Year-End Tax Moves for New Jersey Pre-Retirees: A 2026 Planning Checklist

Why Year-End Tax Planning Is Different in 2026

The final months of the year are when many of the most meaningful tax planning decisions are made, and 2026 brings a set of changes that raise the stakes. The One Big Beautiful Bill Act reshaped charitable deductions, the SALT deduction cap has been raised to $40,000 for joint filers, and the standard deduction is now $32,200 for married couples filing jointly. Meanwhile, Roth conversion windows and tax-loss harvesting opportunities do not wait until April. They close on December 31.

For pre-retirees in their 50s and 60s, the period between now and year-end is a window to reduce taxable income, position retirement accounts for tax-free growth, and coordinate charitable giving with the new rules. Here is what the team at GPS Wealth Management recommends reviewing before the calendar turns.

Roth Conversions Before December 31

A Roth conversion moves money from a traditional IRA or 401(k) into a Roth IRA. You pay income tax on the converted amount now, but the funds grow tax-free and withdrawals in retirement are not taxed. Unlike contributions, there is no income limit for Roth conversions.

Roth conversions must be completed by December 31 to count for the 2026 tax year. There is no extension. The key question is how much to convert, and the answer depends on several factors:

• Your current tax bracket: The 2026 federal brackets remain at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The top rate kicks in at $640,600 for single filers and $768,700 for married filing jointly. Converting just enough to fill your current bracket without pushing into the next one is a common approach.
• Future income expectations: If you expect your income to rise due to RMDs, Social Security, or pension payments, converting now at a lower bracket can reduce the total tax paid over your lifetime.
• IRMAA impact: Roth conversions increase your modified adjusted gross income, which can trigger Medicare premium surcharges (IRMAA) two years later. The team at GPS Wealth Management coordinates conversions with IRMAA thresholds to avoid unexpected Medicare costs.
• State taxes: New Jersey taxes Roth conversions as ordinary income. However, NJ does not tax qualified Roth withdrawals in retirement, so the conversion creates a one-time state tax hit in exchange for permanent state tax-free growth.

For a deeper look at conversion strategies, including partial conversions and multi-year approaches, see the team’s guide to Roth IRA conversions for New Jersey residents.

Tax-Loss Harvesting in Taxable Accounts

Tax-loss harvesting involves selling investments that have declined in value to realize a loss, which can offset capital gains and up to $3,000 of ordinary income per year. Unused losses carry forward to future tax years indefinitely.

Before year-end, review your taxable brokerage accounts for:

• Positions with unrealized losses: Selling these before December 31 locks in the loss for the 2026 tax year. The loss can offset gains from other sales, fund distributions, or Roth conversion income.
• The wash sale rule: If you sell a security at a loss, you cannot buy a substantially identical security within 30 days before or after the sale. Violating this rule disallows the loss. You can, however, purchase a similar but not identical fund (for example, switching from one S&P 500 index fund to another provider’s total market fund).
• The 0% capital gains bracket: If your taxable income is below $49,450 (single) or $98,900 (married filing jointly) for 2026, long-term capital gains in that bracket are taxed at 0%. You can sell appreciated positions, realize the gain tax-free, and reset your cost basis higher.

Tax-loss harvesting pairs naturally with Roth conversions. If you realize losses in a taxable account, those losses can offset some of the income created by a Roth conversion, reducing the net tax cost. The team at GPS Wealth Management discusses how these strategies work together in the guide to tax-efficient retirement withdrawal strategies.

Charitable Giving Under the New Rules

The One Big Beautiful Bill Act changed how charitable deductions work starting with the 2026 tax year. Understanding these changes is important for planning year-end giving:

New Charitable Deduction Rules for Itemizers

For taxpayers who itemize, charitable deductions are now allowed only to the extent they exceed 0.5% of your adjusted gross income (AGI). For someone with a $200,000 AGI, the first $1,000 of charitable giving produces no deduction. Additionally, for taxpayers in the 37% bracket, the deduction’s value is capped at 35%.

New Deduction for Non-Itemizers

For the first time since the 2017 tax reform, non-itemizers can deduct up to $1,000 ($2,000 for married filing jointly) in cash gifts to qualifying charities. This is a meaningful change for the roughly 90% of filers who take the standard deduction.

Strategies That Still Work

• Donating appreciated stock: When you donate stock held for more than a year directly to a charity, you avoid paying capital gains tax on the appreciation and can deduct the full fair market value (subject to the new AGI floor). This remains one of the most tax-efficient ways to give.
• Donor-advised funds (DAFs): Bunching multiple years of giving into a single contribution to a DAF lets you cross the 0.5% AGI floor and the standard deduction threshold in the giving year, then distribute grants to charities over time.
• Qualified charitable distributions (QCDs): If you are 70 1/2 or older, you can direct up to $111,000 per person from your IRA directly to a qualifying charity. QCDs count toward your RMD, reduce your taxable income, and bypass both the AGI floor and deduction limits entirely. Under the new rules, QCDs are more valuable than ever for charitable retirees.

The SALT Deduction Cap and New Jersey Taxes

New Jersey has some of the highest property taxes and state income taxes in the country, which makes the state and local tax (SALT) deduction cap directly relevant to year-end planning:

• New cap: The SALT deduction cap has been raised from $10,000 to $40,000 for married filing jointly ($20,000 for single filers) for 2025 through 2029.
• Phaseout: For joint filers with AGI above $500,000, the cap phases out by 30%, but cannot drop below $10,000.
• What counts: The SALT deduction includes state income taxes, property taxes, and local taxes. For many New Jersey homeowners, property taxes alone can approach or exceed the cap.

If your combined state income tax and property tax will exceed the cap regardless, prepaying property taxes before December 31 does not provide additional federal benefit. However, if you are near the cap, timing a state estimated tax payment or property tax payment can make a difference. Review your situation with a tax advisor. The team at GPS Wealth Management discusses the impact of NJ taxes on retirement planning in the New Jersey retirement tax guide.

Maximize Retirement Account Contributions

Before December 31, confirm you are on track to hit the maximum contributions allowed:

Note: 401(k) contributions must be made through payroll by December 31. IRA contributions for 2026 can be made until April 15, 2027, but contributing before year-end gives your money more time to grow. For more on catch-up contributions and the new super catch-up for ages 60 to 63, see the team’s guide to catch-up contributions after 50.

Required Minimum Distributions

If you turned 73 or older in 2026, your required minimum distribution (RMD) must be taken by December 31 (first-year RMDs have an April 1 extension, but taking two distributions in one year can push you into a higher bracket). Failing to take your full RMD triggers a 25% penalty on the amount not withdrawn.

Before taking your RMD, consider whether a qualified charitable distribution (QCD) or a Roth conversion would be more advantageous. You cannot convert RMD amounts to a Roth, but you can satisfy the RMD first and then convert additional funds. The team at GPS Wealth Management covers RMD strategies in detail in the guide to understanding required minimum distributions.

Your Year-End Tax Planning Checklist

Here is a summary of moves to review with your financial advisor and tax professional before December 31:

• Estimate your 2026 taxable income: Run a preliminary tax projection to see where you stand relative to bracket thresholds, IRMAA limits, and the SALT cap.
• Evaluate Roth conversion opportunities: Determine if converting part of a traditional IRA makes sense given your current bracket and expected future income.
• Harvest tax losses: Review taxable accounts for loss positions that can offset gains or conversion income, while respecting the wash sale rule.
• Plan charitable giving: Decide whether to bunch donations, use a donor-advised fund, donate appreciated stock, or make a QCD based on the new deduction rules.
• Maximize retirement contributions: Adjust payroll deferrals now if you are not on pace to hit the 401(k) limit. Check IRA contributions.
• Take your RMD: If required, complete your distribution before December 31 to avoid the 25% penalty.
• Review estimated tax payments: If you had significant capital gains, a Roth conversion, or other unusual income, check whether your withholding and estimated payments cover your liability to avoid underpayment penalties.
• Coordinate with NJ-specific planning: Review how moves like Roth conversions interact with the NJ pension exclusion, NJ income tax brackets, and property tax programs.

Work With the Team at GPS Wealth Management

Year-end tax planning is not a single decision. It is a set of coordinated moves that affect your income taxes, Medicare premiums, retirement savings, and charitable impact for years to come. The team at GPS Wealth Management works with pre-retirees and retirees across South Jersey to build year-end plans that connect retirement planning, tax planning, and investment management into a single strategy.

To schedule a year-end planning conversation, call 856-552-0746 or visit the contact page.