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Your Financial New Year’s Resolution: A Tax Planning Reset
Matt Bowden CFP®, ChFC®, CLU®Senior Wealth Strategist
Every new year, people make New Year’s resolutions – join the gym, eat healthier, save more money – but most give up by February because they never looked back at why last year failed or created a realistic plan going forward.
Your taxes could work exactly the same way.
Most high-income earners start the new year without reviewing what actually happened last year. Did your withholding cover your tax bill? Are you facing underpayment penalties? Did those strategic moves you made actually work out? It’s like trying to lose weight without ever stepping on the scale to see where you started.
Your New Year Tax Reset: Two Essential Steps
Step 1: Look Backward
First, you need an honest assessment. Review your 2025 tax estimates to see what worked, what didn’t, and what assumptions changed under new tax laws like OBBBA. This is your financial “weigh-in.”
If you made Roth conversions or adjusted your distribution strategy last year, did it deliver the results you expected? Identifying gaps now helps prevent repeating mistakes in 2026.
Step 2: Plan Forward
Next, build a realistic projection for 2026 based on your expected income, deductions, and distributions. This isn’t a vague goal to “pay less in taxes”, it’s a concrete roadmap. Think about upcoming events that could impact your taxes:
- Are you planning Qualified Charitable Distributions?
- Expecting large capital gains from investments or property sales?
- Facing Required Minimum Distributions that keep climbing?
- Changes in compensation or retirement status?
These items now interact with new Modified Adjusted Gross Income (MAGI) thresholds under One Big Beautiful Bill Act (OBBBA) and could help or hurt your ability to qualify for valuable deductions like the enhanced senior deduction and expanded SALT cap.
The Compounding Problem: An Example
Here’s what can happen if you ignore the plan: Imagine you retired at 70 with $1 million in your IRA. After three years of strong returns (averaging 14.5% annually), your IRA grew to $1.5 million by age 73. Great news, right?
Not entirely. Your Required Minimum Distribution jumped from about $37,736 to $56,604, an extra $20,000 you must take out. That increase doesn’t just mean more taxable income. It could raise your Medicare premiums and trigger phaseouts that eliminate valuable new OBBBA deductions you were counting on.
It’s like ignoring your health for three years and suddenly not fitting into any of your clothes. The problem can compound if you don’t address it proactively.
Make This Year Different
Unlike most New Year’s resolutions that fail by February, a well-designed tax plan can get better throughout the year, especially when navigating new laws with MAGI thresholds and phaseouts that could either save you tens of thousands or cost you the same.
And of course, as you review your tax situation, be sure to coordinating with your CPA or tax professional to identify opportunities and align your strategy for the year ahead.
The question is: Are you treating your taxes like a forgotten resolution, making the same mistakes every year? Or are you ready to take that honest look backward, create a realistic plan forward, and actually stick to a strategy that works?
Make 2026 the year your tax planning actually succeeds.
Looking Ahead:
Next month we will be looking at how you can maximize the amount you give to the next generation through legacy planning and help create that generational wealth.
5 Tax Planning Strategies to Help Unlock Success in 2026
Matt Bowden CFP®, ChFC®, CLU®, Senior Wealth Strategist
After three years of strong market returns, many investors may be facing larger retirement portfolios and more complex tax challenges. With recent changes from the OBBBA, SECURE Act, and SECURE Act 2.0, the tax landscape has shifted significantly. Here are five strategies that could help you navigate 2026 more effectively.
Build Tax Diversification Now
Over-concentrating in traditional pre-tax retirement accounts can create problems. A couple with $500,000 each in 401(k)s at age 50 could potentially see balances grow to roughly $3.5 million by retirement, resulting in Required Minimum Distributions that might exceed $130,000 at age 73. This could push them into higher tax brackets and possibly trigger expensive IRMAA Medicare surcharges.
Tax diversification across taxable, pre-tax, and Roth accounts may provide more flexibility in retirement to help control taxable income. With lower individual tax rates now permanent under OBBBA, deferring taxes indefinitely may deserve reconsideration.
Prepare for Larger Required Minimum Distributions
Strong market performance often means larger RMDs. A $1 million IRA could grow to approximately $1.336 million in three years, potentially increasing the RMD from $40,650 to $60,748. For charitably inclined individuals, Qualified Charitable Distributions (QCDs) may offer an attractive solution, allowing you to direct up to $111,000 annually from your IRA to charity while potentially reducing taxable income.
The individuals and situations depicted here are hypothetical only, and do not represent the actual performance of any particular investments or strategy. All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful. A diversification does not assure a profit or protect against loss in a declining market.
Maximize Employee Benefits
SECURE Act 2.0 introduced enhanced catch-up contributions of $11,250 for ages 60-63, Roth employer matching, and student loan payment matching. It’s generally advisable to review benefits annually, as employers frequently update plan features.
Choose Roth Contributions Strategically
Consider taking full advantage of increased 2026 contribution limits and making strategic decisions between Roth and traditional contributions. Business owners should evaluate whether SEP IRAs, SIMPLE IRAs, Solo 401(k)s, or defined benefit plans might be more suitable for their situation. High earners might want to explore cash balance plans that could potentially defer significant income annually.
Leverage Health Savings Accounts
HSAs are generally considered highly tax-efficient, offering triple tax benefits. For 2026, contribution limits increase to $4,400 for individuals and $8,750 for families, with an additional $1,000 catch-up for those 55 and older. A 55-year-old who maximizes contributions for ten years could potentially accumulate over $120,000 by age 65, available tax-free for healthcare expenses.
The Bottom Line
The tax landscape has undergone significant changes. By considering these five strategies, you may be able to help reduce lifetime tax burdens and position your portfolio for long-term success.
Reference: “Unlocking 2026 Success: 5 Income Tax Planning Strategies” by Debra Taylor, Carson Tax Solutions, January 16, 2026
Click here to see 8 tax planning considerations every preretiree should know
Tax Law Changes that Could Affect Your Return This Tax Season
Tax laws are constantly evolving. Make sure you’re aware of changes that could impact your return this year. Take a few minutes to review what’s new and how it might affect your tax strategy.
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