2026 is here! While our calendars may be filled with holiday activities, this is also an opportunity to take time and make financial preparations for the new year. Here are three areas to consider making changes that will bring dividends down the road, taxes, savings, and budgeting. In many ways, the three are related.
You have until the tax filing deadline (April 15) to make 2025 contributions to traditional IRAs, Roth IRAs and Health Savings Accounts (HSA). Doing so may lower your tax bill. The 2025 limit for IRA contributions is $7,000 and an additional $1,000 for those over 50. If you qualify for a deductible IRA, the contribution will lower your 2025 tax bill. Even if your income does not allow a deductible IRA contribution you can still help your future self by making an IRA contribution. A Roth contribution will have no effect on the 2025 tax bill but future withdrawals (after age 59 ½ and 5 years in the Roth IRA) will be tax free. The 2025 contribution limits for HSAs are $4,300 for self-coverage or $8,550 for family coverage. If you are over age 55 you can add an additional $1,000 catch up contribution. You must have a High Deductible Health Plan to be able to make HSA contributions. Making HSA contributions lowers your adjusted gross income and thus, your tax bill.
For many, the new year brings a salary increase. If it does not kick in on January 1, your company may have a different date for this increase. Many companies award bonuses early in the new year for the previous year’s accomplishments. What is your plan for the extra income? Without a plan you are likely to squander the surplus. The time to plan what you will do with the extra cash is before it arrives. Do you need to beef up your emergency fund? Do you need to start saving for a college education for a child? Is it time to increase your savings into the company retirement plan? Is there a project you want to get done around the house? Is there a vacation you’ve been dreaming about? Determine now to take the extra and put it aside for whatever you decide is your priority. The new year is also a good time for a family budget reset. Review the past year’s credit card and bank statements and see if your spending matches your priorities.
It’s not too early to start planning for tax filing. While most tax payers will use the standard deduction, you may qualify for itemized deductions. Did you have unusual medical expenses in 2025? Have you made considerable charitable contributions? If so, you should gather your receipts now. If you delay you will probably skip the possibility of itemizing and just take the standard deduction. Are you expecting to write a check in April for taxes owed and possibly a penalty for not having enough withheld? Are you expecting a whopping refund? If either of these is true you may not be having enough tax withheld from your paycheck or perhaps too much withheld. Talk with your payroll department about adjusting your tax withholding. If you are beyond your working years, you may want to consider making quarterly estimated payments in 2026 to avoid a penalty.
For most 401k savers, 2025 was a good year. The stock market is up and your retirement plan probably needs to be rebalanced. Now is the time to take some of the gains and bring your portfolio back in line with your initial plan.
Don’t look at these suggestions as a major overhaul of your financial life. Doing so may overwhelm you and that thought may cause you to avoid any changes. Rather, look at these as minor tweaks to a good plan. Peck away at them as you go and set yourself up for a better financial future. And before making any of these moves remember to consult your financial advisor or tax professional.