Year-End Tax Moves for Pre-Retirees

What can you still do in December to change this year’s tax? More than you’d think, but only until the 31st. Once the calendar turns, the year is closed and the bill is set. For pre-retirees, the last few weeks are when the cheap moves are still on the table, conversions in a low-income year, harvesting at the right rate, locking in deductions. Run the list below before year-end. Most of it can’t be done in April.

Before December 31

• Run your Roth conversion to the bracket line. Estimate your taxable income, then convert just enough to fill the top of your target 2026 bracket (for a couple, the 24% bracket reaches $403,550) without spilling into the next one. See Roth conversion windows by age for which years to push hardest.
• Check the IRMAA threshold before you convert. A conversion sets your Medicare premiums two years out. For a couple, income at or below $218,000 avoids the 2026 surcharge entirely. Convert up to the line you’ve chosen, not past it. The full IRMAA brackets show every tier.
• Harvest gains or losses to match your rate. In a low-income year, harvest long-term gains at the 0% rate (taxable income under $98,900 for a couple) and reset your basis. In a high-income year, harvest losses to offset them, and mind the 30-day wash-sale window across every account.
• Take your RMD if you’re subject to one. RMDs begin at 73 or 75 depending on your birth year, and the penalty for missing one is 25% of the shortfall. If you’re not there yet, skip this and convert instead while the room exists.
• Give straight from the IRA with a QCD. If you’re 70½ or older and give to charity, a qualified charitable distribution of up to $111,000 for 2026 satisfies your RMD and keeps the income off your return.
• Bunch charitable gifts into a high-income year. Funding a donor-advised fund with appreciated stock skips the capital gains tax and stacks several years of giving into one deduction, worth the most in a year your income spikes.
• Use your annual gift exclusion. You can give $19,000 per recipient in 2026 with no gift-tax filing, and the gift must clear by December 31 to count for this year. A couple can give $38,000 to each person.
• Max the accounts that still take contributions. Top off the 401(k), HSA, and any IRA you’re eligible for. The 2026 401(k) elective deferral limit is $24,500, with an $8,000 catch-up at 50 and an $11,250 super catch-up at ages 60 to 63.
• Set up withholding to cover a year-end surprise. Withholding from an IRA distribution counts as paid evenly all year, so a December withholding can cover a estimated-tax shortfall the quarterly system would penalize.

The one that’s easy to miss

Watch your effective rate, not just your bracket. The same year-end dollar can fill a low bracket and still make more of your Social Security taxable, trigger the net investment income tax, and lift your Medicare premiums two years out. Before you finalize any big move, check what rides along with it.

December is a deadline, not a suggestion. The conversions, the harvest, the gifts, the QCD, none of them can be done once the year closes. Work the list now, while the moves are still yours to make, and start the new year with the bill already shaped the way you want it.