Midyear is an ideal time to review your financial situation and determine whether you’re on track to minimize your tax liability. Evaluating your income, deductions, and investments now gives you more flexibility to make adjustments before year-end rather than scrambling during tax season.
Several tax-saving opportunities may still be available, especially with recent tax law changes affecting deductions, tax brackets, and investment income.
Understand Your Tax Bracket
One of the most important steps in tax planning is knowing your marginal tax rate—the percentage of tax applied to your next dollar of taxable income.
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, retained the federal income tax brackets ranging from 10% to 37%. While the rates remain unchanged, understanding where your income falls can help you decide whether it’s beneficial to reduce taxable income before moving into a higher bracket.
2026 Federal Income Tax Brackets
Single Filers
- 12%: $12,401
- 22%: $50,401
- 24%: $105,701
- 32%: $201,776
- 35%: $256,226
- 37%: $640,601
Head of Household
- 12%: $17,701
- 22%: $67,451
- Higher brackets follow the same thresholds as single filers.
Married Filing Jointly
- 12%: $24,801
- 22%: $100,801
- 24%: $211,401
- 32%: $403,551
- 35%: $512,451
- 37%: $768,701
Married individuals filing separately generally use half of the joint-filing thresholds.
If your projected income is close to entering a higher tax bracket, you may benefit from accelerating deductible expenses or implementing other tax-saving strategies to reduce taxable income.
Review Standard and Itemized Deductions
The OBBBA maintained relatively high standard deduction amounts for 2026:
- Single filers: $16,100
- Head of household: $24,150
- Married filing jointly: $32,200
Itemizing deductions only makes financial sense if your total eligible deductions exceed your standard deduction.
Recent tax law changes have also affected several deductions. For example:
- The state and local tax (SALT) deduction now offers expanded benefits.
- Some charitable contribution deductions have become more restrictive.
- Several new deductions are available even if you claim the standard deduction.
These new above-the-line deductions include:
- Qualified tips
- Qualified overtime pay
- Senior deduction for taxpayers age 65 and older
- Qualified auto loan interest
Reviewing these opportunities can help maximize your available tax savings.
Plan Medical Expenses Carefully
Medical expenses can provide valuable tax deductions, but only if certain thresholds are met.
You can generally deduct qualified medical expenses that exceed 7.5% of your adjusted gross income (AGI) if you itemize deductions.
Eligible expenses may include:
- Health insurance premiums
- Long-term care insurance premiums
- Medical and dental treatments
- Prescription medications
- Mileage related to medical appointments
If your expenses are close to exceeding the 7.5% threshold, it may make sense to schedule additional qualifying medical costs before year-end to maximize your deduction.
Conversely, if you don’t expect to itemize this year or won’t exceed the deduction threshold, postponing certain expenses until next year could provide greater tax benefits.
Always prioritize your health over tax planning, and consider how timing may affect insurance coverage and deductibles.
Evaluate Investment Gains and Losses
The long-term capital gains tax rates remain unchanged under the OBBBA at 0%, 15%, and 20%.
These favorable rates apply to investments held for more than one year.
2026 Long-Term Capital Gains Thresholds
Single Filers
- 15%: $49,451
- 20%: $545,501
Head of Household
- 15%: $66,201
- 20%: $579,601
Married Filing Jointly
- 15%: $98,901
- 20%: $613,701
Tax-loss harvesting may help reduce your taxable gains if you’ve sold appreciated investments during the year.
Selling investments with unrealized losses can offset capital gains. If you wish to repurchase the same investment, remember to wait at least 31 days to avoid triggering the IRS wash sale rule.
Don’t Forget the Net Investment Income Tax
Higher-income taxpayers may also be subject to the 3.8% Net Investment Income Tax (NIIT).
The tax generally applies when modified adjusted gross income exceeds:
- $200,000 for single filers
- $200,000 for head of household
- $250,000 for married couples filing jointly
- $125,000 for married individuals filing separately
Strategies that reduce modified AGI or investment income may also reduce or eliminate NIIT liability.
Take Action Before Year-End
Waiting until December often limits your tax planning options.
A midyear review gives you time to:
- Estimate your annual taxable income.
- Maximize available deductions.
- Evaluate investment strategies.
- Plan medical expenses.
- Reduce exposure to higher tax brackets.
- Prepare for additional taxes such as NIIT.
Working with a qualified tax professional can help ensure you’re taking advantage of every opportunity available under current tax law.
Final Thoughts
Effective tax planning isn’t something to leave until the last minute. By reviewing your financial picture now, you can identify strategies that may lower your tax bill, increase available deductions, and help you keep more of what you earn.
Whether you’re evaluating your income, planning investment sales, or considering deductible expenses, taking action before year-end can make a meaningful difference when it’s time to file your 2026 tax return.