Key Takeaways

• Use your 2025 return as a diagnostic tool to calculate your real tax percentage and identify specific areas for AGI reduction.
• Use the post-tax season window to calibrate your withholding or estimated payments. 
• IRS limits have increased for 401(k)s ($24,500), IRAs, and HSAs. Adjust your deferrals to leverage these new ceilings.
• With tax rates at historic lows, evaluate tax-gain harvesting or execute Roth conversions to lock in tax-free growth and eliminate future RMD requirements.
• Reducing financial clutter simplifies filing and strengthens your records against potential IRS audits.

If you’re like most of my Mobile clients, you were ready to put tax season behind you as soon as your return was filed. But this is actually a very good time to step back and look at what your 2025 return is telling us.

It gives us a clear picture of how your income was taxed, where the pressure points were, and which planning opportunities may be worth addressing this year.

Think of it as a “spring cleaning” for your tax reduction strategy: clearing the clutter so you can focus on the moves that will bring real savings next tax season.

Why should you review your tax return after filing?

The primary reason to review your tax return after tax season is to identify missed opportunities and prevent future overpayments. Your tax return is a financial diagnostic tool that reveals exactly where your money went and how the IRS views your income. 

By reviewing it now, we can:

1. Calculate your real tax rate

A lot of my Southern Alabama clients focus on their refund or balance due, but those numbers don’t tell the whole story. They just tell you if you overpaid or underpaid your estimated bill throughout the year.

What we really need to look at is your Total Tax (Line 24 on Form 1040) and divide it by your Adjusted Gross Income (Line 11). That gives us a rough federal effective rate to use as a planning benchmark where we can work on lowering it.

2. Calibrate your withholdings

We can use your fresh tax return to update your Form W-4 with your employer. Because rather than getting a huge refund, you actually want to break as close to even as possible. That refund money is much better off in a high-yield savings account or your 401(k), where it can actually grow.

3. Maximize your above-the-line deductions

Reviewing your return shows you exactly where you fell short of tax-advantaged goals.

• If you have a Health Savings Account (HSA), did you max it out? If not, you missed out on some triple-tax-advantaged savings. 
• Look at your total retirement contributions. If your earnings are approaching a higher tax bracket, increasing your elective deferrals is a primary strategy for mitigating tax drag.

Do you need to adjust your withholding after tax season?

As I mentioned above, adjusting your tax withholding (or estimated payments) immediately after tax season is one of the best ways to ensure you aren’t overpaying the IRS throughout the year or facing massive underpayment penalties next April.

If your return showed a massive refund or a big balance due, your pay-as-you-go system isn’t working. 

Let’s say you got a $3,000 refund this year. That’s $250 a month you didn’t have for your mortgage, your high-yield savings, or your kids’ tuition.

On the flip side, there’s the underpayment penalty to consider. 

The IRS expects you to pay at least 90% of your current year’s tax or 100% of last year’s tax (110% if your AGI is over $150,000) through withholding or estimated payments. 

If you owe more than $1,000 at the end of the year and have paid less than 90% of your total tax, the IRS charges an underpayment penalty. This interest-based penalty accrues from the date the tax was supposed to be paid.

How to adjust your withholding

• Use the IRS Tax Withholding Estimator to run the numbers. You’ll need your just-filed 2025 return and your most recent pay stubs. (Or, you can have us figure it out for you.)
• Account for non-wage income. If you have dividends, interest, or a side hustle, don’t wait for a 1099 next year. You can actually use your W-4 to have extra tax taken out of your day job check to cover your side business, avoiding the need for quarterly vouchers.
• Submit the change. Most companies use an online portal. Ensure you see the net pay change in your next one or two pay cycles.

When should you do tax planning?

Tax planning is a 12-month cycle, not a 2-week sprint. If you want to keep more of what you earn, you need to audit your strategy now, while your 2025 data is fresh. Here are the high-level moves we should be discussing for your 2026 filing:

1. No Tax on Tips & Overtime Tracking

Most payroll systems are still catching up to the OBBBA’s no tax on qualified tips (up to $25,000) and qualified overtime (up to $12,500) laws. If you aren’t tracking your time-and-a-half segments or tip logs separately from your base pay now, you will struggle to reconstruct those numbers next April.

Set aside time toaudit your paystubs this month and start a manual log of your qualified tips and overtime. 

2. The New Itemization Math

With the standard deduction jumping to $16,100 (Single) and $32,200 (MFJ) for tax year 2026, and the SALT (State and Local Tax) cap moving up from $10,000 to $40,400 for 2026, the math on whether you should itemize has changed.

But even with those increases, the floor to itemize is still high. If your combined mortgage interest and state taxes put you at $30,000, you’re still $2,200 short of seeing any benefit from itemizing.

This is where charitable bunching can come in. Instead of giving $5,000 to your favorite cause every year, you could bunch two years of donations ($10,000) into 2026. This would push your total deductions well over the $32,200 standard threshold, allowing you to actually write off those donations. Then in 2027, you’d simply go back to taking the standard deduction.

3. Senior Deduction & Retirement Calibrations

If you or your spouse is 65+, the $6,000 additional senior deduction ($12,000 for couples) might mean you can afford to convert more of your Traditional IRA to a Roth IRA this year without jumping into a higher bracket. 

A Roth conversion involves moving money from a traditional IRA or 401(k) into a Roth account, paying the tax now to secure tax-free growth and withdrawals forever.

By executing a Roth conversion now, you can effectively fill that low-tax space with income from your Traditional IRA. You pay a tiny bit of tax today (at the lowest rates you’ll likely ever see) to move that money into a Roth account where it will never be taxed again, and where it won’t be subject to Required Minimum Distributions (RMDs) later.

4. Realizing Gains and Losses 

Don’t wait until December to look at your brokerage account. If you have underperforming assets, sell them to offset your realized capital gains. You can also use up to $3,000 of excess losses to wipe out ordinary income.

Why should I update my retirement contributions after tax season?

Updating after tax season allows you to use your recently filed tax data to determine if you need to lower your taxable income to avoid higher tax brackets or qualify for specific credits. It also ensures you are taking full advantage of the increased 2026 contribution limits.

2026 Retirement Contribution Limits

The IRS has increased the limits for nearly every retirement vehicle this year. If you haven’t adjusted your payroll deferrals, you are likely under-contributing and missing out on valuable tax-deferred growth.

Note: If you’re between the ages of 60 and 63, you qualify for the Super Catch-up. You can contribute a total of $35,750 to your 401(k) this year. Many payroll departments don’t automate this. You have to tell them to do it. 

And for higher earners, remember that there are some stipulations for you on the retirement contribution limits above. Reach out to us if you want help sorting through those. 

How to update your retirement contributions 

• Log into your HR Portal and ensure your percentage is set to hit the new $24,500 (or $35,750 for seniors) limit by December 31st.
• If you have an HSA-qualified plan, prioritize maxing out that $8,750 (Family) limit before your 401(k) (unless you have an employer match with your 401k). It’s the only account that is tax-deductible going in and tax-free coming out for medical costs.

Financial spring cleaning

Spring cleaning your tax reduction strategy means clearing your financial deck so you can better see the moves that actually matter. Check on:

1. Consolidating your orphan retirement accounts

If you’ve switched jobs in the last few years, you likely have a trail of old 401(k)s or 403(b)s sitting in the metaphorical “account orphanage.”

This is a risk because scattered accounts often have higher fees and unoptimized investment allocations. From a tax perspective, having five different 1099-Rs during tax season is a recipe for a missed entry.

Consider a Direct Rollover into your current employer’s plan or a consolidated IRA. It keeps your tax-deferred bucket in one place and makes it significantly easier to track your cost basis.

2. The beneficiary double-check

Your will does not override your retirement account beneficiary designations.

If your 2025 tax return was Married Filing Jointly, but your old IRA still lists your sister or an ex-spouse as the beneficiary, that money will go to them regardless of what your will says.

With the SECURE 2.0 10-year rule for inherited IRAs firmly in place for 2026, the tax consequences for your heirs depend entirely on their relationship to you. Make sure the right people are listed so they aren’t hit with an unnecessary tax burden.

3. Building a one-stop tax vault

Stop saving receipts in your car’s center console. In 2026, digital is the way to stay audit-ready.

And remember, the IRS has three years to audit your return. You need to have every deduction, every charitable gift, and every business expense backed up and easily accessible.

I suggest creating a “2026 Tax” folder in a secure cloud drive today. When you get a receipt for a deductible expense, snap a photo and drop it in immediately. 

4. Plugging any financial leaks

• Review your bank statements for the last 90 days. Cancel any unnecessary subscriptions, like the streaming services, that unused membership to your Mobile gym, or “pro” software versions you haven’t touched.
• Are you sitting on $50,000 in a big-bank savings account earning 0.01%? Move your savings into a High-Yield Savings Account (HYSA) or a money market.
• Check the expense ratios on your old 401(k) funds. If you’re paying 1% in fees on a target date fund, you’re losing thousands in growth. Consolidating into a low-cost IRA plugs that hole.
• Are you paying for accidental death or rental car coverage riders on your insurance that your premium credit card already covers? Trim the fat. 

Final thoughts

By taking a few moments now to spring clean your tax reduction strategy, you’re actively managing your wealth and ensuring that 2026 is the most tax-efficient it can be.

Whether it’s adjusting your withholding to reclaim your monthly cash flow, consolidating old accounts for better clarity, or rebalancing your portfolio to account for 2026’s new tax brackets, every small adjustment you make today compounds over time.

Let’s start with a review of your 2025 return together and use that to build a customized tax-savings action plan for 2026.

251-633-4070

FAQs

“How often should I update my tax strategy?” 

Ideally, you should revisit your strategy twice a year: once in the spring (immediately after filing) to set your course, and once in late autumn (October/November) to make any final year-end adjustments before the books close on December 31st.

“How do I rebalance my portfolio without paying taxes?”

The best way to rebalance without paying taxes is to perform the rebalance inside a tax-advantaged account like a 401(k), 403(b), or IRA. Alternatively, you can rebalance in a taxable account by directing new investment capital toward underweighted assets rather than selling overweighted ones.

“Should I roll over my old 401(k) into a new IRA?”

In 2026, rolling over an old 401(k) into a consolidated IRA often makes sense to gain better investment options and lower fees. However, be cautious if you plan on doing a “Backdoor Roth IRA,” as a large Traditional IRA balance can trigger the Pro-Rata Rule, increasing your tax liability.

“Why should I update my retirement contributions after tax season?”

Updating after tax season allows you to use your recently filed tax data to determine if you need to lower your taxable income to avoid higher tax brackets or qualify for specific credits. It also ensures you are taking full advantage of the increased 2026 contribution limits.

“How much capital loss can I use to offset income in 2026?”

In 2026, you can use capital losses to offset 100% of your capital gains. If your losses exceed your gains, you can use up to $3,000 ($1,500 if Married Filing Separately) to offset ordinary income like wages or interest. Any remaining loss can be carried forward to future tax years indefinitely.

“Why should I change my withholding after tax season?”

You should change your withholding to align your tax payments with your actual liability. Adjusting now allows you to spread any necessary increases over many paychecks, rather than facing a large bill or penalty at the end of the year.