Key Takeaways
- Getting organized early helps prevent missing income documents and IRS matching issues later.
- January is the best time to check withholding and estimated tax payments for the year ahead.
- Contribution limits for retirement and health-related accounts reset, and planning now makes them easier to hit.
- Waiting until tax season often means fewer options, more stress, and less control.
It’s a new year. And that means tax season and the nagging background thought in your head: “I should probably deal with my taxes soon” (sans urgency in January).
But I’d love to get you thinking about how this month is ALSO when you can make key choices that make this year’s taxes easier on future-you: Like whether your records land in one place, your withholding gets reviewed, or estimates are calculated now.
So, why not let this year’s resolution include getting strategy-minded in January instead of after tax filing? Here’s how you can kickstart tax planning strategies here in early January.
“What are tax planning strategies you should use first in 2026?”
#1: Get organized
It’s funny how all good strategies start with getting things in order. And while you might not be waking up excited to organize tax paperwork, this is an essential starting point.
Because most tax problems I see later in the year can be traced back to missing information.
So, figure out what’s coming now so that you’re not stuck later waiting on one missing document when everything else is ready to go.
While you can put some things in order now, others you’ll have to wait to get your hands on until they get sent. Most individual tax documents are issued by January 31, like W-2s, most 1099s, and Social Security documents. Others, like Partnership K-1s and some brokerage forms, often arrive in February or even March.
If you use a tax organizer, access it for this purpose. If not, a simple labeled folder (physical or digital) works just fine. The goal is one place where everything lands.
One other small January step that will save you grief later: make sure your address is updated with your Tracy employer(s), bank, brokerage, and any other platforms tied to your tax standing. If a form goes to the IRS but never makes it onto your return, you’re almost guaranteed follow-up letters and possible amendments later.
#2: Do some “back-of-the-envelope” math
You don’t need final numbers yet, but January is a good time to get general estimates on what you’ll owe.
If you owed last year, or if the amount surprised you, this is when we want to understand why. And if you make estimated tax payments, January matters because your final estimated payment for 2025 is due January 15.
Also, looking ahead to the new year, this is the time to revisit your quarterly estimated tax amounts and set calendar reminders for April 15, June 15, September 15, and January 15 (2026) payments don’t get overlooked.
As a general rule, to avoid underpayment penalties, you typically need to:
- Pay at least 90% of your current-year tax, or
- Pay 100% of the prior year’s tax (110% for higher-income taxpayers)
#3: Check on your withholding
Tax brackets adjust for inflation. Standard deductions change. That means withholding that worked last year may not work this year.
January is the best time to review your withholding and make small adjustments that are spread out over the entire year.
This is especially worth checking if you changed jobs or income levels, you added (or dropped) side or contract income, or you owed unexpectedly last year.
( I’m glad to help you get a clear picture of how your tax situation may have changed and adjust for it: taxpath-appointment.youcanbook.me/)
#4: Plan your contributions
Every January, contribution limits reset. And every December, I have Tri-Valley Area clients who wish they’d remembered that and planned earlier in the year when it could have made a difference. With that in mind… here are some of the key limits to know heading into 2026:
Health FSA: For the 2026 plan year, you can contribute up to $3,400.
Health Savings Account (HSA): Limits increase to $4,400 for individuals and $8,750 for families.
Workplace retirement (401k/403b): For 2026, the individual deferral limit rises to $24,500 (up from $23,500 in 2025).
IRA contributions: The annual limit for Traditional and Roth IRAs increases to $7,500 for 2026.
Catch-up contributions: The standard catch-up limit for those aged 50+ is $8,000 in 2026 for workplace plans and $1,100 for IRAs. Notably, a new “super” catch-up for those aged 60–63 allows for contributions up to $11,250 in 2026.
January is a great time for you to make proactive decisions about which accounts you’ll prioritize, roughly how much you want to contribute, and whether your contributions will be automatic.
You don’t have to max everything out. But spreading contributions across the year is usually far easier than trying to force them in at the end.
A quick exception to note here: Starting January 1, 2026, if you earned more than $150,000 in FICA wages in 2025, any catch-up contributions you make to your workplace plan (401k, 403b, or 457b) have to be made on a Roth (after-tax) basis. You can’t use those extra catch-up dollars to lower your current taxable income, but you haven’t lost them forever – they’ll grow and be withdrawn tax-free in retirement.
Here’s a table for your reference with more details on contribution limits:
| Account Type | 2026 Contribution Limit | Catch-Up (Age 50+) |
|---|---|---|
| 401(k) / 403(b) | $24,500 | $8,000* ($11,250 for age 60-63) |
| IRA (Roth/Trad) | $7,500 | $1,100 |
| Health FSA | $3,400 | N/A |
| HSA (Self/Family) | $4,400 / $8,750 | $1,000 (Age 55+) |
*Note: High earners (> $150k in 2025) must designate these as Roth.
Final thoughts
If you’re wondering, “How can I reduce my tax bill in 2026?”… my thoughts above will give you a head start.
But if you’re wondering, what are tax planning strategies I’d suggest for your individual situation? Let’s take some time to review where things are at for you and get a plan in place here at the start of the year.
My calendar is open:
taxpath-appointment.youcanbook.me/
FAQs
“What is the 401(k) contribution limit for 2026?”
The 401(k) contribution limit for 2026 is $24,500 for individual deferrals, an increase from $23,500 in 2025. If you are aged 50 or older, the standard catch-up limit is $8,000, while those aged 60–63 may qualify for a “super” catch-up limit of $11,250.
“When is the first day to file taxes in 2026?”
While the IRS has not yet announced the official opening, tax season typically begins in late January (around January 26-27, 2026). You can start organizing documents now, but the IRS cannot process returns until the electronic systems officially open.
“What is the 2026 IRA contribution limit?”
For 2026, the annual contribution limit for both Traditional and Roth IRAs has increased to $7,500 ($8,600 if you’re 50+). This is up from the $7,000 limit set in 2025.
“What should I do if my W-2 or 1099 is missing in January?”
First, check your payroll portal or banking app, as many forms are now digital-only. If it hasn’t arrived by January 31, contact the payer to confirm your mailing address. Filing without a form can lead to an IRS matching notice and delayed refunds.
“Do I need to adjust my tax withholding for 2026?”
Yes, I recommend reviewing your withholding in January because tax brackets and standard deductions are adjusted for inflation annually. A “paycheck check-up” ensures you aren’t underpaying throughout the year, which helps avoid a surprise bill next April.
“What are tax planning strategies I can start in January?”
The best early-year strategies include organizing your 1099 and W-2 documents, adjusting your workplace withholding to match new 2026 tax brackets, and setting up automatic contributions to take advantage of the increased 2026 retirement and FSA limits.
