Year-End US Tax Planning 2026: What You Can Still Change Before 31 December
There are roughly nine weeks left to make a difference to your 2026 US tax bill. Some decisions have to be acted on before 31 December. Others can wait until 2027, but only if you qualify and meet their own deadlines.
Say you live in the UK, have a US retirement account and sold some investments this year. You're planning to sort out the tax return next spring. The catch? A tax return only records what already happened. It usually can't create a loss sale, a completed gift or a Roth conversion after the year has closed.
So before you move any money, look at the combined US and UK result. A US deduction that looks useful on paper can be worth much less once UK tax, foreign tax credits and income-based limits are factored in.
Year-end US tax planning 2026: what to review before 31 December
Look at your realised investment gains and losses, any remaining payroll contributions, possible Roth conversions, itemised deductions and charitable gifts. If you have UK connections, map the same transactions against both tax calendars. IRA and HSA contributions for 2026 can generally be made up to 15 April 2027 if you're eligible, but a filing extension generally does not extend those contribution deadlines. [1–4]
Harvest investment losses with a purpose
Selling an investment at a genuine loss can offset capital gains. If your allowable losses are bigger than your gains, you can generally deduct up to $3,000 against other income ($1,500 if married filing separately) and carry the rest forward. A drop in market value on its own isn't a realised loss. [5]
Here's a quick example. $8,000 of realised gains and $5,000 of allowable realised losses leave you with a $3,000 net gain before other adjustments. That lowers the gain. It isn't a $5,000 tax refund.
Watch the wash-sale rules before buying back in. If you buy substantially identical stock or securities within 30 days before or after a loss sale, the loss can be disallowed for now. Check automatic reinvestments and purchases across all relevant accounts, including your spouse's accounts and IRAs. A purchase in January can still affect a December loss sale. UK share-matching rules work differently and need their own calculation. [6, 7]
Review retirement and HSA contributions separately
For 2026, the basic employee 401(k) deferral limit is $24,500. The usual age 50 catch-up is $8,000, while eligible participants aged 60 to 63 get an $11,250 catch-up instead. Ask payroll now about remaining pay dates and plan cut-offs. Higher earners may have to make catch-up contributions as Roth contributions in 2026, so don't assume every extra contribution lowers your taxable income today. [1, 8]
The combined traditional and Roth IRA contribution limit is $7,500, plus $1,100 if you're 50 or over. Whether you can contribute and whether a traditional IRA contribution is deductible are two separate tests. Excluded foreign earned income generally doesn't count as IRA compensation, and the foreign earned income exclusion is added back when working out the relevant income limits. [1, 2]
The 2026 HSA limits are $4,400 for self-only cover and $8,750 for family cover, including employer contributions. Eligible people aged 55 or over can generally add another $1,000. HSA eligibility depends on having qualifying cover, what other cover you have and your Medicare status. Living abroad or paying for private health insurance doesn't automatically make you eligible, and the UK tax treatment needs checking separately. [3]
Model a Roth conversion before you instruct the custodian
A low-income year can be a good time to convert part of a traditional IRA to a Roth IRA. The converted amount adds to your income now, so the real question is whether paying that tax today is worth it over time. Conversion income can also reduce income-sensitive deductions, and a conversion generally can't be undone by recharacterising it. If you're planning a 2026 conversion, set it up well before 31 December and check your custodian's processing cut-off. [2]
If you're UK resident, get a separate UK and treaty analysis before converting. A low US tax bill doesn't mean a low combined bill. Your account history, residence and the exact transaction can all change the outcome.
Itemise or take the standard deduction in 2026?
For 2026, the SALT deduction cap is $40,400, or $20,200 for married filing separately. It phases down once modified adjusted gross income goes above $505,000 ($252,500 for separate filers), with minimum caps of $10,000 and $5,000. It's a ceiling on eligible deductions, not a credit and not a guaranteed saving. [4]
The basic standard deduction is $16,100 for single filers or married filing separately, $32,200 for married filing jointly and $24,150 for head of household. Compare your allowable itemised total with the deduction you can actually take, allowing for age, blindness and filing-status rules. [9]
UK income tax isn't a US state or local tax. Foreign income tax may fall under separate deduction or foreign tax credit rules instead, and you can't use the same tax twice. [10]
Plan charitable giving under the 2026 rules
Bunching several years of planned gifts into one year can help if it makes itemising worthwhile. From 2026, itemisers face a new floor of 0.5% of adjusted gross income for charitable deductions, and other limits can apply too. [4]
From 2026, people who don't itemise can deduct eligible cash gifts of up to $1,000 ($2,000 on a joint return). It doesn't cover every gift or every recipient, and donor-advised fund contributions don't qualify for this particular deduction. [11]
Check that the recipient is eligible for US purposes, keep the required acknowledgements and leave enough time for the gift to complete. A donation to a UK charity doesn't automatically qualify for a US deduction. [12]
Check the deductions for tips, overtime and seniors
The 2025 law brought in temporary deductions for 2025 through 2028. They come with conditions. They are not blanket exemptions from tax.
Qualified tips: a deduction of up to $25,000. Occupation, reporting, business-type and other eligibility tests apply.
Qualified overtime: up to $12,500, or $25,000 jointly. It generally covers the premium required under US federal overtime law, not all overtime pay and not ordinary UK overtime.
Seniors: eligible people aged 65 or over can claim up to $6,000 each. This does not make all Social Security income tax-free.
The tips and overtime deductions start phasing out above $150,000 of modified adjusted gross income ($300,000 jointly). The senior deduction starts phasing out above $75,000 ($150,000 jointly). Valid SSN and joint-filing rules apply. Keep your payroll records and work through the income test that applies to you. [9, 13]
Use two calendars for US and UK planning
The US tax year for individuals generally ends on 31 December. The UK 2026 to 2027 tax year runs from 6 April 2026 to 5 April 2027. So a sale or payment in December can land in different reporting periods in each country. [14, 15]
Build a simple list of transactions showing dates, sterling and dollar values, gains, income and tax paid. Foreign tax credit timing depends partly on whether foreign taxes are claimed on a paid or accrued basis, and on the income category and limitation involved. A UK payment made in January doesn't automatically offset the US tax due for the previous calendar year. [10]
Americans living in Singapore, Dubai, Qatar, Saudi Arabia, India, Belgium, France and Monaco should also check local rules before following a US-only checklist. Nothing above confirms local eligibility or local tax relief.
Your practical next step
Pull together your latest investment statements, realised gains report, retirement contributions, expected income, charity receipts and foreign tax records. Ask for a 2026 projection with and without each move you're considering. Anything with a December deadline should be done early enough for payroll, banks and custodians to process it.
Want a joined-up review before the year closes? Contact Tax and Accounting Hub to request a US and UK year-end tax planning review. Just tell us where you live and which decisions you're weighing up.
Which needs your attention first: investments, retirement contributions or US and UK tax timing?
Frequently asked questions
Do all US tax planning decisions have to be made by 31 December?
No. Many investment, gift and conversion decisions need action before year end, but eligible 2026 IRA and HSA contributions can generally be made until 15 April 2027.
Does a capital loss give me a dollar-for-dollar tax refund?
No. An allowable loss reduces taxable gains or, within the applicable limit, other income. The actual saving depends on your tax position.
Can I claim the full SALT cap while living abroad?
Not automatically. You need eligible taxes, you must itemise and the income phase-down applies. UK income tax is not a US state or local tax.
Is UK overtime automatically eligible for the US overtime deduction?
No. The deduction depends on qualified compensation under US federal overtime law and other eligibility rules.
Should a UK resident convert an IRA to a Roth IRA in December?
Only after modelling both the US and UK consequences. A conversion can create taxable income and affect other deductions.
Official sources
Some IRS publications still carry a 2025 edition. We use those for the continuing rules and the 2026 guidance cited above for 2026 dollar limits.
This blog is for general information only. Every situation is different, and the tax treatment may vary according to your residence, income, filing status and other circumstances. It is not personalised tax, legal or investment advice. Please get advice suited to your circumstances before acting. The article is aimed at US citizens and resident aliens for calendar year 2026 and is not a Form 1040-NR planning guide.
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