Tax Withholding and Estimated Tax

IRS Topic No. 409, Capital gains and losses

Investor.gov (U.S. SEC): Wash sales

Last checked: November 4, 2026

This article is general tax information, not tax, legal or investment advice for any individual situation.