As fall settles over Massachusetts, most people turn their attention to the holidays. It is also the right moment to focus on income tax planning. The last few months of the year give you time to review your finances, take advantage of deductions while they still count, and build a plan for next year.
At Roark & Mansur Law, we encourage clients to treat income tax planning and estate planning as one conversation. The tax decisions you make this fall can affect what you leave behind, and your estate plan can affect how much tax you and your family pay.
Why Is Fall the Best Time for Year-End Tax Planning?
Many tax-saving moves must be completed by December 31. Waiting until the last week of the year leaves little room to gather records, talk with your advisors, or fix a problem you did not see coming.
Starting in October or November lets you review your income for the year and estimate where you will land. You can then decide whether it makes sense to defer income, increase retirement contributions, or move charitable gifts into this year. Reviewing potential deductions early also helps you avoid rushed decisions that may not fit your long-term goals.
Why Should Tax and Estate Planning Go Together?
Income tax planning looks at what you owe this year. Estate planning looks at what happens to your assets after you are gone. The two overlap more than most people expect.
For example, retirement accounts, lifetime gifts, and trusts all carry income tax consequences for you and your heirs. Massachusetts residents also face a state estate tax on estates above $2 million, a far lower threshold than the 2026 federal exemption of $15 million per person. When tax and estate planning happen together, each decision supports the other instead of working against it.
How Can Retirement Savings Lower Your Taxable Income?
Retirement savings can be among the most powerful tools in year-end tax planning. Contributions to a traditional (pre-tax) 401(k) or a deductible traditional IRA can reduce your federal taxable income now while building long-term security as part of your retirement planning.
For 2026, you can defer up to $24,500 into a 401(k), plus an $8,000 catch-up contribution if you are 50 or older. Workers ages 60 through 63 can make a higher catch-up of $11,250. The IRA limit is $7,500, or $8,600 with the catch-up. Higher earners may be required to make catch-up contributions to a 401(k) on a Roth basis, so check with your plan administrator.
Timing matters. 401(k) deferrals generally must come out of paychecks by December 31, while IRA contributions for 2026 can usually be made until the April 2027 filing deadline. Keep in mind that Massachusetts does not allow a state income tax deduction for traditional IRA contributions, although 401(k) deferrals still reduce your state taxable wages.
What Tax Benefits Come With Charitable Giving?
Charitable giving lets you support causes you care about while lowering your tax bill. Federal rules changed for 2026, so this year is a good time to revisit your approach.
If you take the standard deduction, you can now deduct up to $1,000 in cash gifts to qualifying charities, or $2,000 for married couples filing jointly. If you itemize, only the portion of your charitable gifts above 0.5% of your adjusted gross income is deductible. Options worth discussing with your advisors include:
- Gifts of appreciated stock, which can avoid capital gains tax on the growth
- Donor-advised funds, which let you take a deduction now and recommend grants over time
- “Bunching” gifts, or combining several years of giving into one year to clear the itemizing threshold
- Qualified charitable distributions (QCDs), which let IRA owners age 70½ or older send up to $111,000 directly to charity in 2026 without counting it as taxable income
- Charitable trusts, which can provide income to you or your family and a gift to charity later
What Should You Review in Your Estate Plan Before Year-End?
The end of the year is a natural checkpoint for your estate plan. A short review now can identify gaps or issues before they become costly.
Are You Using Your Annual Gift Tax Exclusion?
In 2026, you can give up to $19,000 to any one person without filing a gift tax return, or $38,000 if you and your spouse split gifts. Unused exclusions do not carry over, so gifts must be completed by December 31. Regular annual gifts can also reduce the size of your estate for Massachusetts estate tax purposes.
Are You Ready for Required Minimum Distributions?
Most people must begin taking required minimum distributions (RMDs) from traditional retirement accounts at age 73. Your first RMD can be delayed until April 1 of the following year, but doing so means taking two distributions in one tax year. Missing an RMD can trigger a penalty, so plan the amount and timing now.
Do Your Beneficiary Designations Match Your Plan?
A beneficiary designation on a retirement account or life insurance policy generally controls who receives that asset, even if your will says something different. Review each designation after a marriage, divorce, birth, or death in the family. Your attorney can confirm that your designations work with your trusts and the rest of your plan.
Do Your Will and Trusts Still Reflect Your Wishes?
Changes in family circumstances, assets, or tax law can leave older documents out of date. Year-end is a good time to update your will, review trust terms, and confirm that your chosen fiduciaries are still the right people for the job.
Frequently Asked Questions About Income Tax Planning
How will my beneficiaries be taxed on my retirement accounts?
Withdrawals from an inherited traditional IRA or 401(k) are generally taxed as ordinary income to the beneficiary. Most non-spouse beneficiaries must empty the account within 10 years of the owner’s death. Inherited Roth IRAs follow the same 10-year rule, but qualified withdrawals are usually tax-free, which makes Roth accounts a valuable asset to leave to heirs.
Can a trust or estate deduct charitable contributions, and to what extent?
Yes. Under federal tax law, a non-grantor trust or an estate can deduct amounts paid to charity from its gross income if the governing document authorizes the gift. Unlike individuals, these trusts and estates generally are not subject to percentage-of-income limits, but the gift must come from income rather than principal.
How will the income generated by a trust be treated for tax purposes?
Income from a revocable trust is taxed to you as the grantor. For an irrevocable non-grantor trust, income distributed to beneficiaries is generally taxed to them, while income the trust keeps is taxed to the trust. Trusts reach the top 37% federal bracket at a little over $16,000 of income, so distribution planning matters.
Should I do a Roth conversion before RMDs start?
It can make sense, especially in lower-income years between retirement and age 73. You pay income tax on the converted amount now, but Roth IRAs have no lifetime RMDs and can pass to heirs tax-free. Once RMDs begin, you must take that year’s RMD before converting, and the RMD itself cannot be converted.
Protect Your Legacy With Integrated Tax and Estate Planning
Income tax planning works best when it is part of a larger strategy. Integrating tax planning with estate planning helps you keep more of what you earn today and makes sure your legacy is protected for the people and causes you care about.
Our estate planning attorneys at Roark & Mansur Law help Massachusetts individuals and families review their plans and make informed decisions before year-end. Contact us today to schedule a consultation.