Proactive Tax Planning

A “Proactive” approach to your tax planning instead of a “Reactive” approach could produce better results!

When it comes to managing your finances, waiting until tax season to think about taxes can often lead to missed opportunities. A proactive tax planning approach allows individuals and families to evaluate their financial situation ahead of time and make thoughtful decisions that may improve their long-term outcomes. By reviewing expected income, retirement contributions, gifting strategies, and charitable planning in advance, taxpayers can take advantage of opportunities that may not be available with a purely reactive approach. The following strategies highlight several items taxpayers may consider as part of their planning for the 2026 tax year.

Items Taxpayers May Consider for Proactive 2026 Tax Planning Include:

1. Prepare a 2026 tax projection - Taxpayers already know the 2026 rates and by reviewing their 2025 situation and all 2026 expectations of income, a qualified tax professional could help them with a tax projection for 2026.
   

2. New contribution limits for retirement savings - For 2026, the contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is $24,500. The limit on annual contributions to an IRA is $7,500. The catch-up contribution limits for those 50 and over increases slightly to $1,100 for IRAs.
   

3. Explore if a potential Roth IRA 3. Explore if a potential Roth IRA conversion is helpful for your situation - A Roth IRA can be beneficial in your overall retirement planning. Investments in a Roth IRA have the potential to grow tax free and they do not have required minimum distributions during the lifetime of the original owner. Also, Roth IRA assets may pass to your heir’s income tax free. Roth conversions include complex details and are not right for everyone. Also, some recent proposals have suggested changes about which IRAs could be converted to ROTH IRAs. For updates and to review if a ROTH conversion is a good idea for you, please call us.
   

4. Take advantage of annual exclusiongifts - For 2026, the maximumamount of gift tax

   exemption remains at $19,000 for gifts made by an individual and $38,000 for gifts made by married couples. This means you can give up to that amount to a family member without having to pay a gift tax. Ideas for gifting can include contributing to a working child (or grandchild’s) IRA or gifting to a 529 plan, which is a tax-sheltered plan for college expenses.
   

5. Consider bunching your charitable donations into a Donor Advised Fund (DAF) - Now is the time to explore if it is helpful for your tax situation to deposit cash, appreciated securities or other assets in a Donor Advised Fund, and then distributing the money to charities over time. Up to 60% of your adjusted gross income can be deductible if given as donations to typical charities.
   

6. For 2026, the maximum Qualified Charitable Distribution (QCD) is $111,000 per individual. This means that someone aged 70 1/2 or older can donate up to $111,000 directly from their IRA to a qualified charity without having to include the amount in their taxable income.
   

7. Talk with us about your situation. We appreciate the opportunity to be the a stewards of our client’s wealth.

   
   

Proactive tax planning is not about making last-minute adjustments, it’s about creating a thoughtful strategy that aligns with your overall financial goals. Each individual and family has a unique financial picture, which means the right approach to tax planning can vary significantly. Working with a trusted advisor can help you evaluate the options available and determine which strategies may be most beneficial for your situation. If you would like help reviewing your financial picture or exploring proactive tax planning strategies for the years ahead, the team at Apex Capital Wealth Management would welcome the opportunity to assist you.

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