What Should Retirees Do for Year-End Tax Planning in 2026?
You’ve spent decades building this. The worry you’re feeling in the middle of the night usually isn’t about the market… because you’ve lived through enough of those to know how they end. It’s smaller and harder to name. Somewhere between your last paycheck and your first required withdrawal, you’ll make a decision that costs more than it should have, and you won’t find out until the return is filed.
December is where a lot of those decisions get made, or get made for you by default.
For most of your working life, taxes were something that happened to you. Retirement hands that control back, and it comes with a deadline.
Short answer: Year-end tax planning for retirees means deciding (before December 31) how much taxable income to recognize this year and in what form. The main levers are required minimum distributions, Roth conversions, the structure of your charitable giving, capital gains and losses, and the effect all of it has on your Medicare premiums two years from now.
Three of those levers changed for 2026, and one of them will cost some households money this December they might not even notice.
Table of Contents
- What is different about year-end tax planning in 2026?
- Why does the standard deduction change the math for retirees this year?
- What is the control window, and why does it close on December 31?
- What should Houston energy professionals review before year-end?
- How do the new charitable rules change year-end giving?
- What should you do about RMDs before the deadline?
- How does this year’s income affect your 2028 Medicare premiums?
- What does this look like for one household?
- What belongs on a retiree’s year-end tax checklist?
- Frequently asked questions
- How do you know when it’s time to get help with this?
What Is Different About Year-End Tax Planning in 2026?
Three provisions of the One Big Beautiful Bill Act took effect for the first time this tax year, and all three land squarely on retirees.
A new floor beneath charitable deductions. If you itemize, the first 0.5% of your adjusted gross income in charitable gifts is no longer deductible. Adjusted gross income, or AGI, is your total income for the year before your standard or itemized deduction comes off.
A cap on the value of itemized deductions. Filers in the top 37% bracket now get no more than 35 cents of benefit per dollar deducted.
A new senior deduction. Anyone 65 or older gets an additional $6,000, available through 2028, and you can claim it whether or not you itemize. It phases down once modified adjusted gross income, which is AGI with a few items added back, passes $75,000 on a single return or $150,000 on a joint one, and disappears entirely at $175,000 and $250,000.
That last one is the sleeper. A Roth conversion or a large capital gain doesn’t just cost you tax at your marginal rate. It can also shrink a deduction you’d otherwise have received, which pushes the real cost well above what a bracket table suggests. Nobody sends you a notice when it happens.
The IRS inflation adjustments for 2026 set the rest of the year’s figures. Rates themselves are unchanged at 10% through 37%.
Why Does the Standard Deduction Change the Math for Retirees This Year?
Because a growing number of retirees no longer itemize, and a charitable gift only produces a federal deduction if you do.
For a married couple who are both 65 or older, the number your itemized deductions have to beat in 2026 is $35,500.
- Standard deduction, married filing jointly: $32,200
- Additional standard deduction, age 65 or older: $1,650 per qualifying spouse
- Total to beat by itemizing: $35,500
The senior deduction sits outside this comparison. You can claim it whether you itemize or take the standard deduction, so it lowers your tax bill either way without changing which side of the choice you land on.
Beating $35,500 is harder than it looks, and harder still in Texas, where there’s no state income tax feeding the state and local tax deduction. The SALT cap did rise to $40,400 this year, but for a Houston household that’s mostly property tax.
So if you take the standard deduction, your December check to the church reduces your federal tax bill by exactly zero. It’s still a gift and it still does good work. It just isn’t a tax strategy anymore, and we’d guess most people giving to their church have no idea that changed this year.
What Is the Control Window, and Why Does It Close on December 31?
Chart a typical retiree’s taxable income across their 60s and 70s and a shape appears. It drops hard when the paycheck stops, stays low for a while, then climbs back as Social Security and required distributions begin, often higher than where it started.
We call the low stretch in the middle the tax valley, and the years you spend in it the control window. Using it deliberately is the heart of retirement planning at this stage of life.
During those years you have unusual influence over your own taxable income. No employer is setting your salary, and no government formula is forcing money out of your retirement accounts. You decide what to recognize, and you’ll never have this much say again.
Then the window closes on its own. Once required distributions begin, part of your income becomes mandatory, and the required amount climbs each year, because the formula divides your balance by a factor that shrinks as you age. People who spend the control window doing nothing often land in a higher bracket at 78 than they were at 68, with fewer moves available.
Here’s the part that matters in September: the window is annual. Every December 31, one year of it expires, and the room you didn’t use doesn’t carry forward. A 66-year-old who waits until 70 to pay attention hasn’t lost a little ground. They’ve lost four of maybe seven usable years.
If you’re 55 or older, tax planning is only one part of the decisions ahead. Our free Retirement Guide walks through the major areas worth reviewing as retirement gets closer, including income, investments, taxes, Social Security, healthcare, and estate planning.
Click to Download Our Free Retirement Guide →
How Do You Decide How Much to Convert?
A Roth conversion moves money from a traditional IRA to a Roth IRA, and you pay ordinary income tax on the amount in the year you convert. The question is never whether conversions are good. It’s how much room you have this year, and what the next dollar costs. Four things decide it:
- What’s your baseline taxable income for 2026 before any conversion?
- Where does the next bracket begin, and how much room is left inside your current one?
- Does it push your modified adjusted gross income past the senior deduction phaseout, a Medicare surcharge tier, or the $200,000 and $250,000 thresholds for the net investment income tax, a 3.8% surtax on investment income?
- What will your income look like once required distributions and Social Security are both running, and is that likely to be higher or lower than today?
Question 4 matters most. Converting at 22% to avoid 24% later is a reasonable trade. Converting at 24% to avoid 22% later is an expensive mistake, and the tax you paid isn’t coming back.
Conversions carry a hard December 31 deadline. Unlike an IRA contribution, you can’t complete one in April and have it count for the prior year. Our post on retirement income planning covers how they fit into the larger income sequence.
What Should Houston Energy Professionals Review Before Year-End?
If you’re retiring from BP, Chevron, ExxonMobil, Shell, ConocoPhillips, or Phillips 66, the general advice above is only half your picture. Long careers at the majors tend to produce a particular balance sheet, and it changes what year-end planning should focus on.
Your pre-tax balance is probably outsized. Decades of contributing to a savings plan with a generous match, in a high-income career, tends to leave people with far more in traditional pre-tax accounts than in taxable brokerage or Roth. That’s a good problem in one sense and a costly one in another. Your future required distributions will be large, your control window is worth more than it is for the average retiree, and every year you spend in the tax valley without acting is genuinely expensive. This is the most common thing we see, and the one we recommend acting on early.
Severance, deferred compensation, and vesting dates. Packages that pay out across a calendar year boundary can stack two years of income into one, or split it usefully across two, and any election usually has to be made well before the payment date. Restricted stock counts as income in the year it vests, so a December vest can undo a conversion you planned in October.
If you hold employer stock that has grown substantially, a provision called net unrealized appreciation may let you move those shares into a taxable account and have the growth taxed at long-term capital gains rates instead of as ordinary income. The rules are strict, the election is generally tied to a lump-sum distribution, and taking the steps out of order can forfeit the treatment permanently. Anyone with a significant position here should be talking to someone before December, not during it.
Pension and lump sum elections. A lump sum versus annuity decision affects the size of your control window, your bracket for the next decade, and your Medicare exposure. These offers are frequently time-limited, which means the plan sets your deadline, not the tax calendar.
How Do the New Charitable Rules Change Year-End Giving?
They shift the advantage away from writing checks and toward two other structures: qualified charitable distributions and bunching.
For itemizers in 2026, the first 0.5% of AGI in charitable gifts produces no deduction. On $300,000 of income, the first $1,500 is disregarded. Gifts above the floor stay deductible up to the usual annual limits. If you take the standard deduction instead, you can now claim a small charitable deduction without itemizing, worth up to $1,000 on a single return and $2,000 on a joint one, for cash gifts to qualified charities.
Two ways around the problem:
Bunching. Give $45,000 in one year instead of $15,000 for three, and the concentrated year is far more likely to clear both the 0.5% floor and the standard deduction. A donor-advised fund, (a charitable account you fund now and grant out later) lets you take the deduction this year while the charities keep receiving money on your normal schedule.
Qualified charitable distributions. Although underused by many retirees, this is usually the better option.
When Is a QCD Better Than Writing a Check?
A qualified charitable distribution (QCD) sends money straight from your IRA to a qualifying public charity. The amount is excluded from your income instead of claimed as a deduction, and that difference does a great deal of work. Because the money never enters your income at all, a QCD:
- Produces a federal tax benefit even if you take the standard deduction
- Skips the 0.5% floor entirely, since there’s no deduction for the floor to apply to
- Lowers the income figure driving Medicare surcharges, the taxable portion of Social Security, and the senior deduction phaseout
- Counts toward your required minimum distribution, if you have one
The 2026 limit is $111,000 per person, or $222,000 for a couple when each spouse has an eligible IRA. You must be 70½ on the distribution date, and the transfer has to go directly from custodian to charity. Donor-advised funds, private foundations, and supporting organizations don’t qualify.
Pay attention to the age. QCD eligibility starts at 70½, while required distributions don’t begin until 73 or 75 depending on your birth year. That gap is a planning window of its own, because every dollar you move out by QCD in those years never appears in a future required distribution. Our article on reducing required minimum distributions before they start covers how that compounds.
What Should You Do About RMDs Before the Deadline?
Confirm the amount, that the money has left the account, and that you’ve covered every account that requires one.
They’re due by December 31, and the penalty for missing one is 25% of what you failed to take, dropping to 10% if you correct it promptly. The IRS required minimum distribution FAQs lay out the mechanics. Four places where people get caught:
- The first-year exception. Reach your required distribution age this year and you may delay that first withdrawal until April 1 of next year. That stacks two distributions into one tax year, which can push you into a higher bracket or across a Medicare tier. Sometimes it’s the right call, but it should be a decision, not a default.
- Multiple accounts. IRA distributions can generally be added together and taken from one IRA, while employer plans such as a 401(k) are calculated separately from each plan.
- Old accounts you’ve stopped thinking about. A rollover IRA from two employers ago still has a corresponding required distribution.
- Inherited accounts. These follow their own rules, including the 10-year requirement that applies to many beneficiaries.
Note on sequencing: If you’re giving to charity and you’re over 70½, run the QCD before you take the rest of the distribution. Once the money lands in your checking account, that year’s opportunity is gone.
How Does This Year’s Income Affect Your 2028 Medicare Premiums?
Directly, because Medicare looks back two years.
The income-related monthly adjustment amount (IRMAA) is a surcharge added to Medicare Part B and Part D premiums for higher-income beneficiaries. It’s based on your modified adjusted gross income from two years prior. Your 2026 premiums were set by your 2024 return. What you do this December sets your premiums for 2028.
For 2026, the surcharge begins once that income figure passes $109,000 on a single return or $218,000 on a joint one. The standard Part B premium is $202.90 a month, and the first tier adds $81.20 for Part B plus $14.50 for Part D, roughly $1,148 a year for each person enrolled.
These thresholds are cliffs; crossing one by a single dollar triggers the full surcharge for all 12 months, and where both spouses are enrolled, it applies to each of them.
Which is why a December conversion calls for a second look before you execute it. One that makes good sense on the bracket math can still be worth reconsidering if it lands you $2,000 over a tier and costs several thousand dollars two years out. Better to do that math in advance than discover it in a letter from Social Security.
Qualified Roth withdrawals never count toward that income figure at all, which is much of the long-run case for building Roth assets during the control window.
What Does This Look Like for One Household?
Meet Dan and Marilyn, an illustrative couple, both 71 and retired from an energy company here in Houston. They have about $2.1 million in traditional IRA assets, and they give $12,000 a year to their church in monthly installments, as they have since their kids were in the youth program there. Born in 1955, their required distributions begin at 73. Their income before any planning looks like this:
- Pension income: $52,000
- Taxable portion of Social Security: $49,000
- Baseline AGI: $101,000
They’re considering a $110,000 Roth conversion to use the control window before required distributions begin. That puts their income near $211,000, just under the $218,000 joint threshold that would trigger a Medicare surcharge in 2028. So far, so good. Now look at what those monthly church checks accomplish:
- Annual charitable giving: $12,000
- Less the 0.5% floor at $211,000 of AGI: $1,055
- Amount deductible if they itemize: $10,945
- Their total itemized deductions: roughly $25,000
- Their standard deduction, both over 65: $35,500
- The deduction they’ll claim: the standard deduction
- Federal tax benefit from the $12,000 gift: $0
The church gets every dollar, and the return shows nothing, because their itemized total never comes close to the standard deduction they’d take anyway.
Run the same gift as a qualified charitable distribution and it leaves the IRA directly for the church, excluded from income instead of deducted. Their AGI drops to about $199,000, widening the gap to the Medicare threshold from $7,000 to $19,000 and leaving room for a larger conversion in the same year. It also shrinks the balance that future required distributions get calculated against.
Dan and Marilyn give the same $12,000 either way. Only one version of that gift shows up on the return.
Note: This example is hypothetical, uses rounded figures, and is provided only to illustrate the planning process. It doesn’t represent any actual client, and the outcome for any household depends on its own facts.
What Belongs on a Retiree’s Year-End Tax Checklist?
Work through these before December 31:
- Project your 2026 taxable income, including the taxable portion of Social Security and any capital gains you’ve already realized.
- Confirm your required minimum distribution has been taken from every account that requires one.
- Decide whether a Roth conversion fits, and size it against your bracket, the senior deduction phaseout, and the Medicare thresholds.
- Restructure charitable giving as a qualified charitable distribution if you’re over 70½, or bunch several years of gifts into a donor-advised fund if you aren’t.
- Review realized gains and losses, sell positions that are down to offset gains you’ve already taken, and check for room beneath the 0% long-term capital gains ceiling, which in 2026 is $98,900 of taxable income on a joint return and $49,450 on a single one.
- Confirm withholding and estimated payments are adequate for the income you’ll report.
- Review beneficiary designations and make any tax-free gifts to family, since the annual limit per recipient doesn’t carry forward. Both are legacy and estate planning items that are sometimes skipped for years.
- Coordinate everything with your CPA, ideally in November instead of late December.
That final item is important; most of these decisions are irreversible after December 31, and several require a custodian to process a transaction during the busiest fortnight of their year. Our pre-retirement checklist covers the version of this list for the year before you stop working.
Frequently Asked Questions
When is the deadline for year-end tax moves?
December 31 for nearly all of them. Required minimum distributions, Roth conversions, qualified charitable distributions, and selling positions at a loss have to be completed within the calendar year. IRA and health savings account contributions are the exception and can generally be made until the April filing deadline. Start by early December, since custodians need processing time.
Should you do a Roth conversion before the end of the year?
Convert when your tax rate today is likely lower than your rate later, which usually means the years between retirement and required minimum distributions. Before converting, check three thresholds:
- The top of your current tax bracket
- The senior deduction phaseout, which begins at $150,000 on a joint return
- The Medicare surcharge threshold two years out
Conversions can’t be undone.
How much can you give to charity directly from an IRA in 2026?
Up to $111,000 per person in 2026, or $222,000 for a married couple when each spouse has an eligible IRA. You must be at least 70½ on the distribution date, and the money has to move directly from your custodian to a qualifying public charity. Donor-advised funds don’t qualify.
At what age do required minimum distributions start?
Age 73 if you were born between 1951 and 1959, and age 75 if you were born in 1960 or later, under the SECURE 2.0 Act. Your first distribution can be delayed until April 1 of the following year, though that stacks two distributions into one tax year. Every distribution after that is due December 31.
How does your income this year affect your Medicare premiums?
Medicare uses your income from two years earlier, so 2026 income sets your 2028 premiums. Surcharges begin above $109,000 of modified adjusted gross income on a single return and $218,000 on a joint one. These thresholds are cliffs, which is why Concenture Wealth Management models conversion amounts against them before year-end.
How Do You Know When It’s Time to Get Help With This?
When one financial move triggers a chain reaction and nobody is coordinating the big picture.
A single Roth conversion can increase the taxable portion of your Social Security, bump up your Medicare premiums two years out, and shrink your net income. Meanwhile, your CPA files returns based on past moves, your attorney drafted your estate plan years ago, and your investments sit elsewhere. While each may be doing good work, none of them are reviewing the entire strategy in October—when you still have time to act.
That connective work is what financial planning is for, and what our 3 Step Process is built around.
We’ve spent years advising families through this transition, and the pattern rarely changes. Instead of searching for a clever maneuver to come out ahead, start looking early enough to still have a choice.
The control window is open right now, and it gets a little shorter every December.
If you’d like to see what these decisions look like against your own numbers, schedule a conversation with our Houston team. There’s no cost and no obligation.
