2026 Year-End Tax Planning: Expert Strategies for the ACA Cliff, Charitable Deductions, and Asset Transfers

Manage income for the ‘ACA cliff’

Adjustments to adjusted gross income (AGI) can influence a variety of tax incentives, including the premium tax credit that reduces the cost of Affordable Care Act marketplace health insurance.

Although Congress expanded the credit during the pandemic, the enhanced benefit expired after 2025, exposing millions of Americans to the so-called “ACA cliff” beginning in 2026. This means that if they earn even $1 more than a specific income threshold, they lose all eligibility for subsidies and must cover the full premium for health coverage.

“This is the first year the ACA cliff really matters,” said Tommy Lucas, a certified financial planner at Moisand Fitzgerald Tamayo in Orlando, Florida. His firm is ranked No. 44 on CNBC’s Financial Advisor 100 list for 2026.

The cliff impacts ACA enrollees once household income exceeds 400% of the federal poverty line threshold, which varies by family size. For 2026, those limits are approximately $63,000 for a single person or $129,000 for a family of four.

However, strategies exist to avoid “falling off the cliff,” such as pairing a high-deductible health plan with health savings account contributions, which lower your AGI, Lucas said.

Leverage the charitable deduction

Starting in 2026, new legislation also introduced a charitable deduction for filers who do not itemize tax breaks, worth up to $1,000 for single filers and $2,000 for married couples. This deduction applies to cash contributions made to eligible nonprofit organizations.

A $2,000 deduction reduces income subject to tax. For example, if a married couple filing jointly in the 22% tax bracket donates $2,000, they could reduce federal income taxes by up to $440.

If you claim the deduction for 2026, you could have “a little bit more room” to potentially offset moves that increase taxable income, such as selling profitable investments or making Roth conversions, Lucas said.

Transfer assets to a donor-advised fund

If you itemize deductions and give to charity, recent legislation added two changes that could reduce your benefit.

For 2026, there is a charitable deduction “floor” for itemizers, which allows the tax break only once your donations exceed 0.5% of AGI. There was no floor before the 2025 tax law.

For example, if your AGI is $200,000 and you donate $10,000 in 2026, the 0.5% floor, or the first $1,000, isn’t eligible for the charitable deduction.

The legislation also limits the deduction for top-earning households in the 37% top marginal income tax rate by effectively capping the tax break at 35%.

With the S&P 500 hovering near a record high, many investors are sitting on profitable assets in taxable brokerage accounts and may consider donating those assets for a possible charitable deduction.

One way to maximize gifts under the new law is bunching charitable gifts you’d have otherwise donated gradually into a single year, according to CFP Charissa Anderson, an executive vice president at Ferguson Wellman Capital Management in Portland, Oregon. Her firm ranked No. 52 on CNBC’s Financial Advisor 100 list for 2026.

“Bunching becomes even more tax-effective when we pair it with the donor-advised fund and fund it with appreciated stock,” she said. Donor-advised funds work like a charitable checkbook, allowing taxpayers to make a large gift at one time but can distribute the funds to eligible nonprofit organizations over time.

Plus, donating profitable investments “still continues to provide the benefits of avoiding capital gains,” Anderson said.

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