Tax Strategies You Might Be Missing Out On
Filing your taxes is just one step in a much broader tax planning process – and if it’s the only step you take, you could be leaving meaningful opportunities on the table. True tax planning happens year-round with your Baird Financial Advisor team, helping ensure each financial decision plays a role in the bigger picture.
- Tip 1: Maximize Your Contributions
- Tip 2: Put Your Charitable Gifts to Work
- Tip 3: Consider Strategies to Minimize Capital Gains
- Tip 4: Plan for Any Roth Conversions
- Tip 5: What for Changes
Here are a few strategies you might not be taking full advantage of – and how to make them part of your year-round plan.
Tip 1: Maximize Your Retirement and Other Key Account Contributions
Thoughtfully contributing to your retirement and other tax-advantaged savings accounts, like Health Savings Accounts (HSAs), is one of the most effective ways to reduce your taxes. Depending on the type of account, your contributions may lower your taxable income today while potentially allowing your savings to grow tax-deferred or tax-free over time.
The chart below outlines key contribution limits and tax thresholds for 2026:
| 2025 | 2026 | Change | |
| 401(k) Contribution | $23,500 | $24,500 | + $1,000 |
| 401(k) Catch-Up Contribution (Age 50+) | $7,500 | $8,000 | + $500 |
| 401(k) Super Catch-Up Contribution (Age 60-63) | $3,750 | $3,250 | - $500 |
| IRA Contribution | $7,000 | $7,500 | + $500 |
| IRA Catch-Up Contribution (Age 50+) | $1,000 | $1,100 | + $100 |
| HSA Contribution* | $4,300 / $8,550 | $4,400 / $8,750 | $100 / $200 |
| HSA Catch-Up Contribution (Age 55+) | $1,000 | $1,000 | $0 |
| QCD Contribution | $108,000 | $111,000 | $3,000 |
| Standard Deduction** | $15,000 / $30,000 | $16,100 / $32,200 | $1,100 / $2,200 |
*Individual / family coverage **Single / married filing jointly
As shown above, contribution limits change both over time and as you reach particular ages – making it worth revisiting your contribution strategy regularly with your Baird Financial Advisor team.
Tip 2: Put Your Charitable Contributions To Work
Charitable giving decisions go beyond the amount you donate. Thoughtful planning around what, when and how you give can all influence your tax outcome. The following strategies can all help increase the tax benefit of your giving:
- Bunching. Now that the increased standard deduction has been made permanent by the One Big Beautiful Bill Act (OBBBA), many may find it more challenging to individually deduct charitable donations. However, combining smaller, annual donations into larger ones every other year (often referred to as “bunching”) lets you take the standard deduction one year and itemize the next – ultimately maximizing your deductions over multiple years.
Additionally, the OBBBA created an extra deduction of up to $2,000 for joint filers ($1,000 for all others) on cash gifts made to public charities (excluding private foundations or donor-advised funds) in the years you do take the standard deduction – potentially making the bunching strategy even more effective. - Giving through a Qualified Charitable Distribution (QCD). Generally, IRA distributions are taxable – but if you’re age 70 ½ or older and own an IRA, you can make tax-free distributions directly from your IRA to qualified charities. And, if you’re age 73 or older, these QCDs count toward your IRA’s required minimum distribution for the year. For retirees, QCDs may become an increasingly valuable strategy in the coming years – as the permanently higher standard deduction limits the benefit of itemizing charitable gifts.
- Gifting appreciated stock. Once you’ve held appreciated stock for more than 12 months, you can gift it to a charity or donor-advised fund. This comes with a few advantages: Deducting the full value of the investment, potentially lowering your taxable income and avoiding paying capital gains tax on the appreciation.
Pro Tip: Expecting the investment will continue to grow? Gifting shares that have appreciated and later buying additional shares reduces your tax burden if you decide to sell in the future.
Tip 3: Consider Strategies To Minimize Capital Gains
Maybe you own technology stock that has surged in value, or company stock that has appreciated over the course of your career. While that growth may have boosted your portfolio, it could also trigger a larger tax hit if you choose to sell. Your Baird Financial Advisor team has access to tax-smart investment solutions that can help you navigate when and how to realize gains, while keeping taxes and risk in balance.
On the flip side, perhaps other parts of your portfolio haven’t performed as expected. If you decide to sell those underperformers, you may be able to use the capital losses to offset your capital gains – and reduce your overall tax liability. Still have an overall net capital loss after that? You can then deduct up to $3,000 of the loss against your ordinary income – and carry forward any remaining losses for use in future years.
Tax Strategies You Might Be Missing Out On
Your Baird Financial Advisor team can help you apply the most tax-efficient strategies for your plan.
Tip 4: Carefully Plan Any Roth Conversions
With the OBBBA extending today’s tax rates indefinitely, there may be more time and flexibility to plan any Roth conversions. Because while converting a traditional IRA to a Roth IRA can bring about significant tax savings down the road, converting it all at once can push some of that income into a higher tax bracket today. To keep your tax cost lower, consider one of two strategies:
- Convert enough from your traditional IRA to maximize your current tax bracket without crossing into the next one. Then, reassess next year and potentially do another partial conversion, again filling up that year’s bracket.
- Make your conversion during a downturn in the market. This way, you’ll essentially be able to convert a larger portion of your portfolio at a lower tax cost. If and when the market rebounds, you’ll get tax-free growth on the money you converted.
How Do You Know if a Roth Conversion Is in Your Best Interest?
At Baird, there are three tests we apply before determining whether a Roth conversion is the best fit for your situation.
- How will you pay the upfront tax?
- How does your current tax rate compare to your future tax rate?
- When do you plan to start making withdrawals?
For more context on how to most effectively answer these questions, check out our article on evaluating the effectiveness of a Roth conversion here.
Tip 5: Watch for Changes That Can Affect Your Tax Strategy
Most major financial decisions you make will have a tax impact, from buying stock to selling a house. But life events outside your financial decision-making can also influence your larger tax strategy. Ask yourself:
- Has there been a change in your family? Marriage, divorce, children and widowhood can affect both your income tax situation and your estate planning decisions.
- Have you changed jobs? Switching employers, retiring or starting or selling a business can potentially influence your capital gains and tax deductions.
- Have you moved? Different states have different sets of laws, and the timing of your move can impact your planning.
- Have tax laws changed, or has the market dipped unexpectedly? Even if your life has remained relatively stable, changes in the markets or in state or federal tax law can have a big impact on your tax liability.
OBBBA: A Reminder That Tax Laws Aren’t Static
The OBBBA, a sweeping tax and budget reconciliation bill passed in the summer of 2025, reshaped several longstanding rules like how much families can pass on estate-tax free. However, not all of these provisions are permanent, and many are scheduled to change or “phase out” beginning in 2028 and beyond. For instance, some key changes related to state and local taxes, business write-offs and senior deductions are expected to shift in the coming years.
This makes it especially vital to think beyond a single tax year when planning your tax strategies. You can learn more about how this bill may impact you here.
Your tax return isn’t meant to be filed away and forgotten. Rather, it’s a useful starting point for thoughtful, ongoing planning. Looking at it closely can reveal what worked well, where you may have missed opportunities and what adjustments could make a difference moving forward.
Once you’ve completed your tax filing for the year, share a copy of your return with your Baird Financial Advisor team, who can review and offer advice for more tax-efficient decisions moving forward.
This information has been developed by a member of Baird Wealth Solutions Group, a team of wealth management specialists who provide support to Baird Financial Advisor teams. The information offered is provided to you for informational purposes only. Robert W. Baird & Co. Incorporated is not a legal or tax services provider and you are strongly encouraged to seek the advice of the appropriate professional advisors before taking any action. The information reflected on this page are Baird expert opinions today and are subject to change. The information provided here has not taken into consideration the investment goals or needs of any specific investor and investors should not make any investment decisions based solely on this information. Past performance is not a guarantee of future results. All investments have some level of risk, and investors have different time horizons, goals and risk tolerances, so speak to your Baird Financial Advisor before taking action.
