As an adult, there are a few things that never seem to reach an end but rather continue on an indefinite loop. Can we all agree that taxes are one of those things? A client recently finished their 2025 taxes and immediately had questions regarding what needs to be done for 2026. Honestly, it’s an excellent question to give thought to (even though it sounds a bit exhausting!)

2025 Taxes – There’s Still Time

Before we get to today’s topic, don’t panic if you are still working on 2025 taxes. There is still time to file (or extend). Just remember that you need to pay in what you owe by April 15th – regardless of whether you extend. Also remember to fund any individual retirement accounts by April 15th (Roth IRAs, IRAs, and HSAs) and by extension date (for self-employed plans like SEP IRAs and individual 401ks)

2026 Considerations

Now, we can turn our eyes to next year. Here are two main suggestions of things you can do now to prepare for 2026.

Review your return and learn from it: Quite a few of my clients don’t review their tax returns when they are completed. I get it – you hire a tax professional so you don’t need to give it that much thought! However, I strongly suggest a review. For one, you may find an error (I found two material errors on returns this year that saved quite a bit of money!). But perhaps more importantly, you can also identify areas for improvement next year. What was your ending effective rate? Were there opportunities for tax strategies you may have missed (such as bucketing charitable contributions in a single year to reach the point where itemized deductions outpaced standard?) Did you fail to max out employer plan contributions or your health savings account or employer sponsored retirement plan? You may not be equipped to do this review on your own but a financial advisor or your tax advisor (after their busy season ends!) can help you.

Calculate 2026 Estimates: A key logistical action item is to use 2025 taxes to plan for 2026 estimated payments. The US tax system requires taxpayers to make payments during the year (either via withholdings or direct payments to the IRS (and states as applicable)). You can’t wait to pay everything you owe until your return is done (unless you are up for paying interest and penalties).

Since there is no way to know now what your taxes will be for the year before you have earned the income, there are rules in place to help you (we will focus on federal income tax – be sure to evaluate your own state’s income tax rules). At the federal level, there are two options available to you that are considered good faith estimates and will not result in penalties or interest if you end up underpaid. You may either pay in 90% of what you believe you will owe in 2026 or you may pay 100% of what you did owe in 2025 (110% is required if your prior year adjusted gross income was over $150,000 married/$75,000 married filing separately) These are known as safe-harbor amounts, discussed in great detail here, meaning you are “safe” from penalties and interest at these levels.

This is where your 2025 tax return comes in handy. If you believe your 2026 income will be similar (or higher) than 2025, the total taxes paid in 2025 (identified on your return) can determine what your “safe harbor” payment is for 2026. If you are using payroll withholdings, check in near the end of the year to make sure you are on track. If you use withholdings on IRA distributions, ensure the specified percentage will result in that amount. If you are making estimates, divide the estimate by four and make even payments throughout the year to reach the safe harbor amount.

If you believe your 2026 income will be lower than 2025, you have a bit more work to do. You will need to project what your 2026 taxes will be and then ensure you make payments of at least 90% of that value. This can be time consuming and prone to error so if the differences are not overly material, you may wish to opt for the earlier option (and take a refund or apply overpayment in the next year)

Hope this helps. While tax season may never end, there are steps you can take to address it and move on!