High-Net-Worth Tax Strategies: Year-end Planning for Individuals and Families

Key Takeaways for High and Ultra-High-Net-Worth Individuals and Families

• Take a coordinated approach to year-end planning. Investment activity, charitable giving, retirement distributions, income timing and wealth transfers can affect one another, making it important to evaluate tax strategies as part of a broader financial plan.
• Review investment, charitable and retirement strategies before year-end. Tax-loss or gain harvesting, charitable contributions, Roth conversions and required minimum distributions can create planning opportunities when aligned with longer-term financial objectives.
• Evaluate opportunities to transfer and preserve wealth. Annual and lifetime gifting, trust and asset protection planning, and other estate strategies can help advance family and legacy goals while addressing potential income, gift, and estate tax implications.
• Look beyond federal income taxes. State and local taxes, estate considerations, business interests, and changing residency or liquidity needs can significantly influence which year-end strategies make sense.

7 Year-end Tax Strategies for High-net-Worth Individuals

Whether you own a business, invest in real estate, or need to explore wealth transfer options, the strategies below offer a comprehensive foundation for high-net-worth tax planning.

1. Harvest Investment Gains and Tax Losses

A year-end portfolio review can help determine whether realizing selected gains or losses supports both your investment strategy and tax position. Capital losses generally offset capital gains, while net capital losses may offset a limited amount of ordinary income, with unused amounts potentially carried forward to future years. Capital assets held for more than one year are generally treated as long-term, while assets held for one year or less are generally treated as short-term.

Tax-loss harvesting should not be viewed as a stand-alone exercise. Selling an investment solely to generate a loss could disrupt portfolio objectives and purchasing the same or a substantially identical security within the wash-sale period can defer the intended loss. Before trading, consider:

• Realized gains and losses across all taxable accounts
• Existing capital-loss carryforwards
• The holding period of each investment
• Portfolio concentration and rebalancing goals
• The potential application of the 3.8% net investment income tax
• State income-tax consequences

The net investment income tax generally applies at a rate of 3.8% to the lesser of net investment income or modified adjusted gross income above $200,000 for single and head-of-household filers, $250,000 for married couples filing jointly, and $125,000 for married individuals filing separately. Because these thresholds are not indexed for inflation, the tax can be an important part of planning for higher-income investors.

2. Maximize Charitable Giving Impact

While year-end charitable planning begins with identifying the causes you want to support, the form and timing of a gift can materially affect its tax treatment. Individuals holding appreciated, publicly traded securities may want to compare donating those assets directly with selling them and contributing cash. A direct contribution may provide a deduction based on the asset’s fair market value, subject to applicable limitations, while potentially avoiding recognition of the embedded capital gain.

A donor-advised fund may help an individual make a deductible contribution in 2026 while distributing grants to operating charities over time. Taxpayers who expect deductions to vary significantly from year to year may also consider “bunching” several years of planned contributions into one tax year, potentially making itemization more beneficial.

Evaluate Whether a Roth Conversion Makes Sense

Converting assets from a traditional individual retirement account (IRA) or other eligible retirement account to a Roth IRA can create taxable income in the year of conversion. In exchange, qualified future Roth IRA distributions may be tax-free, and Roth IRAs do not require lifetime distributions from the original account owner.

A conversion may warrant consideration when an individual:

• Expects to be in a higher tax bracket in future years
• Has a temporary reduction in taxable income
• Wants to reduce future required minimum distributions
• Can pay the conversion-related tax from assets outside the retirement account
• Wants to leave beneficiaries an asset with the potential for tax-free growth
• Has concentrated or depressed assets expected to appreciate

The amount converted should be modeled carefully, as a conversion can push income into a higher federal or state bracket, increase net investment income tax exposure, affect income-based deductions, and alter Medicare premium surcharges. For 2026, the top federal individual income-tax rate remains 37%, applying to taxable income above $640,600 for single filers and $768,700 for married couples filing jointly. The alternative minimum tax exemption is $90,100 for unmarried individuals and $140,200 for married couples filing jointly, with phaseouts beginning at $500,000 and $1 million, respectively.

Rather than converting an entire account at once, some taxpayers may benefit from a series of partial conversions coordinated with their projected income over multiple years. Because Roth conversions generally cannot be recharacterized back to a traditional IRA, projections should incorporate market risk, liquidity, and the taxpayer’s broader estate plan.

4. Transfer Wealth Through Gifting and Trust Planning

Year-end gifting can move assets and future appreciation outside a taxable estate while advancing family, education or philanthropic goals. For 2026, an individual may generally give up to $19,000 per recipient under the annual gift tax exclusion. Married couples may be able to transfer up to $38,000 per recipient when each spouse makes a qualifying gift, although gift-splitting elections and certain transfers may trigger gift-tax return filing requirements.

The 2026 basic federal estate and gift tax exclusion is $15 million per individual. That amount is up from the $13.99 million exclusion for lifetime gifts and estates of individuals who died in 2025.

Depending on the family’s objectives, planning may include:

• Outright annual-exclusion gifts
• Direct payment of qualifying tuition or medical expenses
• Gifts to irrevocable trusts
• Transfers of interests in a family business
• Grantor retained annuity trusts
• Spousal lifetime access trusts
• Intrafamily loans or sales
• Charitable trusts

In addition to tax efficiency, individuals should evaluate how a transfer affects control, cash flow access, asset protection, and family dynamics.

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5. Manage Required Minimum Distributions and Retirement Income

Review all retirement accounts to determine whether the full 2026 required minimum distributions (RMD) have been, or will be, distributed by the applicable deadline. Individuals taking their first RMD should consider whether delaying it until the following April could result in two taxable distributions in one year, potentially increasing their marginal rate or affecting other income-based calculations.

Individuals who are still working should also review retirement-plan contributions. For 2026, $24,500 is the employee deferral limit for 401(k), 403(b), and most governmental 457 plans. The general catch-up contribution for participants aged 50 or older is $8,000, while participants aged 60 through 63 may qualify for an $11,250 catch-up contribution. The combined traditional and Roth IRA contribution limit is $7,500, with an additional $1,100 available for eligible taxpayers age 50 or older, subject to income and participation rules.

6. Time Income and Deductions To Reduce Your Tax Burden

The timing of income and deductible expenses can affect marginal tax rates, deduction limitations and exposure to income-based taxes. Individuals expecting significant business income, a liquidity event, investment gains, equity compensation or other variable income should prepare a multi-year projection before accelerating or deferring transactions.

Any timing strategy should consider the alternative minimum tax, net investment income tax and state tax rules. Moving income or deductions from one year to another may not generate a permanent saving if the transaction creates an offsetting cost, causes another limitation to apply or shifts income into a higher-tax jurisdiction.

7. Coordinate State, Business and Estate-planning Decisions 

Federal tax planning may not capture the full picture for many high-net-worth families. A change in domicile, the sale of a business, a trust distribution, or a large investment transaction can have materially different results across state and local jurisdictions.

Before year-end, individuals who split time among several residences should review domicile, statutory residency, source-income and recordkeeping requirements. Simply owning a home in another state or spending fewer than a certain number of days in one location may not, by itself, establish a change of domicile.

Additionally, business owners should coordinate their individual planning with entity-level decisions. Compensation, retirement-plan contributions, pass-through income, estimated tax payments, business succession and the timing of a potential sale can all affect the owner’s personal tax position.

It’s also important to review estate documents and asset titling after major life or financial events. A technically sound trust arrangement may not achieve its intended purpose when beneficiary designations, account ownership or funding have not been updated.

Year-end Tax Planning Action Items for High-net-Worth Individuals and Families

Use the following action items to guide discussions with your tax, legal, investment and wealth-planning advisors.

• Update Your 2026 Tax Projection: Incorporate investment transactions, pass-through income, retirement withdrawals, equity compensation, charitable gifts and other significant activity into your tax projection.
• Review Realized and Unrealized Gains and Losses: Identify tax-loss or gain-harvesting opportunities while testing each transaction against portfolio objectives and wash-sale considerations.
• Model the Net Investment Income Tax: Determine whether investment gains, passive income or Roth conversion activity could increase exposure to the 3.8% tax.
• Finalize Charitable Contributions: Confirm that securities, donor-advised fund contributions, and complex noncash gifts can be transferred and acknowledged by year-end.
• Confirm Required Minimum Distributions: Verify the amount, source and timing of each required distribution, including distributions from inherited accounts.
• Maximize Eligible Retirement Contributions: Review payroll deferrals, catch-up contributions, and retirement-plan opportunities for family-owned or closely held businesses.
• Assess Annual and Lifetime Gifts: Review available exclusions, liquidity, basis implications, valuations and gift-tax reporting requirements.
• Check Estimated Payments and Withholding: Compare total payments with projected liability, particularly after a large capital gain, business transaction or retirement account distribution.
• Review Estate Documents and Beneficiary Designations: Confirm that wills, trusts, powers of attorney, account titles and beneficiary elections remain aligned with current objectives.
• Evaluate State Tax Exposure: Document residency and domicile factors. Additionally, consider the sourcing of income from businesses, partnerships, trusts and property.
• Coordinate Across Advisors: Bring tax, legal, investment and insurance professionals together before executing a strategy that affects multiple areas of the plan.

For more insights into specific year-end tax planning for individuals, read our 2026 tax planning checklist article.

Your Guide Forward

Each individual’s tax situation is unique, and Cherry Bekaert’s Private Client Services professionals are experienced in identifying the most effective year-end planning strategies tailored to your financial goals and position. Reach out to a Cherry Bekaert advisor to learn more about our services or to initiate your year-end tax planning.

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