Is Your Retirement Plan on Track? Five Questions to Ask This Fall
Is Your Retirement Plan on Track? Five Questions to Ask This Fall With only a few months left in the year, October is a good moment to find out whether your retirement plan is wher
January is National Financial Wellness Month, making it an ideal time to revisit your tax strategy and overall financial plan. With many favorable provisions of the One Big Beautiful Bill Act now permanent, 2026 offers a rare level of predictability, but also new opportunities for proactive planning.
At Davis Capital Management, we help individuals and families use tax-smart strategies to reduce liabilities, protect wealth, and support long-term goals. Here are ten tax moves that can make a meaningful difference in the year ahead.
Boost contributions to tax-advantaged accounts like 401(k)s and IRAs. For 2026, limits are higher, allowing you to defer more income and grow savings tax-free or tax-deferred. This lowers your current taxable income while building future security—a cornerstone of effective wealth management.
Sell underperforming investments to offset capital gains. With long-term capital gains rates remaining at 0%, 15%, or 20% (depending on income thresholds adjusted for inflation), strategic harvesting can minimize taxes on winners, especially in volatile markets.
Itemized deductions remain valuable for some. “Bunching” donations into one year—perhaps via a donor-advised fund—can exceed the higher standard deduction ($16,100 single/$32,200 joint in 2026) and maximize charitable impact while reducing taxable income.
Convert traditional IRA funds to Roth for tax-free future withdrawals. With stable ordinary income rates (top at 37%), converting in lower-income years locks in today’s rates, ideal if you anticipate higher taxes or brackets later.
The permanent $15 million individual exemption ($30 million for couples, indexed for inflation) provides a window for large gifts or trusts. Transfer assets now to remove future appreciation from your estate, preserving more for heirs.
Place investments where they are most tax-efficient. High-taxable-income assets like corporate bonds and REITs sometimes are more suitable in tax-deferred accounts (IRAs, 401(k)s), while tax-efficient investments such as stocks and municipal bonds belong in taxable accounts when appropriate. Municipal bonds are especially powerful in taxable accounts for higher-tax-bracket investors—their interest is typically exempt from federal (and often state) income tax, making them one of the most tax-efficient fixed-income options available.
The increased state and local tax (SALT) deduction cap (up to $40,400 in some cases) benefits high-tax state residents. Coordinate with itemizing to fully utilize property, income, and sales taxes paid.
If taxable income stays below $49,450 (single) or $98,900 (joint), realize long-term gains tax-free. This is powerful for retirees or variable-income years—sell appreciated assets without owing federal capital gains tax.
Defer gains invested in qualified Opportunity Zones until 2026 (or later for full benefits). While deadlines approach, holding longer can exclude future appreciation—consult a fiduciary for suitability.
If nearing age 73, strategize withdrawals to manage brackets. Qualified charitable distributions (QCDs) from IRAs can satisfy RMDs tax-free while supporting causes.
In 2026, tax efficiency is more achievable than ever, but complexity remains. During Financial Wellness Month this January, partner with a fiduciary advisor for tailored wealth management. They’re legally bound to act in your best interest, helping navigate these strategies—including smart asset location with municipal bonds—to minimize taxes and maximize growth. Start the year strong—your financial future depends on it.
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