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What is tax planning?

Tax planning is arranging the timing and form of your income, deductions, and investments during the year so you legally owe less tax. Filing a return reports what already happened; planning changes what happens before December 31.

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Who needs tax planning?

Anyone whose income is more than a single salary: stock compensation, a business or side income, rental property, large investment gains, or crypto.

It also pays in any year with a major change, such as a home sale, a move to another state, a liquidity event, or retirement. Those are the years when timing decisions are worth thousands of dollars and when withholding is least likely to match the bill.

What are the main tax planning strategies?

Most plans combine a handful of moves. Each one depends on your bracket this year compared with the years around it.

  1. 01

    Use pre-tax accounts

    Up to $24,500 in a 401(k) and $4,400 in an HSA ($8,750 family) for 2026.

  2. 02

    Time your income

    Move a bonus, sale, or Roth conversion into a lower-income year.

  3. 03

    Hold investments more than a year

    Long-term gains are taxed at 0%, 15%, or 20% instead of up to 37%.

  4. 04

    Harvest losses

    Losses offset gains plus $3,000 of income a year. See tax-loss harvesting.

  5. 05

    Put each investment in the right account

    Bonds in tax-deferred accounts, stock funds in taxable ones. That's asset location.

  6. 06

    Give appreciated stock

    Deduct the market value of shares held over a year and skip the gains tax.

  7. 07

    Watch the surtaxes

    The 3.8% net investment income tax starts at $200,000 MAGI ($250,000 joint).

How does tax planning work?

Start with a projection of this year’s return: wages, equity income, business and rental income, investment gains, deductions, and credits. Then test each decision against it. The question is always the same: what rate applies to the next dollar, and can a decision move that dollar to a year, an account, or a type of income taxed at a lower rate?

Federal rates run from 10% to 37%. Only the income inside each band is taxed at that band’s rate, so a raise never lowers your take-home pay, but a bonus, vest, or Roth conversion stacked on top of salary is taxed at your highest rate. These are the 2026 thresholds.

Rate Single, taxable income over Married filing jointly, over
10% $0 $0
12% $12,400 $24,800
22% $50,400 $100,800
24% $105,700 $211,400
32% $201,775 $403,550
35% $256,225 $512,450
37% $640,600 $768,700

What 2026 numbers matter most?

The One Big Beautiful Bill Act, signed July 4, 2025, made the current brackets permanent and changed several deductions. The SALT cap rose to $40,400 but shrinks by 30% of modified AGI above $505,000, never below $10,000. These are the figures behind most 2026 plans.

Item Single Married filing jointly
Standard deduction $16,100 $32,200
37% bracket starts $640,600 $768,700
0% long-term gains rate, taxable income up to $49,450 $98,900
20% long-term gains rate, taxable income above $545,500 $613,700
3.8% net investment income tax, MAGI above $200,000 $250,000
State and local tax (SALT) deduction cap $40,400 $40,400
AMT exemption $90,100 $140,200
AMT exemption starts phasing out $500,000 $1,000,000
401(k) employee contribution $24,500 $24,500 per spouse

How do withholding and estimated taxes fit in?

Withholding is a prepayment, not your tax bill.

01

Bonuses and vests are under-withheld

Employers can withhold a flat 22% on bonuses and RSU vests, and must use 37% only on supplemental wages above $1 million in a year. If your top bracket is 32%, 35%, or 37%, every bonus and vest leaves a gap you settle in April.

02

Pay enough to avoid a penalty

To avoid an underpayment penalty, pay in at least 90% of this year’s tax or 100% of last year’s, or 110% if last year’s AGI was above $150,000.

03

Close the gap with withholding

Extra withholding late in the year counts as if it were paid evenly, which makes it the easiest fix. The bonus tax calculator shows the gap on a single payment.

How Nino helps with tax planning

Tax planning means looking ahead at how income, investments, and financial decisions could affect your tax bill. Filing reports what happened. Nino’s AI software helps you explore questions using your financial records; with services, your CPA develops your tax plan and prepares and files the returns included in your plan.

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  • Know what drives your tax bill

    Start with wages, business income, investment sales, and deductions. A raise and a stock sale can affect the same return, even when they feel like separate decisions. Bring your records into Nino to understand the numbers and identify what’s missing before you make a plan.

  • Check a decision before acting

    Compare the cash you’d keep after a stock sale, option exercise, or change in income. An estimate is only useful when its assumptions fit your situation, so check the tax year and state coverage. Your CPA can evaluate the decision alongside your full return.

  • Plan withholding and payments

    Money withheld from a paycheck is a payment toward your tax bill, not the final bill itself. Bonuses, investment gains, or self-employment income may create a gap. Your CPA helps assess whether to adjust withholding or make estimated payments and how much cash to reserve.

  • Connect planning with filing

    Good filing starts before the deadline. Keep track of income forms, deductible expenses, investment records, and major changes during the year. With Nino’s financial and tax services, your CPA prepares and files the returns covered by your plan, using the work you’ve done together throughout the year.

Guides and calculators

Go deeper on tax planning with Nino’s guides and free calculators.

Frequently asked questions

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