Midyear Tax Planning — 6 Moves Business Owners Should Make Before Year-End

Most people only think about their taxes once a year — in April, when it is already too late to change anything. By the time you are filing a return, the tax year is closed and nearly every opportunity to lower the bill has passed. That is the single biggest reason businesses overpay: they treat taxes as a filing event instead of a year-round strategy. The real savings happen in the middle of the year, while there is still time to act. A midyear check-in is when proactive tax planning actually pays off, because the moves you make now shape the return you will file next spring.

This article walks through six midyear tax planning moves business owners should consider before year-end. Some reduce taxable income directly through tax deductions and retirement contributions, some position you for a better return, and all of them work far better when done now rather than in a year-end scramble. These tax planning strategies are built specifically around tax planning for business owners, who have more levers to pull than the average filer. The figures here reflect 2026 amounts published by the IRS. A few of these moves touch your investments, and for those we focus on the tax side and recommend coordinating the investment decisions with your financial advisor. As a tax planning firm Irvine business owners rely on, we use these exact tax planning strategies — and effective tax planning for business owners always weighs both tax deductions and retirement contributions together. If you have been searching for a tax advisor near me or a tax planning firm Irvine companies trust who plans ahead instead of just filing, these are the kinds of moves that separate proactive firms from reactive ones.

Move 1: Check Your Withholding and Estimated Taxes

The first midyear move is the simplest and most overlooked: make sure you are paying in the right amount of tax during the year. For business owners, this is especially important, because much of your income may not have tax automatically withheld. If you pay too little, you face a balance due and possible underpayment penalties next April; if you pay too much, you have handed the government an interest-free loan instead of using that cash in your business.

WHAT TO REVIEW AT MIDYEAR

• Whether your year-to-date income is tracking higher or lower than last year, which changes what you should be paying in

• For owners with W-2 wages: whether your Form W-4 withholding still matches your situation after any changes (a new dependent, a second income, a plan to itemize)

• For pass-through and self-employed income: whether your quarterly estimated tax payments are on pace for this year's actual income

• How last year turned out — a large balance due or a very large refund both signal your payments are off

Catching a shortfall in the middle of the year means you can adjust the remaining payments smoothly, rather than being hit with a large bill and penalties at filing. This is the most basic form of year-round tax planning, and it is where a tax advisor earns their keep — recalibrating your payments to your real income before the year closes.

Move 2: Look for Tax Losses to Harvest

If you hold investments in taxable accounts, midyear is a good time to review whether any positions are sitting at a loss. Tax-loss harvesting is the practice of selling an investment at a loss to realize that loss for tax purposes, where it can offset realized capital gains — and, if losses exceed gains, up to $3,000 of ordinary income per year, with the rest carried forward. Done thoughtfully, it can meaningfully reduce the tax on your investment income.

THE TAX MECHANICS TO UNDERSTAND

• Realized losses first offset realized capital gains; up to $3,000 of any remaining net loss can offset ordinary income per year

• Excess losses beyond that carry forward to future years

• The wash-sale rule disallows the loss if you buy the same or a substantially identical security within 30 days before or after the sale — a 61-day window

• Maintaining your overall investment strategy while harvesting is a portfolio decision, not just a tax one

Here is where we draw a clear line: the tax treatment of harvested losses is our world, but the decision of WHICH positions to sell and how to stay invested is an investment decision that should be made with your financial advisor. We help you understand the tax impact and make sure the wash-sale rule does not erase your loss; your financial advisor handles the portfolio side. Coordinating the two is how tax-loss harvesting is done right.

Move 3: Reconsider Whether to Itemize

Many taxpayers default to the standard deduction without checking whether itemizing would save more — and a few recent changes make this worth a fresh look. For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly. Itemizing only helps if your eligible tax deductions add up to more than that. But two changes have shifted the math for some business owners.

WHAT CHANGED AND WHAT TO WATCH

• The state and local tax (SALT) deduction was raised to $40,000 for 2025 through 2028 (subject to income phaseout), which can make itemizing worthwhile again — especially in a high-tax state like California

• The main itemized categories are medical expenses, home mortgage interest, state and local taxes, charitable contributions, and certain disaster losses, each with its own limits

• Charitable contributions are now generally deductible only above a 0.5% of AGI floor, and medical expenses only above 7.5% of AGI

• Starting in 2026, the value of itemized deductions is capped at 35% for those in the top 37% bracket — meaning a high earner gets up to 35 cents of value per deductible dollar

If you expect to itemize this year, a powerful midyear move is to plan a 'bunching' strategy — concentrating several years' worth of charitable giving into one tax year to clear the standard deduction threshold, then taking the standard deduction in the off years. Deciding whether to itemize, and whether to bunch, is exactly the kind of forward-looking tax planning that has to happen before year-end, not at filing. Start tracking the relevant deductions now.

Move 4: Boost Your Pre-Tax Contributions

One of the most reliable ways to reduce taxable income is to put more into pre-tax accounts. Contributions to traditional employer retirement plans, traditional IRAs, and health savings accounts are generally made with pre-tax dollars, lowering your current federal taxable income dollar for dollar. For 2026, the IRS limits give business owners meaningful room to do this.

2026 CONTRIBUTION LIMITS (IRS)

• 401(k) and 403(b): employees can generally contribute $24,500 for 2026; those 50 and older can add an $8,000 catch-up, and those ages 60 through 63 can add an even higher $11,250 catch-up

• Traditional IRA: the 2026 limit is $7,500, with an additional catch-up for those 50 and older; only traditional (not Roth) IRA contributions may give a current-year deduction

• Health Savings Account (HSA): for those in an eligible high-deductible health plan, 2026 limits are $4,400 for individual coverage and $8,750 for family coverage, plus a $1,000 catch-up at age 55 and older

• Note: starting in 2026, catch-up contributions for those who earned over $145,000 in the prior year must be made to a Roth (after-tax) account

Two midyear advantages here: first, spreading larger contributions over the remaining months is easier than scrambling at year-end; and second, the HSA is uniquely powerful because unspent funds roll over year after year and can later be used in retirement. Increasing these contributions is one of the clearest ways to reduce taxable income now while building long-term security — a textbook example of tax planning that doubles as financial planning. As always, fitting the contributions into your broader budget and goals is worth reviewing with your financial advisor.

Move 5: Plan for Required Minimum Distributions

If you or a spouse is approaching retirement age, required minimum distributions (RMDs) belong on your midyear radar. Under the SECURE 2.0 Act, the age at which owners of certain retirement accounts must begin taking RMDs is now 73, and it pushes back to 75 starting in 2033 for those born in 1960 or later. Withdrawals from traditional 401(k)s and IRAs are taxable, so RMDs can have a real impact on your tax picture.

THE RMD FACTS THAT MATTER

• RMDs from traditional retirement accounts are taxable income in the year taken

• The SECURE 2.0 Act reduced the penalty for failing to take an RMD to 25% of the shortfall, down from 50%

• That penalty drops further to 10% if the account owner takes the missed amount and files a corrected return within two years

• With planning, the timing and tax impact of distributions can often be managed rather than left to chance

The tax planning value of looking at RMDs midyear is that it gives you time to manage the income they create — coordinating them with your other income, deductions, and any charitable strategies before the year ends. The investment mechanics of which accounts to draw from is a conversation for your financial advisor; the tax impact of those distributions is where we focus. Getting both right keeps an RMD from becoming a tax surprise.

Move 6: Evaluate Roth Strategies

The sixth move is to consider whether a Roth strategy fits your situation this year. A Roth conversion moves money from a traditional IRA into a Roth IRA; you pay tax on the converted amount now, but qualified withdrawals later are tax-free and Roth accounts are not subject to RMDs. The appeal of doing this in a particular year depends heavily on your tax bracket — and that is precisely a tax planning question.

THE TAX-SIDE CONSIDERATIONS

• A conversion adds the converted amount to your taxable income this year, so it is often most attractive in a lower-income year

• Paying the tax now can be beneficial if you expect to be in a higher bracket later

• High earners sometimes use a 'backdoor' Roth — making nondeductible traditional IRA contributions and then converting — when income limits block direct Roth contributions

• The right amount to convert in a given year is a tax-bracket calculation that should be modeled before acting

Roth strategies are a perfect example of why midyear is the time to plan: the decision of how much to convert depends on where your income will land for the year, which you can estimate now but not in April. We help you model the tax impact and find the right conversion amount for your bracket; the investment side of the conversion is coordinated with your financial advisor. Done together, a well-timed Roth strategy can be one of the most valuable long-term moves on this list.

A Note on These Strategies

Every taxpayer's situation is different, and these six moves are general tax planning ideas, not personalized tax or investment advice. The right combination for you depends on your income, entity structure, goals, and circumstances, and the figures cited are 2026 amounts that can change. Several of these moves involve investment decisions that should be coordinated with your financial advisor; our focus is the tax side. The best results come from modeling your specific situation with a professional before acting — which is exactly what midyear planning is for.

Turn Midyear Planning Into Real Savings

The common thread across all six moves is timing: every one of them works because it happens before the year closes, while you can still act. That is the difference between proactive tax planning and reactive tax preparation — one shapes the outcome, the other just reports it. Business owners who check in at midyear, adjust their payments, position their deductions, maximize their pre-tax contributions, and plan their investment-related moves with their advisor consistently keep more of what they earn. At Tax Wealth Consultant, a tax planning firm Irvine business owners rely on, serving Orange County and California, we build year-round tax planning into every engagement, coordinate the tax side of your investment moves with your financial advisor, and make sure your tax preparation reflects a plan rather than a scramble. If you have been searching for a tax advisor near me who plans ahead, midyear is the perfect time to start.

Sources referenced in this article (2026 figures): • IRS IR-2025-111 — 2026 contribution and benefit limits (401(k) $24,500, IRA $7,500, catch-ups) • IRS Notice 2025-67 — 2026 cost-of-living adjustments for retirement plans • IRS Rev. Proc. 2025-32 — 2026 standard deduction amounts • One, Big, Beautiful Bill Act (OBBBA) — SALT deduction increase to $40,000 (2025-2028) and itemized deduction changes • SECURE 2.0 Act — RMD age and missed-RMD penalty changes This article is general education about tax planning; it is not personalized tax or investment advice. Figures are 2026 amounts and may change.

Don't Wait Until April — Plan Your Tax Savings Now

Tax Wealth Consultant builds proactive, year-round tax planning into every engagement for business owners — adjusting payments, positioning deductions, maximizing pre-tax contributions, and coordinating the tax side of your investment moves with your financial advisor. Midyear is when the savings happen.

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