Most tax planning happens too late. By the time a return is being prepared in March, nearly every decision that shaped it was locked in on December 31. The last ten weeks of the year are when planning still changes the outcome.
This year matters more than usual. The One Big Beautiful Bill Act (OBBBA) changed several rules that hit New Jersey households directly, and 2026 is the first year many of those changes are fully in effect. Here is where we are focusing with our clients right now.
Should you be itemizing again this year?
For years, the $10,000 cap on state and local tax (SALT) deductions pushed many New Jersey homeowners onto the standard deduction. For 2026, the cap is $40,400. With New Jersey property taxes and state income taxes where they are, many families who stopped itemizing in 2018 should be itemizing again.
There is a catch for higher earners. Once household income passes roughly $505,000, the cap begins to shrink, and it bottoms out at $10,000. A household near that threshold may be able to preserve thousands of dollars of deductions by deferring a bonus, timing a capital gain, or making a larger pre-tax retirement contribution.
Are your charitable gifts still working as hard as they could?
Three new rules apply in 2026:
- Itemizers can only deduct charitable gifts above 0.5% of their adjusted gross income. On $400,000 of income, the first $2,000 of giving produces no deduction.
- Taxpayers in the top 37% bracket receive a maximum benefit of 35 cents per dollar donated.
- Non-itemizers can now deduct up to $1,000 (single) or $2,000 (married filing jointly) in cash gifts to public charities. Donor-advised funds do not qualify.
For clients age 70½ and older, the qualified charitable distribution (QCD) is often the best tool available. A QCD sends money directly from an IRA to charity, up to $111,000 in 2026. It counts toward your required minimum distribution, stays out of your taxable income entirely, and sidesteps the new 0.5% floor.
For younger donors, it can make sense to combine several years of planned giving into a single year. Placing those gifts in a donor-advised fund lets you take the deduction now and send the money to charities over time. One larger gift can clear both the new floor and the standard deduction, where several smaller ones might not.
Have you taken your required minimum distribution?
If you are 73 or older, your 2026 RMD must be out of your account by December 31. If 2026 is your first RMD year, you can wait until April 1, 2027, but you will then take two distributions in 2027, which can push you into a higher bracket. The penalty for missing an RMD is 25% of the amount not taken, reduced to 10% if corrected promptly. Inherited IRAs deserve a careful look as well, since many beneficiaries now face both annual distributions and a 10-year deadline to empty the account.
Is 2026 the right year for a Roth conversion?
Unlike IRA contributions, Roth conversions must be completed by December 31 to count for 2026. The goal is to convert enough to fill your current tax bracket without spilling into the next one. For married couples, the 24% bracket runs up to $403,550 of taxable income this year.
Two details often get missed. First, Medicare looks back two years when setting premiums, so income you report in 2026 determines what you pay for Medicare in 2028. Second, New Jersey taxes conversions too, though only on dollars the state has not already taxed. That state cost belongs in the math.
Are you putting the most you can into your retirement accounts?
The 2026 401(k) limit is $24,500, plus an $8,000 catch-up for those 50 and older. If you are 60 to 63, the catch-up rises to $11,250. One new wrinkle: if you earned more than $150,000 in wages in 2025, your catch-up contributions must now go in as Roth dollars. Check your final paychecks to confirm the money is going where you expect.
Can your investment losses lower your tax bill?
Selling positions at a loss can offset realized gains and up to $3,000 of ordinary income, with the remainder carried forward. If you are sitting on large gains in a concentrated position, now is the time to decide how much to recognize this year versus next, especially if you are near the SALT income threshold or a Medicare premium threshold.
Have you used this year’s gifting allowance?
You can give up to $19,000 per person in 2026 without touching your lifetime exemption, which OBBBA set at $15 million per person. A married couple with three children and their spouses can move $228,000 out of their estate this year without using any of their lifetime exemption. Unused exclusions do not carry over.
Also do not forget:
- Medicare open enrollment ends December 7.
- Flexible spending account balances are often use-it-or-lose-it.
- If you sold a business, a rental property, or a large stock position this year, a fourth-quarter estimated payment may prevent an underpayment penalty.
The cost of waiting
Every item on this list has a deadline, and most of them cannot be fixed after December 31. A missed RMD, an unused gifting exclusion, or a Roth conversion that pushes you into a higher Medicare bracket two years from now are all expensive, and all avoidable with a plan made in October or November.
If you would like a second opinion before year-end, bring us your most recent tax return. We will review it with you and show you where the opportunities are for 2026.
