Year-End Tax Planning: 9 Moves to Make Before December 31

Most people wait until January to think about taxes. By then, a lot of best tax saving opportunities are already gone. Here is what to do before December 31.

Effective tax planning happens before December 31. By taking a proactive approach now, you may be able to reduce your tax liability, improve cash flow, and position yourself for a stronger financial year ahead.

Whether you are a business owner, an individual taxpayer, or both, here are some of the most important tax planning opportunities to review before year-end.

1. Review Your Estimated Tax Payments

If you pay quarterly estimated taxes, now is the time to make sure you are on track. Changes in income throughout the year can lead to underpayment issues that may result in penalties and interest. Compare your estimated payments to your projected year-end tax liability and determine whether any adjustments should be made before December 31.

For business owners, investors, and self-employed individuals, this review is particularly important if income was significantly higher or lower than expected.

2. Maximize Retirement Contributions

Contributions to tax-advantaged retirement accounts are one of the most straightforward ways to reduce your taxable income. Depending on your situation, which may mean maxing out your 401(k), contributing to a traditional IRA, or funding a SEP-IRA if you are self-employed. Contribution limits vary by account type, so confirm where you stand and make any catch-up contributions if you are eligible.

3. Review Your Withholding

If you are a W-2 employee, take a look at your withholding before year-end. Major life changes like a new job, marriage, a new dependent, or income from a side business can all affect your tax situation.

Adjusting your withholding now through your employer can help you avoid a surprise tax bill or underpayment penalty next spring.

4. Accelerate Deductions or Defer Income Where It Makes Sense

If you expect to be in a higher tax bracket this year than next year, accelerating deductions into the current year may be beneficial.

For business owners, this might mean accelerating planned expenses or postponing certain income with right approach. For individuals, it could mean prepaying deductible expenses like mortgage interest or state taxes before December 31.

5. Review Your Business Entity Structure

Year-end is a good time to step back and ask whether your current business structure is still working for you. As your revenue grows or your business evolves, the structure you started with may no longer be the most tax-efficient option.

Changes to entity structure need to be planned in advance and may take time to implement, so having this conversation now sets you up well heading into the new year.

6. Maximize Bonus Depreciation and Section 179

If your business purchased equipment, vehicles, or other qualifying assets in 2026, you may be able to deduct a significant portion of the cost this year rather than depreciating it over time.

Section 179 allows businesses to deduct qualifying purchases up to a set limit, while bonus depreciation rules allow for additional first-year deductions. Review any qualifying purchases made this year and confirm they are being handled in the most advantageous way.

7. Make Charitable Contributions Before Year-End

Charitable contributions must be made by December 31 to be deductible in the current tax year. If you have been thinking about donating, now is the time to follow through.

For those with appreciated securities, donating stock directly to a qualified charity can be particularly effective, allowing you to avoid capital gains while still receiving a deduction for the full fair market value.

8. Review Your Gifting Strategy

The annual gift tax exclusion for 2026 is $19,000 per recipient. If you have a gifting strategy in place, confirm that any planned gifts are completed before December 31. Unused exclusions do not carry over to the following year.

9. Review Your Estate Plan and Beneficiary Designations

If you have experienced major life changes this year, such as marriage, divorce, the birth of a child, or the loss of a family member, your estate plan and beneficiary designations may need to be updated.

Remember that beneficiary designations on retirement accounts and insurance policies supersede instructions in a will, making regular reviews critical.

The Bottom Line

The strategies above work best when they are tailored to your specific situation. An advisor can help you prioritize based on your income, goals, and what has changed in your financial picture this year.

The best tax-saving opportunities happen before December 31. If you would like guidance on how these strategies apply to your business or personal finances, the team at LGT is here to help.

To learn more about LGT and how we can serve you, contact us here.