6 Tax Planning Moves To Make Before 2026

Aloha,

Whenever I ask a Hawaii business owner’s what their financial goals are, saving on taxes is ALWAYS at the top of the list!

However, a lot of taxpayers don’t realize that there’s an expiration date on certain tax strategies. If you wait until after the ball drops on New Year’s Eve, you could be missing out on some of these powerful tax savings opportunities.

Disclaimer: This guide is for educational purposes only and does not constitute tax, legal, or financial advice. Always consult with a qualified tax professional who understands your unique situation before making any tax-related decisions.

1. Maximize Retirement Contributions: Maximizing (or at least contributing as much as possible given your financial situation) your retirement contributions isn’t just a powerful tax savings tool; it’s a crucial way to set “future you” up for success!

   EMPLOYER-SPONSORED RETIREMENT PLANS

   In 2025, you can contribute up to $23,500 pre-tax. If you’re 50-59 or over 64 years old, you’re allowed an additional $7,500 catch-up contribution. If you’re age 60-63, you may be able to make a $11,250 catch-up contribution.

   HOW MUCH

   Elective deferrals (employee contributions) must be made by December 31^st, 2025.

   WHEN

   Traditional (pre-tax) contributions reduce your current taxable income.

   IMPACT

   Traditional (pre-tax) contributions reduce your current taxable income.

2. Before the year ends, you need to review your investment portfolio for potential tax savings. If you have losses, you may be able to take advantage of tax loss harvesting (selling certain investments at a loss) to offset your taxable income.

   Harvesting Capital Tax Losses

   Capital losses can offset your capital gains on a dollar-for-dollar basis.

   OFFSETTING CAP GAINS

   If your capital losses exceed your capital gains, they can offset your ordinary income by up to $3,000 ($1,500 if married filing separately).

   OFFSETTING INCOME

   Any sales must be completed by December 31, 2025.

   WHEN

   Repurchasing the same (or “substantially identical”) stock 30 days before or after the sale disallows the loss for tax purposes.

   NOTE

   Repurchasing the same (or “substantially identical”) stock 30 days before or after the sale disallows the loss for tax purposes.

3. The holidays are a time of giving, plus being charitable can save you on taxes! If you itemize (aka you don’t take the standard deduction), here’s what you need to know:

   Make Any Charitable Contributions

   For 2025, the deduction limit of qualifying cash donations is 60% of your AGI.

   CASH DONATIONS

   Generally, the deduction limit on appreciated non-cash assets held more than a year is 30% of your AGI for 2025.

   APPRECIATED ASSETS

   Donations must be made by December 31, 2025.

   WHEN?

   Donations must be made to qualified organizations, and you must keep clear, detailed records to substantiate your donations.

   NOTE

   Donations must be made to qualified organizations, and you must keep clear, detailed records to substantiate your donations.

4. If you’re a retiree who is 73 years or older (or have inherited an IRA with RMD requirements), taking your Required Minimum Distributions is key to avoiding penalties!

   Required Minimum Distributions

   If required, you must take your RMD before December 31, 2025.

   DEADLINE

   If you turn 73 in 2025, your first-time RMD can be delayed until April 1, 2026. However, you’ll need to take two RMDs in 2026 in this case.

   FIRST-TIME RMD

   If you don’t take your RMD, the penalty is 25% of the amount that should have been distributed (but was not). This penalty can be reduced to 10% if corrected during the “correction window.”

   PENALTY

   Certain special cases for RMDs apply, consult with your tax accountant.

5. If you’re trying to decrease your taxable income for the current tax year, or you’re coming close to the standard deduction, consider bunching deductions:

   Bunch Qualifying Tax Deductions

   Prepaying or accelerating deductible expenses in 2025 to “bunch” the deductions in the current tax year and move you over the standard deduction threshold to take advantage of itemizing your deductions.

   BUNCHING DEDUCTIONS

   Examples of this strategy are: paying your property tax bill in 2025, making multiple years’ worth of charitable contributions, or strategically scheduling and paying for medical expenses before year-end.

   EXAMPLES

   Consult with your tax accountant to determine how you could most effectively bunch deductions depending on your income.