Individual Tax Planning Strategies

Principles

Timing · character (capital gains) · shifting (watch the kiddie tax) · exclusions · marginal rates.

Deductions

• Bunch deductions; donor-advised funds.
• 2026: charity deductible only above 0.5% of adjusted gross income (AGI); non-itemizers $1,000 / $2,000.
• Qualified charitable distributions from individual retirement accounts (IRAs) at 70½+.

Charity

Give appreciated long-term stock (fair market value, no gain tax); sell losers and give cash.

Investments

• Harvest losses (wash sale ±30 days); $3,000 against ordinary income.
• 0% capital gain bracket to $49,450 / $98,900 taxable income (2026).
• Asset location; 3.8% net investment income tax above $200,000 / $250,000.

One Big Beautiful Bill Act (OBBBA) planning

Manage modified AGI for tips, overtime, senior, and car loan deductions and the state and local tax cap phase-down (from $505,000); pass-through entity taxes avoid the cap.

Education

Section 529: K–12 tuition up to $20,000 from 2026; 5-year gift election; Roth rollover up to $35,000.

Exam traps

• Buying the same security in an IRA within 30 days triggers the wash sale rule — and that loss is lost permanently.
• A qualified charitable distribution counts toward required distributions but isn't deductible — it's simply left out of income.
• Stock held one year or less given to charity: the deduction is limited to basis, not fair market value.