The Q4 Tax Playbook: 7 Moves Before December 31, Six Figures in Savings

If you haven’t touched your year-end tax planning since your CPA filed your extension back in April, that’s fine. The window to act is wider now than it will be in eight weeks. December pressure makes people rush; September and October do not have to.

For many surgeons, Q4 tax planning becomes a single event around the holidays—compressed and reactive. That approach can create missed opportunities. Several potentially valuable strategies take time to evaluate and implement, and some involve plan-administrator, custodian, payroll, actuarial, or vendor deadlines that occur well before December 31.

Here are seven planning areas to review now, in the order worth tackling them.

1. Max out your 401(k), including any catch-up contribution

For 2026, the employee elective-deferral limit for a 401(k) is $24,500. If you are age 50 or older, your plan may permit an additional $8,000 catch-up contribution.

If you turn age 60, 61, 62, or 63 during 2026, the higher catch-up limit is $11,250 instead of the standard $8,000 catch-up. That produces a potential total employee deferral of $35,750 for the year: $24,500 plus $11,250. The higher catch-up does not stack on top of the regular catch-up.

One important 2026 change: if you had more than $150,000 of FICA wages from the same employer in the prior calendar year, catch-up contributions generally must be made on a Roth basis if your plan permits catch-up contributions. Roth contributions do not reduce current taxable income, even though qualified future distributions may be tax-free. Confirm how your plan applies this rule before assuming a catch-up contribution will produce a current-year deduction.

2. Confirm your cash balance plan contribution is on pace

A cash balance or defined-benefit plan can be one of the largest available planning levers for a high-income practice owner. Contributions may reach well into six figures, depending on age, compensation, plan design, participant demographics, required funding, and actuarial assumptions.

Do not assume a contribution decision can wait until December. Cash balance plans may have plan-specific actuarial, funding, notice, amendment, payroll, and operational deadlines. Coordinate now with your enrolled actuary, third-party administrator, CPA, and payroll provider.

Employer retirement-plan contributions generally may be deductible for the tax year if made by the due date of the business tax return, including extensions. That general rule does not eliminate plan-specific requirements or the need for advance actuarial work.

3. Execute tax-loss harvesting deliberately

If positions in a taxable investment account are trading below their cost basis, realizing losses may help offset capital gains and, in some circumstances, up to $3,000 of ordinary income. Unused net capital losses may generally carry forward to future tax years.

The mechanics matter. A wash sale can occur when you sell stock or securities at a loss and acquire substantially identical securities during the 30 days before or after the sale. That includes purchases in taxable accounts and can also involve purchases in an IRA, Roth IRA, a spouse’s account, dividend-reinvestment program, or automatic investment plan.

Review your full household trading activity before realizing a loss. A replacement purchase in an IRA or Roth IRA can be especially problematic because the disallowed loss may not be added to the basis of a taxable replacement position.

The tax year of a securities sale is generally determined by trade date, but custodians may have operational cutoffs near year-end. Planning in October or early November often allows more time to evaluate replacement holdings, preserve the intended portfolio allocation, and avoid a rushed December decision.

Tax-loss harvesting is not automatically beneficial. It can create transaction costs, alter portfolio exposures, use up loss carryforwards that may be more valuable later, or produce a lower basis in a replacement investment.

4. Fund the HSA, if eligible

For 2026, the HSA contribution limit is $4,400 for self-only HDHP coverage and $8,750 for family HDHP coverage. Individuals age 55 or older may generally contribute an additional $1,000 catch-up amount, provided they are eligible to make HSA contributions.

An HSA can be among the most tax-efficient savings vehicles available for eligible individuals: contributions may be deductible or excluded from income, investment growth is generally tax-deferred, and distributions for qualified medical expenses are generally tax-free.

Eligibility matters. You generally must be covered by a qualifying high-deductible health plan, have no disqualifying health coverage, not be enrolled in Medicare, and not be claimed as another person’s dependent. Employer contributions count toward the annual limit, and excess contributions can create tax and penalty issues.

5. Decide whether to accelerate or defer practice income

The right answer depends on your current and projected tax picture.

If 2026 is likely to be a lower-income year than 2027, it may be worthwhile to explore accelerating income into 2026. If you expect 2027 income or marginal rates to be lower, deferring income may be more appropriate. The analysis can also depend on your entity type, accounting method, state residency, estimated-tax payments, retirement-plan funding, deductions, and expected capital gains.

There is no universal answer. Run the comparison with your CPA rather than automatically repeating last year’s approach.

6. Consider bunching charitable gifts through a donor-advised fund

Beginning in 2026, itemized charitable deductions are generally subject to a 0.5% of AGI floor. In practical terms, an itemizer generally must make aggregate eligible charitable contributions above 0.5% of contribution-base AGI before receiving a charitable itemized deduction.

At $1.2 million of AGI, that floor equals $6,000:

$1,200,000 × 0.5% = $6,000

A donor-advised fund can be useful when you already intend to make charitable gifts over multiple years and would otherwise itemize deductions. By contributing several years of intended giving in one year, you may clear the 0.5% floor once rather than potentially falling below it in multiple years. You receive the potential charitable deduction when you make an irrevocable contribution to a qualifying donor-advised fund sponsoring organization—not when the fund later distributes grants to charities.

For qualifying cash contributions to public charities, the 60%-of-AGI limitation was made permanent. Different limits may apply to gifts of appreciated property, gifts to private foundations, and gifts to other types of organizations.

A donor-advised fund is not appropriate in every case. Confirm that the sponsoring organization accepts the intended contribution, understand applicable substantiation and valuation requirements, and consider whether total itemized deductions will exceed the standard deduction for the year.

7. Time equipment purchases to qualify

For tax years beginning in 2026, the Section 179 maximum deduction is $2,560,000, with the deduction phaseout beginning once qualifying Section 179 property placed in service during the year exceeds $4,090,000.

Section 179 may allow a business to expense all or part of the cost of qualifying property in the year it is placed in service. Section 179 has eligibility and taxable-income limitations, and the property generally must be used more than 50% for qualified business use.

In addition, 100% bonus depreciation is permanently available for eligible qualified property acquired and placed in service after January 19, 2025, subject to the applicable rules.

The key point is that qualifying equipment must be placed in service—ready and available for its intended business use—by December 31. Ordering or paying for equipment alone is not enough.

If you are evaluating an imaging system, surgical technology upgrade, software system, vehicle, or other practice equipment, begin the analysis early. Confirm that the asset qualifies, determine whether Section 179, bonus depreciation, regular depreciation, or a combination is most appropriate, and account for delivery, installation, financing, and operational-readiness timing.

What this can add up to

Consider a surgeon with $1.2 million of practice income, age 61, reviewing each of these areas before year-end.

The higher age-60-through-63 catch-up is $3,250 larger than the regular age-50-plus catch-up:

$11,250 − $8,000 = $3,250

If that incremental amount is eligible for pre-tax treatment and the taxpayer is in the 37% federal marginal bracket, the incremental current federal tax reduction could be approximately $1,203:

$3,250 × 37% = $1,202.50

However, many higher-wage employees will be required to make catch-up contributions on a Roth basis in 2026, in which case there may be no immediate federal income-tax deduction for the catch-up contribution.

A deductible $200,000 cash balance plan contribution could reduce federal income tax by up to approximately $74,000 at a 37% marginal federal rate:

$200,000 × 37% = $74,000

A fully deductible $8,750 family HSA contribution could reduce federal income tax by approximately $3,238 at that same marginal rate:

$8,750 × 37% = $3,237.50

If a taxpayer contributes $150,000 to a donor-advised fund, meets the applicable requirements, itemizes deductions, and remains within the relevant deduction limits, the deduction may be substantially more valuable than making smaller annual gifts that repeatedly encounter the 0.5% AGI floor.

Finally, a $150,000 qualifying equipment purchase that is placed in service during the year could potentially produce up to a $150,000 first-year deduction through Section 179, bonus depreciation, or a combination of the two. At a 37% federal marginal rate, that could reduce current federal income tax by up to approximately $55,500:

$150,000 × 37% = $55,500

The actual tax result depends on eligibility, entity structure, earned income, taxable income, business use, state tax treatment, depreciation rules, and other deductions and limitations. Depreciation deductions can accelerate tax benefits into the current year and may affect future deductions, gain recognition, or depreciation recapture if property is later disposed of.

The real deadline is earlier

December 31 is an important deadline for many year-end planning strategies. But the practical deadline is often earlier: when your payroll provider needs instructions, when your custodian requires paperwork, when your plan administrator needs actuarial data, or when your vendor must deliver and install equipment so it is actually placed in service before year-end.

Start now, coordinate with the professionals involved, and use the remaining months of the year for intentional implementation rather than December triage.

Capably Yours,

Jared

DISCLAIMER

This article is for informational and educational purposes only and does not constitute investment, tax, or legal advice. It does not take into account the specific objectives, financial situation, or needs of any particular person. You should consult your own tax, legal, and investment professionals before acting on any information contained herein. Capable Wealth, a New York registered investment adviser, provides advisory services only where properly licensed or exempt from licensing.