6 Midyear Tax Moves to Consider Now: A Summer Tax Tune-Up for Future Savings

Tax season may feel safely behind you. After filing your 2025 return, it is tempting to put taxes out of your mind until next spring. But from a financial planning perspective, summer can be one of the best times of the year to make smart tax moves.

Why? Because you still have time.

By midyear, you have enough information to see how 2026 is shaping up, but you still have several months left to adjust your paycheck withholding, increase retirement contributions, organize deductions, harvest investment losses, and think through retirement-account strategies. Waiting until the last few weeks of the year often limits your options. Starting now may help you avoid surprises and potentially lower your tax bill when you file your 2026 return in 2027.

Here are six midyear tax planning moves worth considering.

1. Review Your W-4 Withholding

Many people fill out Form W-4 when they start a new job and never look at it again. That can be a mistake. Your W-4 tells your employer how much federal income tax to withhold from your paycheck. If your life, income, or deductions have changed, your withholding may no longer match your actual tax situation.

Withhold too little, and you could face a larger-than-expected tax bill next April. Withhold too much, and you may get a big refund, but only after giving the government an interest-free loan throughout the year. A refund may feel good, but steady cash flow during the year can be more useful for savings, investing, paying debt, or covering family expenses.

There are several reasons to revisit your W-4 this summer.

First, you may have added a dependent. If you had a child, adopted a child, or otherwise added a qualifying dependent since you last updated your W-4, your tax credits may change. The Child Tax Credit can be worth up to $2,200 per qualifying child under age 17 and directly reduces your tax bill dollar for dollar. Dependents who do not qualify for the Child Tax Credit may still qualify for the Credit for Other Dependents, which can be worth up to $500. Updating your W-4 can help your withholding better reflect those credits.

Second, you may have taken on additional work. If you have more than one job, or if your spouse works, the withholding calculation becomes more complicated. Filling out two W-4 forms the same way can result in too little tax being withheld. If you have freelance, gig, or contract income reported on Form 1099-NEC, taxes may not be withheld at all. In that case, you may need to make quarterly estimated tax payments or increase withholding from your W-2 job to cover the extra income.

Third, you may plan to itemize deductions this year. If you expect itemized deductions to exceed the standard deduction, you can reflect that on your W-4, which may reduce your withholding for the rest of the year.

A simple question can help: How did your 2025 tax filing go? If you owed a large amount or received an unusually large refund, your W-4 may deserve a second look. Your HR department can usually explain how to submit a new form and when the change will take effect.

2. Look for Tax Losses to Harvest

If you have a taxable brokerage account, summer is a good time to look at your portfolio’s winners and losers. Tax-loss harvesting is the strategy of selling investments at a loss to offset realized capital gains. If your losses exceed your gains, you may also be able to use up to $3,000 of losses to offset ordinary income each year, depending on your filing status.

This can be especially useful in a volatile market. You may have positions that are down even if your overall portfolio is still doing well. Realizing those losses can create a tax asset that helps reduce current or future taxable gains.

However, tax-loss harvesting should not be done blindly. The goal is not simply to sell losing investments. The goal is to reduce taxes while keeping your investment plan intact. If an investment still fits your long-term strategy, you may want to replace it with a similar—but not substantially identical—security so your portfolio remains aligned with your target allocation.

For example, an investor who sells one broad-market ETF at a loss may consider buying another broad-market fund with a different index or strategy. But be careful: the wash-sale rule prevents you from claiming a tax loss if you buy the same or a “substantially identical” investment within a 61-day window, which includes 30 days before and 30 days after the sale.

Tax-loss harvesting is most relevant in taxable accounts, not retirement accounts. Also, the details can get tricky, especially if you trade frequently or use multiple brokerage accounts. Some platforms, including Fidelity, offer tax-loss harvesting tools for eligible taxable accounts with realized gains and unrealized losses. These tools can help identify opportunities, but you should still review any action with your broader investment plan in mind.

3. Reconsider Whether Itemizing Makes Sense

For many taxpayers, the standard deduction is the easiest and best choice. But not always. If your financial life changed in 2026, it may be worth checking whether itemizing could save you more.

For tax year 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly. To benefit from itemizing, your eligible deductions generally need to exceed those amounts.

There are five main categories of itemized deductions: medical expenses, home mortgage interest, state and local taxes, charitable contributions, and theft or casualty losses from a federally declared disaster. Each category has its own limits and rules. For example, unreimbursed medical expenses are deductible only to the extent they exceed 7.5% of adjusted gross income. Charitable contributions may also be subject to income-related limitations, including a 0.5% AGI floor under the rules described in the source material.

This year, itemizing may deserve extra attention if you bought a home, paid significant mortgage interest, had large out-of-pocket medical costs, made charitable gifts, or live in a high-tax state.

Another important factor is the state and local tax deduction, often called SALT. Tax legislation from 2025 increased the SALT deduction limit to $40,000 for tax years 2025 through 2028, subject to income phaseouts. That change could make itemizing more attractive for taxpayers in high-tax states or those with large property tax bills.

If you expect to itemize, start organizing records now. Save receipts, donation confirmations, mortgage interest documents, property tax records, and medical expense documentation. Good records can make tax filing easier and help you avoid missing deductions.

Planning early can also help with charitable giving. If you normally take the standard deduction but expect to itemize this year, you might consider “bunching” several years of charitable donations into 2026. That could help push your itemized deductions above the standard deduction threshold.

High-income taxpayers should also be aware that starting in 2026, the value of itemized deductions is capped at 35% for those in the 37% tax bracket. In practical terms, each dollar of eligible charitable donations above the applicable AGI floor may provide no more than 35 cents of tax benefit for taxpayers in that top bracket.

4. Boost Pre-Tax Contributions

One of the most straightforward ways to reduce taxable income is to increase pre-tax contributions. Contributions to traditional employer retirement plans, traditional IRAs, and health savings accounts may reduce current federal taxable income when made with pre-tax dollars.

If your budget allows, consider whether you can increase contributions during the second half of the year.

For 2026, employees participating in 401(k) and 403(b) plans can generally contribute up to $24,500. Those age 50 or older can make catch-up contributions of up to $8,000. Individuals ages 60 through 63 may qualify for a higher catch-up contribution of $11,250 in eligible retirement plans.

Traditional IRA contributions can also help, depending on your income, filing status, and whether you or your spouse are covered by a workplace retirement plan. For 2026, the IRA contribution limit is $7,500, or $8,600 for those age 50 or older. You generally have until the federal tax filing deadline in April 2027 to make a 2026 IRA contribution.

Roth IRA contributions do not provide a current-year deduction, but they can still be valuable because qualified withdrawals in retirement may be tax-free. So the choice between traditional and Roth should be based not only on this year’s tax bill, but also on your long-term tax outlook.

Health savings accounts are another powerful planning tool if you are enrolled in a qualifying high-deductible health plan. For 2026, the HSA contribution limit is $4,400 for self-only coverage and $8,750 for family coverage. Those age 55 or older can contribute an additional $1,000. If both spouses are HSA-eligible, have their own HSAs, and are at least age 55, each spouse can make a separate $1,000 catch-up contribution, bringing the combined family opportunity to $10,750.

An HSA is different from a flexible spending account because unused money can stay in the account year after year. It may even be invested for long-term growth. Qualified medical withdrawals are tax-free, and after age 65, HSA money can be used for nonmedical expenses without penalty, although those withdrawals are taxable.

Pre-tax contributions may lower your tax bill today, but they also serve a larger purpose: building long-term financial security.

5. Plan Ahead for Required Minimum Distributions

If you are retired or approaching retirement, midyear is a smart time to review required minimum distributions, or RMDs.

The SECURE 2.0 Act increased the age at which many retirement-account owners must begin taking RMDs from 72 to 73. Starting in 2033, the RMD starting age moves to 75 for those born in 1960 or later.

RMDs generally apply to traditional IRAs and traditional workplace retirement plans such as 401(k)s. Because these accounts were funded with pre-tax dollars, withdrawals are usually taxable as ordinary income. Failing to take an RMD can result in penalties, so this is not an area to leave until the last minute.

The SECURE 2.0 Act reduced the penalty for missing an RMD from 50% to 25% of the amount not taken. The penalty may be reduced further to 10% if the mistake is corrected in time and the taxpayer files the necessary correction.

Planning ahead can help reduce the tax bite. Depending on your situation, you may consider spreading withdrawals over the year, coordinating distributions with other income, using qualified charitable distributions, or evaluating Roth conversions before RMDs begin. The right approach depends on your income, age, account balances, charitable goals, and long-term retirement plan.

6. Consider Roth Strategies

Roth accounts can be powerful because qualified withdrawals are tax-free and Roth IRAs do not have lifetime RMDs for the original owner. That makes Roth strategies worth reviewing, especially during the summer when you still have time to plan.

A Roth conversion involves moving money from a traditional IRA into a Roth IRA. The converted amount is generally taxable in the year of conversion, but after that, the money can potentially grow tax-free and be withdrawn tax-free if the rules are met.

A Roth conversion may make sense if you are currently in a lower tax bracket than you expect to be in later. It may also be attractive in a market downturn, because converting depressed assets can reduce the tax cost of moving them into a Roth account. If those assets later recover inside the Roth, future qualified growth may be tax-free.

High earners may also consider a backdoor Roth IRA strategy. This generally involves making a nondeductible contribution to a traditional IRA and then converting that amount to a Roth IRA. This is different from a typical Roth conversion, which usually involves converting pre-tax traditional IRA funds. Backdoor Roth strategies can be useful, but they require careful attention to existing IRA balances and tax rules, including the pro rata rule.

Roth planning is not automatically right for everyone. It can increase your tax bill in the current year, and the benefit depends heavily on your future tax rates, cash flow, retirement timeline, and estate planning goals.

Final Thoughts: Pick the Tax Moves That Fit Your Life

A good summer tax tune-up does not require you to overhaul your entire financial life. Sometimes the best move is simple: update your W-4, increase your 401(k) contribution by 1%, save your receipts, or review your taxable portfolio for harvesting opportunities.

The key is to act while you still have time. By reviewing your withholding, tax-loss harvesting opportunities, itemized deductions, pre-tax contributions, RMD obligations, and Roth strategies now, you may be able to reduce stress and improve your tax outcome next spring.

Everyone’s tax situation is different. Before making major tax or investment decisions, consider speaking with a qualified tax professional or financial advisor. With a little planning this summer, you can head into next tax season with more confidence—and possibly more savings.