Tax Planning

Tax Planning Strategies: 6 Ways To Lower Your Tax Bill Next Year

Written by TurboTaxBlogTeam
Published Jun 18, 2024 - [Updated May 5, 2026]
6 min read
Reviewed by Jotika Teli, CPA Lena Hanna, CPA

December 31 is the deadline for most tax-saving moves, so the earlier you act, the more options you have. These strategies include maximizing retirement contributions, making charitable donations, and claiming every credit you’re eligible for.

Key takeaways

Contributing to a 401(k) or traditional IRA reduces your taxable income dollar for dollar; 2026 limits are $24,500 for a 401(k) and $7,500 for an IRA.
Adjusting your W-4 withholding now prevents an unexpected tax bill at filing time.
Charitable donations made before December 31 are deductible in the same tax year.
The Lifetime Learning Credit is worth up to $2,000 per tax return for qualifying education expenses.
Tax-loss harvesting, HSA contributions, and bunching deductions are advanced strategies that can significantly reduce higher-income tax bills.

Most people think about taxes twice a year: when they file and when they get their refund. Believe it or not, what you do now throughout the rest of 2026 can make a difference in your tax refund when you file your taxes in 2027. This is why early tax season planning can make such a meaningful difference.

While we don’t expect you’ll cannonball into tax planning this second, below are six practical tax strategies to support tax planning for individuals that will help you get your tax feet wet for next season and ensure you get your biggest tax refund yet next year.

Tips for tax year 2026

1. Stay organized

Organization can make it easier on yourself for next year. Start a folder of important documents and financial records now to help give you a jump-start for tax time next year.

If you’re self-employed, you can use QuickBooks Self-Employed to easily track your income, mileage, expenses, and capture your receipts for the entire year.

2. Consider reviewing your W-4 form to adjust your withholding

If you owed money when you filed your tax return this year, you may want to think about adjusting your withholding.

Withholding is the tax your employer takes from your paycheck each pay period, and to update it, you simply re-file your W-4 form with your payroll department. You can choose to update it whenever you want throughout the year or as your personal situation changes.

The TurboTax W-4 calculator can help you adjust your W-4 based upon your personal circumstances. Your employer will then be able to make the changes based on your W-4 to adjust your paycheck withholding accordingly.

3. Make charitable donations before the end of the year

Charitable giving is a commonly used tax strategy, and timing matters. Contributing to charity or donating goods before year-end can reduce your taxable income for the current tax year, potentially lowering your bill when you file.

If you’re planning to itemize your deductions, you’ll want to narrow your search to charities that are considered not for profit 501(c)(3) charitable organizations, as only qualified charities are typically recognized for tax deduction purposes. You can check to see if your charitable organization of choice is listed as an IRS qualified exempt organization.

Starting in tax year 2026, you can deduct cash contributions of up to $1,000 ($2,000 when married filing jointly) even while taking the standard deduction. To deduct more than that, you will have to itemize your deductions on Schedule A.

4. Lower taxable income by contributing to your retirement funds

Contributing to retirement accounts remains one of the most effective methods of tax planning for individuals. If you contribute to a 401(K) or a Traditional IRA, you’ll be able to take a dollar for dollar reduction in your income that is used to calculate your taxes.

In 2026, you can contribute up to $24,500 ($32,500 if you’re age 50 or older) to your 401K and $7,500 ($8,600 if you’re age 50 and older) to your traditional IRA. If you’re self-employed, you can contribute the lesser of: 25% of your income or $72,000 to a SEP IRA.

5. Learn something new

Maybe you want to learn a new career skill, refresh what you already know, or finally get around to studying something you’ve always been fascinated by. No matter the motivation, if you meet the income requirements, you may be eligible for the Lifetime Learning Credit.

There’s no limit on the number of years you can claim the credit, and it’s worth up to $2,000 per tax return (20% of up to $10,000 in eligible costs). You don’t need to be on track for a degree to claim this credit, the Lifetime Learning Credit is for qualified tuition and related expenses paid for eligible students enrolled in any eligible educational institution.

6. Use tax-efficient investing strategies

A key tax strategy is managing how your investments are taxed rather than just how they perform.

This includes:

Tax-loss harvesting, which offsets gains with realized losses
Controlling when you sell investments to manage capital gains
Holding assets long-term to benefit from lower capital gains tax rates
Using tax-advantaged accounts where possible

Many of the most effective tax strategies come from timing and structuring investment activity, not just deductions.

FAQ

Tax planning is the process of using legal strategies to reduce taxable income and overall tax liability. Effective tax planning helps you keep more of what you earn.

The best time to start tax planning is as early in the tax year as possible. This kind of early tax season planning gives you more time to adjust income, maximize deductions, and use effective tax planning strategies before key deadlines like December 31.

While the basic principles are the same, tax planning for wealthy individuals is often more complex. It often involves multiple income sources and more advanced tax planning strategies like managing capital gains.

Yes. You can usually make IRA contributions up until the tax filing deadline (typically in April) and still have them count toward the previous tax year. This gives you extra time to take advantage of retirement-related tax planning strategies, even after the calendar year has ended.

Neither is strictly better, they work in different ways. Tax deductions reduce your taxable income, while tax credits reduce your tax bill directly. In general, tax credits have a bigger impact, but both are important parts of effective tax strategies.

If you still need to file your taxes, don’t worry about knowing tax laws and tax forms. No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund — guaranteed.

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