Midyear Tax Planning 2026: Practical Steps That Could Help Lower Your Tax Bill This Year
Midyear tax planning is a strategy that can help reduce your tax burden when tax season rolls around.
It probably feels as though you just filed your taxes — and here we are offering an article on midyear tax planning.
The truth is that while many people are understandably tuned into taxes when filing season is in full swing, tax planning is most effective as a year-round endeavor.
Of course, that's partly because taking a proactive approach to tax planning can help minimize your tax burden when filing season inevitably arrives. But the peace of mind that can come from taking charge of your finances (and your taxes) so you can focus on living your best life is also valuable.
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So, with that in mind, here are a few midyear tax planning strategies and tips.
Midyear tax planning tips
1. First, know your goals.
On its face, tax planning involves reviewing your sources of income and considering the ins and outs of tax deductions, credits, and exemptions.
But to be most effective, at least at the start, tax planning should be about you and your personal and financial goals.
So, begin your midyear tax planning process with a clear sense of where you are financially and where you want to be.
- This might mean revisiting short-term, mid-term, and long-term wants and needs to see what you have accomplished during the first part of 2026.
- Also, make note of which goals need more attention and why.
- On the other hand, if you haven't had a chance to write down goals for this year, midyear is a great time to do that.
Begin your midyear tax planning process with a clear sense of where you are financially and where you want to be.
For example, maybe you want to continue feeling comfortable in retirement, so your emergency savings will need a boost. Or perhaps you want to travel more, so you'll need sufficient cash to spend at a favorite destination.
- Writing your goals down and assessing them through a midyear lens can help clarify them.
- In turn, the clarity that you gain from revisiting personal and financial goals can help your tax adviser or certified financial planner (if you have one or both) know how best to help you.
Summer tax planning strategies
2. Meet and discuss with a professional.
Another helpful step in midyear tax planning is meeting with a trusted, qualified tax or financial advisor to discuss your goals.
This is a good time to get answers.
- For example, you may want your advisor's take on where you are now compared to this time last year, in terms of your potential tax liability.
- Also, where are you now compared to where you expected or wanted to be at this point in 2026?
Maybe your goals have changed significantly since you last met with your advisor. Life can move fast, and our perspectives on what's important in our lives can shift quickly (or subtly) as well.
A midyear tax-planning meeting is a good time to inform your advisor of any life changes or shifts in your financial situation, personal circumstances, or perspective. (Those might impact your taxes.)
Also, some summer activities and other common circumstances like selling your home (or wanting to), buying a car, or starting or ending a business, job, or marriage can have significant tax consequences.
Be prepared to share that information with your tax advisor, so you have a complete picture of your potential tax liability for the year. '
(The more vivid that picture, the easier it will be for you or your advisor to tailor tax strategies to your situation.)
3. Assess and estimate taxable income
Of course, a major aspect of midyear tax planning involves assessing and estimating your taxable income. So it's a great time to take stock of your various sources of income (earned and unearned) and estimate your tax liability.
Knowing your potential tax burden midyear can help you map out estimated tax payments and, if you're collecting a paycheck, make critical midyear tax withholding adjustments on your W-4.
Additionally, if you're self-employed, midyear is a great time to assess your business's state and potential liabilities so you can make estimated tax payments if needed.
Tips for Retirees:
- When you are assessing and estimating, if you're an older adult or retiree, don't forget about required minimum distributions (RMDs).
- There are new RMD rules thanks to the SECURE 2.0 Act.
- The age at which you must take your first RMD is 73.
Also, take some time to assess your Social Security income.
Due to inflation adjustments, many older adults have seen increases in their Social Security checks, which, for some, can affect tax liability. (Generally, up to 85% of Social Security benefits may be taxable.)
- Thanks to a 2.8% Social Security cost-of-living adjustment (COLA) for 2026, many retirees are receiving larger monthly checks this year.
- Those higher benefits can affect how much of your Social Security income becomes taxable and may eventually influence Medicare premium surcharges for some higher-income retirees.
If you're age 65 or older, pay particular attention to recent tax law changes. Under the Trump 2025 tax bill, eligible older adults can claim a temporary bonus $6,000 deduction through 2028 ($12,000 for some married couples filing jointly), subject to income limits.
That deduction could significantly affect retirement-income planning and estimated tax calculations.
4. Minimize tax liabiity and maximize deductions
A complete picture of your goals, life shifts, and income is important because taxes and seemingly endless tax rules can be complicated. Thankfully, you and every other taxpayer are entitled to legitimately claim tax deductions, credits, and exemptions.
Another reason midyear tax planning is helpful is that reducing tax liability and taking advantage of tax deductions often hinge on timing — that is, when it's best to incur certain expenses or realize income.
For example, you might have plans that will trigger capital gains or losses, or you may end up taking two RMDs in a year.
Or you might have to make estimated tax payments due to higher-than-expected dividend income.
The tax burdens associated with these kinds of events might be minimized at tax time because you are engaged in midyear tax planning now.
Taking advantage of tax deductions often hinges on timing.
- Also, while you are considering ways to minimize your taxable income, remember that charitable giving doesn't have to wait until the end of the year.
- Midyear is a good time to make charitable donations and, yes, you could potentially reap tax benefits later.
- But...take note of new charitable giving rules recently passed in the 2025 Trump tax overhaul.
Midyear tax to-do list: Bottom line
5. Stay tuned to tax changes and get organized.
Midyear is a great time to reflect on what went wrong during the most recent tax filing season and vow to do better next year.
For example, if you weren't happy with your preparer last tax season or are ready to make a change for other reasons, take time now to look for a qualified tax professional.
Or, if you have been doing your own taxes, perhaps you want to investigate different filing options or find a trusted source of advice to guide you next time.
Stay tuned to key changes and tax amounts.
- Additionally, midyear is a great time to review changes and key amounts that could affect your 2026 tax liability. Stay tuned to inflation-adjusted amounts for tax credits and deductions you typically claim. (Those new amounts are typically announced by the IRS in late October.)
- Also, pay attention to state tax changes. Many states have passed major tax legislation this year, and those changes can impact your finances and taxes.
When potential tax-related paperwork or information flows in, keep it in one place.
Consider scanning important documents or, in some cases, shredding what you don't need. (It's generally a good idea to keep tax records for at least three years from when you filed your tax return. But if securities losses or bad debt are involved, you might need to hold onto those records for up to seven years.)
Above all, create a system that works for you to track income, expenses, donations, and the like.
Doing those things and engaging in the goal-setting and strategizing aspects of midyear tax planning should help free up time to do what you love most — which, for many people, probably isn't taxes.
Related
- A Bunch of Tax Deductions and Credits You Need to Know
- Federal Tax Brackets and Income Tax Rates for 2026
- What's in the 2025 Trump Tax Bill?
Note: This item first appeared in Kiplinger’s Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.
