While tax planning might not be on your bucket list as we head into fall, neglecting your finances at this time of year can be costly.
However, with less than five months left in the year, it's a great time to reflect on your current situation and make needed adjustments to take the pressure off when April 2026 rolls around.
First on the list
Start by looking at your withholdings. If you're withholding too little or too much, or if your income has significantly changed in recent months, now is the time to make updates to avoid scrambling in the new year or receiving an unexpected tax bill.
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Next, review any contributions you're making to a tax-advantaged account, such as a health savings account, flexible spending account, an employer-sponsored retirement account or even charitable donations. These tax-saving opportunities might also require contributions before December 31.
Reviewing these contributions now gives you time to strategically plan how much you're able to contribute for the remainder of the year and make adjustments if needed. It's a good idea to max out yearly contributions if you can afford it.
Adjusting to change
If you've had or expect big life changes such as marriage, divorce, the birth of a child, job loss, new employment or the purchase of a new home, you'll likely need to adjust withholdings or add or remove dependents. Such a change might also move you into a new tax bracket.
Review any tax liabilities that could affect your budget so you can make the appropriate adjustments before the next tax season.
Dark side of the bonus
Receiving bonuses or other benefits such as equity compensation can also derail your taxes. If your employer uses the flat percentage method, you could face an underpayment penalty.
Meanwhile, a midyear bonus could potentially push you into a higher tax bracket, leaving you with a tax bill in 2026.
Changes in the code
The new tax legislation known as the One Big Beautiful Bill Act (OBBB) could also impact your current and future tax strategies. This year, the standard deduction has been raised to $15,750 for single filers and $31,500 for those who are married, filing jointly.
If you've been itemizing, it might be more tax-efficient to claim the larger standard deduction. The child tax credit has also been expanded to $2,200 per child. If you're a parent, reassess your eligibility and withholdings to avoid paying too little or missing potential refunds.
Taking advantage of tips
The OBBB, signed into law by President Donald Trump in July, also includes future tax provisions that you can plan for now.
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Beginning with 2026 returns, eligible workers can deduct a max of $25,000 of combined overtime and tip income from federal taxable income. Even though these deductions don't apply right now, take this time to track tips and overtime to help you optimize future deductions.
Increases made to estate and gift tax exemptions, the launching of Trump Accounts, and the phasing out of EV and solar credits are also worth checking.
Final thoughts
Midyear tax and overall financial planning gives you enough time to adjust income streams, withholdings and contributions and benefit from those changes.
It's much easier to fix missteps as soon as they're caught, allowing you to be proactive.
If you've recently experienced major life changes, believe you will or are wondering how upcoming tax changes could impact you, consider meeting with a financial professional to receive specialized guidance.
Cynthia Pruemm is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. SIS Financial Group and CoreCap Advisors are separate and unaffiliated entities.
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