3 End-of-Year Tax Moves for Retirees as 2027 Closes In
If you haven’t utilized any tax strategies in 2026, the clock is ticking to lower your tax liability before it strikes midnight. Once the new year hits, many of your tax-saving moves will no longer apply to 2026’s tax return.
While taxes are unavoidable, retirees who are utilizing their lifelong savings and enjoying their golden years have unique opportunities to manage their money to benefit them both now and in the future.
While you still have time, it’s important to evaluate your situation and determine where you can make meaningful tax moves to lower your tax liability.
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Roth conversions
Roth conversions should be a key part of your end-of-year tax strategy. Roth conversions help convert tax-deferred dollars from a traditional retirement plan to a tax-free Roth IRA account. The money you convert will count towards your taxable income for 2025. Those dollars will grow tax-free and can be withdrawn tax-free in retirement.
Whether to convert into a Roth depends on your unique situation, including your current tax bracket and the amount of withdrawals from tax-deferred accounts. This can be a useful tactic if you know you’ll be in a higher tax bracket in the future, which could be new retirees who haven’t started taking Social Security benefits or required minimum distributions (RMDs) from these accounts, which begin at age 73 or 75, depending on which year you were born.
In addition, tax rates might be increasing in the near future with the national debt climbing and a potential Social Security shortfall on the horizon. It might make more sense to complete a Roth conversion while rates are still low to lock in today’s tax rates, and enjoy the rest of your money’s growth tax-free.
Tax-loss harvesting
While 2026 has been kind to our investments, that might mean you have a larger capital gains tax bill, which could be costly and dampen your return.
A common strategy to help mitigate these gains is to utilize tax-loss harvesting. This is when you offset your investments that have performed well by selling other investments at a loss. These losses are written off on your return and lower your capital gains tax liability.
Once these stocks are sold, you can buy similar investments to maintain your market position. Capital losses can be deducted for up to $3,000 for joint filers, or $1,500 if filing separately.
As we approach the end of the year, monitor your investment performance and see if there’s a way to maximize your return. We recommend evaluating your investments every quarter throughout the year so you can navigate the market’s ups and downs and capitalize on the performance.
It’s important to note that IRAs and 401(k)s don’t apply to this strategy because these accounts aren’t taxable.
Keep in mind that investing can be emotional. Consider working with a financial professional if you don’t have the experience managing your investments to help you maintain a big-picture view of your finances and remove emotion from your financial decisions.
Charitable giving
The holidays are a fitting time to give back to the community, and it can be a benefit to both organizations in need and your finances.
Donations to IRS-qualified 501(c)3 charities are tax-deductible, which typically includes churches, schools, research centers and many other nonprofit organizations. Writing off donations can be deducted from your yearly taxable income, which might lower your tax bracket.
There are a few ways retirees can do this. First, those who are 70½ or older can make qualified charitable distributions (QCDs) up to $111,000 directly from their IRA in 2026. Distributions are pretax and can be used to meet your annual RMD.
They can also donate appreciated long-term securities, claiming a deduction for the full value of the stock without you or the charity paying taxes on the appreciation over time. This can be beneficial for stocks that have grown significantly over time, which can make for a hefty capital gains tax bill if sold.
To make donating easier, retirees can also open a donor-advised fund (DAF) with a specific charity, which operates like a charitable checking account. You can transfer your assets into the account, which is only to be used by the charity sponsoring the account, and you can claim an upfront write-off. The money is invested and continues to grow, potentially growing your impact.
One thing to consider before donating is that you must forego the standard deduction and itemize your deductions to take advantage of these tax benefits. The standard deduction is $32,200 in 2026.
Consider professional guidance
When we evaluate a client’s tax plan, we take into account their entire financial picture to determine the best course of action. Often, this involves creating a multiyear plan as part of a comprehensive retirement strategy.
After you evaluate your tax moves in 2026 and head into the new year, I encourage you to create a long-term, flexible plan for future years. If this feels overwhelming, consider working with a financial planner who can help guide you in your decision-making.
