A Guide to Mid-Year Planning

by Alex Freedman, Senior Wealth Advisor

By June or July, you generally have a much clearer picture of realized capital gains or losses, income trends, portfolio positioning, and potential liquidity events on the horizon.

With this added visibility, you can shift from reactive tax filing to more proactive, forward-looking tax and financial planning.

A thoughtful mid-year tax review can help you identify potential opportunities, improve tax efficiency, and reduce year-end surprises.

Here are five steps you can take with your advisory team to help you get started.

1. Evaluate Income, Timing & Withholding

Understanding your projected income for the year is a critical component of smart tax planning. If your individual or combined household income is tracking higher than anticipated, consider strategies such as:

• Accelerating deductions into the current tax year
• Deferring income, including bonuses, distributions, and equity compensation, into the following year if appropriate
• Adjusting estimated tax payments to help minimize underpayment penalties
• Updating W4 federal tax withholding (particularly if you’ve added a dependent, taken on consulting work, or plan to itemize this year)
• Reviewing domicile, residency, and multi-state income tax exposure

Example: A dual-resident taxpayer splits time between New York and Florida. Mid-year tracking reveals they are close to exceeding residency thresholds in New York. By adjusting travel and documentation for the remainder of the year, they preserve Florida residency status and avoid substantial state income taxes.

2. Harvest Tax Losses Strategically

Periods of market volatility can be unsettling, but they may also present valuable planning opportunities. Tax-loss harvesting allows you to offset realized capital gains by selling underperforming investments at a loss, potentially improving after-tax portfolio efficiency. Key considerations include:

• Maintaining portfolio diversification and alignment with your long-term goals
• Avoiding unintended tax consequences, including potential violations of the IRS wash sale rule
• Coordinating harvested losses with gains from portfolio rebalancing, business sales, or other liquidity events

This strategy can be especially effective in years where certain sectors or asset classes have experienced uneven performance.

3. Optimize Retirement and Tax-Advantaged Contributions

Maximizing contributions to tax-advantaged accounts can help strengthen your long-term retirement savings strategy while reducing your current federal taxable income. Depending on where you are, you may want to:

• Increase contributions to employer-sponsored retirement plans: The annual contribution limit for 401(k)s and similar plans is $24,500. Individuals age 50 or older may also be eligible for catch-up contributions of up to $8,000, while those ages 60–63 can contribute up to $11,250 in catch-up contributions.²
• Boost contributions to traditional IRAs: The annual contribution limit is $7,500, or $8,600 for individuals age 50 or older.² If your income exceeds the threshold for direct Roth IRA contributions, a backdoor Roth IRA strategy may provide an alternative way to fund a Roth account through nondeductible traditional IRA contributions.
• Fund a triple-tax advantaged Health Savings Account (HSA): If you are enrolled in a high-deductible health plan, you may be eligible to contribute up to $4,400 as an individual or $8,750 as a family.³

In addition, review your retirement accounts to ensure you remain compliant with required minimum distribution (RMD) rules for traditional IRAs, 401(k)s, and other tax-deferred accounts, as missed distributions can result in significant penalties.

4. Explore Charitable Giving, Estate and Gifting Strategies

Mid-year is an excellent time to get ahead of charitable planning and avoid the year-end rush. Consider “bunching” donations to donor advised funds (DAFs), establishing a charitable trust, or gifting appreciated securities instead cash to help enhance tax efficiency and philanthropic impact.

On the estate planning and gifting side, if you haven’t already, now is a good time to begin:

• Utilizing the 2026 annual federal gift exclusion of $19,000 per recipient ($38,000 for married couples).⁴
• Funding irrevocable trust structures to transfer wealth to loved ones while reducing the size of your taxable estate.
• Leveraging valuation discounts for closely held business interests where appropriate.

Example: A business owner transfers minority interests in a privately held company to an irrevocable trust for their children. By completing this mid-year, they may be able to apply valuation discounts, remove future appreciation from their taxable estate, and efficiently use available gift tax exclusions and exemptions.

5. Reassess Portfolio Positioning and Rebalancing

Rebalancing enables you to align your portfolio with your long-term goals while proactively managing potential tax consequences. Key areas to evaluate include:

• Concentrated positions with significant embedded gains
• Opportunities to diversify in a tax-efficient manner
• Use of charitable vehicles or trusts to help offset or reduce tax exposure

Integrating tax-aware rebalancing into your broader wealth strategy helps ensure that investment decisions and tax planning work together, rather than in isolation.

Mid-Year Tax Planning: A Brief Q&A

Q: When should I start mid-year tax planning?
A: Ideally between May and July. By this point, you have enough financial data to make informed decisions while still having time to implement meaningful strategies.

Q: Should I prioritize tax savings over investment performance?
A: No. Tax efficiency should complement (not override) your long-term investment strategy. Decisions should always align with your overall financial goals.

Q: How can charitable giving reduce my tax liability?
A: Donating appreciated assets can help you avoid capital gains taxes while still receiving a charitable deduction for the full market value, subject to IRS limits.

Trust in Our Team of Experts

Mid-year tax planning is about taking control: reducing uncertainty, capturing opportunities, and making tailored adjustments that can translate into significant tax savings.

The earlier you act, the more options you have. Let’s talk about your mid-year tax strategy today.

Sources
¹ https://www.irs.gov/publications/p550
² https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500
³ https://www.irs.gov/pub/irs-drop/n-26-05.pdf
⁴ https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax