3 End-of-Summer Financial Moves That Could Lower Your Tax Bill in 2026

Taxes might be the last thing on your mind when it's sweltering outside, and many people are in vacation mode. However, a mid-year look at your taxes and investments can save you both money and stress come tax season. Here are three moves to make before the summer ends.

1. Check you are paying the right withholding tax

The amount your employer withholds from your paycheck for the IRS is not set in stone, and it's worth checking in once a year to see if you're paying roughly the right amount. That's particularly true if your situation has changed -- perhaps you got married, took on extra work, or had a baby. Fill out a new W-4 withholding form if there's anything that might affect your tax rate or entitle you to tax credits.

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The IRS has a Tax Withholding Estimator you can use to estimate your withholdings, and using it this summer can help you avoid getting hit with a larger-than-expected bill or even a fine if you've dramatically underpaid. On the flip side, if you are paying too much, you might be able to reduce the amount withheld and have more cash to spend or invest each month.

2. Consider tax-loss harvesting

With major U.S. indexes in record high territory, now may be a good time to rebalance your portfolio to manage risk and avoid drift. For example, in my portfolio, CrowdStrike (NASDAQ: CRWD) has gained about 480% during the past three years. While it is still a high-conviction stock, cybersecurity stocks now make up an oversized part of my portfolio. There are a few ways I can rebalance, including directing new money to other sectors or reducing my CrowdStrike position.

However, if you sell stocks or ETFs held in a normal brokerage account, you may owe capital gains taxes on any profits. That's where tax-loss harvesting comes in, because you can offset any gains by realizing the losses on underperforming investments. The idea is to replace the sold asset with a similar, but not identical, investment. That way, you don't run afoul of the IRS wash-trading rules, and you also keep your holdings balanced.

Take a look at your portfolio to see if your allocation is still in line with your goals and whether there are losses you might harvest, or overweight positions you might want to trim. Make sure you keep detailed records of all the transactions.

3. Track your tax-advantaged account contributions

One extremely effective way to reduce your tax bill is to max out your contributions to tax-advantaged accounts. Now's a good time to see how you're doing because you've still got time to get back on track without making panic moves at the end of the year. If you have a 401(k) and your employer matches your contributions, try to ensure you put enough in to maximize that workplace matching.

The maximum contribution you can make to individual retirement accounts (IRAs) and Roth IRAs for 2026 is $7,500 for those under 50 and $8,600 if you're 50 or older. An IRA can reduce your tax bill now, whereas a Roth IRA can reduce your tax bill in retirement. If you're not sure which makes more sense, check out our guide to traditional IRAs vs. Roth IRAs.

Like many things in life, taxes are rarely a set-it-and-forget-it endeavor. If you wait until December or next tax season, it may be too late to reduce your tax bill.

Emma Newbery has positions in CrowdStrike. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool has a disclosure policy.