Get ahead: 5 tax planning steps you can take before the new year

The end of the year is a prime time to assess your tax situation and identify steps you may be able to take to reduce your 2026 tax bill and avoid surprises at filing time. The sooner you begin this process, the more time you will have to ensure your plans are in place by December 31.

As a first step, we recommend asking your professional advisors for help estimating what you are likely to owe the government for this year. Then, you can begin determining which of these tax planning strategies best fit your personal circumstances.¹

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. As part of this process, you can also ask your J.P. Morgan team for a tax summary showing year-to-date activity in your J.P. Morgan accounts.²

With this snapshot in hand, you can better assess whether it makes sense to implement tax planning strategies before year-end.

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.³

Alternatively, if you still like the securities sold, you can buy them back or acquire similar securities—provided you are careful not to violate the wash sale rule. This rule prohibits you from taking a loss on the sale of a security if you buy a “substantially identical” security within 30 days either before or after the loss-trade date.

If you do not want to be out of the position for an entire month, you might want to consider doubling up on your position (i.e., buying the identical position at the current price, then waiting more than 30 days before selling the original loss position). But time is short: November 30 is the last day you can implement this strategy and recognize the loss for 2026.

Keep in mind that tax-loss harvesting shouldn’t be limited to year-end planning: You may want to regularly review your portfolio for harvesting opportunities. Even when markets are up, dispersion—the varied returns of individual stocks—creates opportunities for tax-loss harvesting. Year-to-date through August 2026, for example, more than 330 of the stocks that comprise the S&P 500 experienced a drawdown of 5% or more.⁴

You might benefit from having an account that is designed to consistently, automatically look for losses, and to realize them when appropriate. For more information, see How cutting edge technology can enhance your wealth with tax savings.

Deduct charitable contributions

Well-timed charitable donations can ensure the associated deductions are effective in an intended tax year. Depending on what you plan to donate, it could take time to complete the transfer. Confirm estimated transfer times with your financial institutions to determine whether your donations will be considered to have been made by the end of this year.

Pairing charitable contributions of appreciated publicly traded stock with a tax-loss harvesting strategy can help you rebalance your portfolio in a tax-efficient manner. In addition to receiving a deduction based on the fair market value of the donated stock, you can also avoid tax on the equities’ unrealized gains.

However, make sure you’ve held the donated stock, unhedged, for more than one year. The holding period may be longer if the securities were received in connection with services performed as a partner in a for-profit investment venture (e.g., at a hedge, venture capital or private equity fund).

Also, keep in mind: Deductibility is subject to certain limitations based on your adjusted gross income (AGI). Additionally, on January 1, 2026, two new changes enacted under the One Big Beautiful Bill Act (OBBBA) curtailing the itemized deductions of high-income taxpayers went into effect: One established a 0.5% of AGI “floor,” such that charitable contributions are generally deductible only to the extent they exceed that threshold; and the other enacted a roughly 5.4% overall haircut on itemized deductions for those in the top rate bracket.⁵

You might consider consolidating the charitable donations you had planned to make over multiple years into a single-year gift in 2026 to ensure the total deduction exceeds 0.5% of your AGI and to prevent the 0.5% floor from applying in multiple years. 

If you’re unsure which charity you want to support, but would like to use the deduction this year, consider contributing to a donor-advised fund (DAF). Tax deductions for donations to DAFs are immediate, but the payout from the DAF to another charity can be made at a later date.

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 (generally by April 15, June 15, September 15 and January 15) to avoid underpayment penalties on those amounts, as well as any balance that is due on April 15 of the following year.

The law allows estimated payments to be made on the basis of a lesser-of calculation; either:

• 110% of the actual tax liability for the preceding year, or
• 90% of the estimated tax liability for the current year⁶

In a higher interest rate environment, if you expect to owe much more in taxes for 2026 than you owed for 2025, you could consider paying estimated taxes based on your 2025 tax liability and investing the difference in 100% principal-protected, short-term fixed income investments. This may allow you to earn a return on the incremental amount you will owe for at least a few months.

3. Optimize compensation and benefits

Here are some steps that you may want to consider as part of your compensation planning. We recommend considering these steps now, if you’re not taking them already.

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. In 2026, the maximum contribution amounts are:

• IRAs—$7,500. (For those 50 years of age or older, it’s $8,600.)
• 401(k) and 403(b) accounts—$24,500. (Those 50 and older can contribute up to $32,500.) Taxpayers who turned, or will turn, age 60, 61, 62 or 63 during 2026 can contribute up to $35,750⁷

Converting assets from a traditional IRA to a Roth IRA may be worth considering if you:

• Think your future income tax rates may be higher
• Can afford to pay the taxes with cash from other sources
• Do not plan to leave IRA assets to charity
• Expect the funds to remain in the IRA for a long period of time

Converted amounts are generally taxable in the year of conversion, which may affect other AGI-based items. Conversions must be completed by December 31 to count for 2026.

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. If you own a retirement account and have reached age 73, generally, you will be required to take an RMD each year by December 31.⁸

Distributions can also be useful for philanthropic purposes. If you have significant philanthropic objectives, remember you can make a qualified charitable distribution (QCD) from an IRA directly to a public charity (though not to a DAF). The amount you donate will go towards satisfying your RMD if completed correctly.⁹

However, depending on your circumstances, it might be more tax efficient to gift appreciated securities you have held for more than one year. For more information, see “Are qualified charitable distributions always the best tax-saving move?”

If you inherited an IRA after 2019, final regulations issued in July 2024 require—beginning in 2025—certain beneficiaries to take annual distributions over the 10-year period following the year of the account owner’s death. Depending on factors including the ages of the original owner and the beneficiary, in many cases the RMDs would be relatively modest for the first nine years, with a large final distribution at the end of the 10th year.

The rules are nuanced, so it’s critical to consult your tax advisor to confirm your RMD requirements if you are the beneficiary of an inherited IRA. Your advisor can help you create a long-range plan to manage taxes in a way that supports your overall financial goals.¹⁰

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 December 31, 2026, if not earlier (as specified by your employer).

If you defer compensation, there is no income tax liability on either the compensation or its growth until you receive it, at which time you’ll owe the ordinary tax rates then in effect. One tradeoff for electing to defer: You assume risk as a creditor of the employer. This decision, too, requires careful consideration of your expected current and future income tax rates.

Exercise stock options

If you are an executive, you may want to exercise some of your stock options in 2026. The important question is: Which options should you choose? 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. Good options are:

• Deep in the money (i.e., the strike price is substantially less than the current fair market value) 
• On high-dividend-paying stocks
• Near their expiration date

Your J.P. Morgan team can provide an analysis to help with your deliberations.

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. This federal lifetime exclusion amount increased under the OBBBA, and is scheduled to be adjusted for inflation beginning in 2027. 

If you have a taxable estate and the capacity and desire to gift, and you have not used all or part of your current lifetime gift and estate tax exclusion, consider acting now to lock in the gifting potential.¹¹

Using our proprietary Wealth Plan Plus technology, your J.P. Morgan team can help quantify the amount of assets you can transfer while maintaining your own future financial security.

Put annual tax-free gifts to good use

Every year, U.S. taxpayers take advantage of the annual gift tax exclusion by giving to as many individuals as they choose for gifts of a present interest. 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.

The annual gift tax exclusion is a use-it-or-lose-it opportunity. If you do not make a gift this year, you cannot double up next year.

Parents and grandparents often use their annual gift tax exclusions to fund 529 educational savings accounts, where the funds are generally allowed to grow free of U.S. income and capital gains taxes. As long as the money is used for the account beneficiary’s qualified education expenses, no U.S. income or gift tax will be due upon distribution.

The OBBBA also created a new type of tax-deferred account to encourage savings for minors, referred to in the law as a “Trump account,” with contributions eligible beginning July 4, 2026. Trump accounts are eligible to receive up to $5,000 per year in non-deductible contributions, including potential employer contributions, plus a one-time $1,000 government contribution for eligible children born from 2025 to 2028. 

Consider asking your tax advisor whether your Trump account contributions have any gift tax implications: IRS guidance provides a safe harbor under which most individual contributions will be treated as qualifying for the annual gift tax exclusion, but in general, the safe harbor is available only if the donor is not otherwise required to file, and does not file, a gift tax return for the year.¹² For more information, see “How Trump accounts create a new way to save for minors.”

5. Get professional tax planning advice

There are many ways to strengthen your financial health before year-end, especially if you get started now.

Speak with your tax advisor about which actions may be right for you. Your J.P. Morgan team can work with you and your tax advisor to help identify tax planning actions that are best suited to your personal circumstances and long-term financial goals.