When most people think about taxes, they think about filing a return in the spring. But by then, many of the decisions that determine your tax bill have already been made. The middle of the year is actually one of the best times to perform a tax review. There are still several months left to make adjustments that could reduce your taxes, improve your retirement income strategy, and help you avoid unexpected surprises.
If you’re retired or approaching retirement, here are a few areas worth reviewing sooner rather than later:
Estimate your income.
Before making any tax-related decisions, it’s helpful to have a general idea of what your income for the year will look like. Add up your expected income sources, including:
- Social Security benefits
- Pension income
- Required or planned IRA withdrawals
- Investment income
- Part-time employment income
Why does this matter mid-year? Many tax strategies are most effective when you know how much room you have before crossing important thresholds, so you can avoid higher tax brackets, Medicare premium surcharges, and increased taxation of your Social Security benefits.
Remember the new Senior Bonus Deduction.
One of the most significant recent tax changes for retirees is the new Senior Bonus Deduction created by the One Big Beautiful Bill Act. Beginning in 2025 and continuing through 2028, taxpayers age 65 and older may qualify for an additional deduction of up to $6,000 per person. This deduction is available whether you take the standard deduction or itemize. It also stacks on top of the existing age-65 additional standard deduction. For married couples where both spouses qualify, that’s potentially an additional $12,000 in deductions.
The Senior Bonus Deduction begins to phase out once modified adjusted gross income exceeds $75,000 for single filers or $150,000 for married couples filing jointly. If your income is close to those limits, it’s worth considering how withdrawals, Roth conversions, or other tax decisions could affect your eligibility.
Consider a Roth conversion.
If you’ve accumulated savings in a traditional IRA, you should evaluate whether converting a portion of those assets to a Roth IRA fits into your long-term tax strategy. A Roth conversion requires paying income taxes on the amount converted today, but future qualified withdrawals from the Roth are tax-free. Roth IRA withdrawals are also not included in the formula used to determine the taxation of your Social Security benefits.
The key is figuring out how much to convert in a given tax year. Converting too much can increase your tax bracket, push you into a higher Medicare premium tier, or reduce or eliminate eligibility for the Senior Bonus Deduction. Reviewing your projected income now gives you time to determine whether a partial conversion makes sense before year-end.
Make the most of charitable giving.
If charitable giving is part of your financial plan, it’s worth reviewing how you’re making those gifts. For taxpayers who itemize, 2026 rules require charitable contributions to exceed 0.5% of adjusted gross income before they become deductible. That means smaller donations spread throughout the year may not provide the tax benefit they once did.
For retirees age 70 ½ or older, a Qualified Charitable Distribution (QCD) is one of the most tax-efficient ways to give. A QCD allows you to transfer up to $111,000 in 2026 directly from your IRA to a qualified charity. The distribution counts toward your RMD for the year, but it isn’t included in your taxable income. It may also help with the taxation of Social Security benefits and avoiding higher Medicare premiums.
Don’t forget your RMD.
If you’re age 73 or older, Required Minimum Distributions (RMDs) must be taken by December 31st. Missing or underestimating your RMD can result in substantial penalties, so it’s important to confirm the amount you need to withdraw and decide when to take it.
Some retirees prefer taking their RMD earlier in the year, while others wait until later. Taking your RMD early in an up market can lock in gains. Waiting until year-end may provide some additional tax-deferred growth. As with many financial decisions, the benefits and drawbacks depend on your cash flow needs, market conditions, and overall financial plan.
Review gains and losses in taxable investment accounts.
If you hold investments in taxable accounts, review your positions to determine if you would benefit from tax-loss harvesting (selling positions that have declined in value to offset gains elsewhere in your portfolio). If your losses exceed your gains, you can generally use up to $3,000 per year to offset ordinary income, with any remaining losses carried forward to future years. Keep in mind that selling an investment and repurchasing the same security within 30 days triggers the wash-sale rule, which disallows the loss.
Tax planning works well when it’s done before the year is over. Taking time now may create opportunities that simply won’t be available when you’re ready to file your return. If you haven’t had a mid-year tax conversation with your financial advisor or CPA, you should do so. A proactive review today could help lower your tax bill, improve your retirement income plan, and save you more than you’d expect.
Frequently asked questions.
How do I figure out where my income falls from a Roth conversion standpoint?
Generally, you want to convert up to, but not past, the top of your current tax bracket, and below the income thresholds that trigger higher Social Security taxation or Medicare IRMAA surcharges. Your advisor or CPA can run a projection using your actual income sources.
If I’ve already taken my RMD this year, can I still do a QCD?
Once you’ve received an RMD in cash, it cannot be recharacterized as a QCD after the fact. To use a QCD to satisfy your RMD, the transfer must go directly from your IRA to the charity before you take the distribution itself.
Are there tax moves I can make for 2026 after December 31st?
IRA contributions for 2026 can generally be made up to the tax filing deadline in 2027. Health Savings Account contributions, if you’re eligible, follow the same rule. But the most significant moves (Roth conversions, RMDs, tax-loss harvesting, and QCDs) must be completed by December 31st.
How might my 2026 income affect my Medicare premiums?
Medicare Part B and Part D premiums are based on your income from two years prior, meaning your 2026 reported income will determine your 2028 premium amounts. A large Roth conversion or IRA distribution this year could push you into a higher IRMAA bracket two years from now.
Disclaimer: The information above is for general educational purposes only and should not be considered financial, tax, or legal advice. Always consult with a qualified professional regarding your specific situation. You should consult with your CPA and/or attorney before implementing any estate planning, gifting, or tax-related strategy.