Planning Beyond Tax Season: Key Considerations for 2026 and Your Long-Term Financial Strategy

By Steve Henderson, CPA, PFS, CFP®, CKA®, Regional Director, Partner, Merit Financial Advisors, and Director, SSC CPAS and Doug Morris, CFP®, Regional Director, Partner, Merit Financial Advisors

Tax rules tend to change quite frequently, and while most people catch the big headlines, fewer stop to think about what those shifts mean for their own money. As a result, decisions about income, investing, or giving are often made without a clear sense of how these changes will affect tax outcomes.

But for families who are serious about building long-term financial security, the most impactful tax decisions are rarely made in March or April. They’re made years in advance, when there’s time to coordinate investment strategy, retirement planning, charitable goals, and estate planning into a single, cohesive framework.

With several major provisions now made “permanent”, at least until Congress decides otherwise, 2026 offers a rare moment of stability in a tax code that typically changes from one year to the next.

Stability Creates Opportunity and Responsibility

Lower individual tax rates, enhanced standard deduction, the Qualified Business Income (QBI) deduction for pass-through businesses, and the expanded estate and gift tax exemptions no longer carry automatic expiration dates. That added certainty gives families and business owners a longer runway to plan, particularly around wealth transfers and business succession, rather than racing against arbitrary deadlines.

A good place to start is simply reviewing beneficiary designations, trust documents, and business succession plans to make sure they still reflect your intentions. These are areas that often get set once and then forgotten, even as family dynamics, asset levels, and goals change.

Retirement Planning Is Now a Tax Planning Conversation

One of the more practical changes for 2026 involves 401(k) catch-up contributions. If you are over age 50 and earn more than $150,000, any catch-up contributions must now go into the Roth portion of the plan rather than the traditional pre-tax side.

That may feel like losing a deduction, but it also creates a pool of tax-free income later in life. The challenge is that 401(k) providers are implementing the rule differently, and contribution splits that worked in the past can now tilt far more money into Roth accounts than expected. A brief review of payroll elections can prevent surprises when tax forms arrive.

This change also highlights a broader concept we emphasize with clients: tax diversification. Households that enter retirement with a mix of pre-tax, taxable, and Roth assets tend to have far more flexibility in managing their effective tax rate than those whose savings sit in a single bucket.

The Double-Edged Nature of Roth Conversions

Roth conversions remain one of the most powerful and most misunderstood tools in personal finance.

Converting assets to Roth can create long-term tax-free income, but it also creates taxable income the year you make the conversion. That “phantom income” can trigger unintended consequences, including higher Medicare premiums, the taxation of Social Security benefits, or the loss of income-based deductions.

The risk is executing a conversion without a multi-year projection that accounts for how today’s decision affects tomorrow’s tax picture. This is one of the clearest examples of why coordination between a CPA and a financial advisor matters.

Where Investments and Taxes Intersect

Taxes quietly shape portfolio outcomes long before April 15. Decisions about which investments belong in which types of accounts and when gains or losses are realized can materially affect after-tax returns.

Two areas that often go overlooked are tax-loss harvesting and tax-gain harvesting. While selling positions at a loss can help offset gains, there are also years when long-term capital gains may be taxed at 0%. In those situations, realizing gains and resetting a higher cost basis can be just as valuable.

Charitable Planning, Structured Thoughtfully

Americans contribute more than $550 billion annually to charitable organizations, yet a growing share of households no longer receive a direct tax benefit for those gifts because they take the standard deduction.

Tools such as donor-advised funds (DAF) allow families to separate the timing of the tax deduction from the timing of the charitable gift. Funding a DAF in a high-income year can capture the deduction now, while leaving flexibility to decide which organizations to support later.

For retirees, Qualified Charitable Distributions (QCD) from IRAs offer another layer of efficiency by satisfying required minimum distributions (RMD), while keeping the income off the tax return. In some cases, families even choose to name a charitable vehicle as the beneficiary of an IRA, turning a heavily taxed asset into a tax-efficient legacy.

Key Considerations for 2026

• Review who is named where. Beneficiary designations, trust terms, and ownership agreements often stay in place long after circumstances change. A brief review can help ensure they still reflect how you want assets handled today, not how things looked years ago.
• Check how your 401(k) contributions are actually landing. For higher-income participants over 50, the new Roth catch-up rules can change where dollars are being directed. Looking at a recent statement or payroll record can prevent surprises later.
• Treat Roth conversions as a multi-year decision. Running projections across several years can clarify whether a conversion affects Medicare premiums, Social Security taxation, or access to income-based deductions.
• Pay attention to where assets are held. The type of account an investment sits in — and the timing of gains or losses — often shapes after-tax results as much as the investment itself.
• Be deliberate about charitable giving. Whether through a donor-advised fund, a Qualified Charitable Distribution, or donating appreciated securities, the strategy is critical.

The Bottom Line

The real opportunity in tax planning is not finding a new deduction. It’s recognizing that taxes, investments, retirement income, and estate planning are integrated components of the same long-term strategy.

At Merit Financial Advisors, we believe the most effective plans are built through collaboration and refined over time. A conversation today can often prevent costly surprises down the road.