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Every pilot knows that overlooking a checklist item can create complications down the line, often when there are fewer options to address them.
Tax planning works much the same way.
Strategies that can make a meaningful difference in your tax bill, such as funding an account, harvesting a loss, or timing a charitable gift, often have a December 31 deadline. After that, certain opportunities may no longer be available for the current tax year.
That’s why financial advisers generally recommend starting your year-end planning in November rather than mid-December. Custodians need time to process contributions, and fund paperwork doesn’t happen overnight.
Between your demanding schedule and complex compensation structure, a few strategic decisions made now could help reduce your 2026 tax liability while supporting your broader financial goals.
Here’s where to start.
Make Education Savings Work Harder
If you’re balancing education funding with long-term wealth planning, a 529 college savings plan can offer a tax-efficient way to support both priorities. Contributions grow tax-free when used for qualified education expenses, and making larger contributions upfront can be an effective strategy if you have the financial flexibility to do so.
For example, rather than contributing the annual gift tax exclusion amount of $19,000 each year, you can elect to front-load up to five years of that exclusion at once ($95,000 per contributor, or $190,000 for a married couple). This approach can potentially move a substantial sum out of your taxable estate in a single transaction while funding your child’s education down the road.
It’s also worth revisiting the Child Tax Credit and dependent care benefits, even if your income has historically phased them out. Thresholds and partial-credit calculations can change, and a strategy that didn’t apply a year or two ago may be worth a second look before the calendar turns.
Look Beyond Your Airline Retirement Plan
If you’ve built income streams beyond your airline paycheck, such as a charter operation, consulting work, rental property business, or another venture run as a sole proprietor or small business, you may have additional tax-planning opportunities. Self-employment income opens retirement planning tools that a W-2 paycheck alone doesn’t.
A Solo 401(k) or SEP-IRA may allow you to defer a significant portion of that outside income, depending on your eligibility and existing retirement plan contributions. For 2026, the standard elective deferral limit sits at $24,500, with an additional $8,000 catch-up contribution available to those 50 and older, and a combined employer-and-employee plan limit of $72,000.
When coordinated with your existing airline-sponsored retirement plan, these options may create additional opportunities for tax-efficient retirement savings.
A high-deductible health plan opens a similar opportunity through a Health Savings Account (HSA). These contributions are tax-deductible going in, grow tax-free, and come out tax-free for qualified medical expenses. It’s a triple benefit you won’t find in many other places.
The 2026 HSA limits are $4,400 for individual coverage and $8,750 for family coverage, with an additional $1,000 available to those 55 and older. If you can afford to pay current medical costs out of pocket and let your HSA balance grow, an HSA can also serve as a valuable resource for healthcare expenses in retirement.
Find Opportunities Inside Your Portfolio
Over the course of your aviation career, you may have accumulated significant holdings in a single stock, whether through equity compensation or long-term investments. These concentrated positions can create both opportunity and risk, making year-end an ideal time to evaluate your portfolio’s diversification, tax efficiency, and alignment with your long-term goals.
One strategy worth considering to address overconcentration is tax-loss harvesting, which involves selling investments at a loss to offset capital gains and potentially reduce your tax bill. There’s no annual limit on how much you can offset in capital gains, and if your losses end up exceeding your gains, you can generally deduct up to $3,000 of the remaining losses against your ordinary income each year. Any unused losses can be carried forward to future tax years.
To count against this year’s taxes, eligible transactions generally must be completed before December 31. (As a note, be mindful of the wash-sale rule that can disallow a loss if you purchase the same or a substantially identical security within 30 days before or after the sale.)
For additional tax-loss harvesting opportunities, direct indexing may be worth exploring. By holding individual stocks rather than a single index fund, you can potentially harvest losses across multiple positions while maintaining broad market exposure.
Give Generously, Plan Strategically
If charitable giving is part of your financial strategy, changes to federal tax rules make it especially important to revisit your approach in 2026.
Under the new rules, itemizing taxpayers generally face a 0.5 percent adjusted gross income (AGI) floor before charitable deductions apply, and the tax benefit of itemized deductions is limited for those in the highest tax bracket.
In practical terms, the same gift may provide a different tax benefit than it did in previous years, making strategies such as “bunching” multiple years of charitable contributions into a single tax year worth considering before December 31.
Additionally, gifting appreciated stock directly, rather than cash, remains one of the more tax-efficient ways to give. Depending on your circumstances, you may be able to avoid capital gains tax on the appreciation while receiving a deduction based on the stock’s fair market value, subject to applicable limitations.
Other considerations include donor-advised funds (DAFs), which allow you to make a contribution now, potentially capture the deduction this year, then decide which charities receive the money over time. A Qualified Charitable Distribution (QCD) made directly from an IRA can also support your charitable goals while satisfying all or part of a required minimum distribution (RMD), if applicable, once you’re 70½ or older.
Stay Ahead of Retirement Tax Deadlines
For airline pilots, retirement comes with a deadline most professionals don’t face—mandatory retirement at age 65. This predetermined transition period from airline compensation to retirement income creates a new set of tax-planning opportunities and challenges, particularly if you’ve accumulated substantial retirement savings.
Required minimum distributions (RMDs), which generally begin at age 73 or 75 depending on your birth year, are an important year-end consideration. If you’re subject to RMDs, ensuring you’ve withdrawn the required amount by December 31 can help you avoid costly penalties while managing your annual tax liability. While certain first-time distributions may qualify for an extended deadline, reviewing your requirements before year-end can help you avoid unnecessary surprises.
Importantly, the years between mandatory retirement and the start of RMDs typically create a strategic Roth conversion window. While you’ll pay taxes on the amount converted, this strategy can help reduce future RMDs and provide a source of tax-free retirement income. Because conversions must generally be completed by December 31 to count toward the current tax year, it’s worth evaluating this opportunity before the window closes.
Coordinating these decisions with your airline retirement benefits, Social Security, and other income sources can help you manage future tax exposure while maintaining greater financial flexibility throughout retirement.
Bringing It Together
Your financial priorities will evolve throughout your flying career. Whether you’re balancing a growing family’s needs or approaching retirement with a concentrated investment portfolio and charitable giving goals, your tax strategy should evolve alongside them.
What stays constant is that many year-end planning opportunities disappear once the calendar turns. Taking a proactive approach now can help you make the most of those opportunities while keeping your long-term financial goals in focus.
That’s where Allworth Airline Advisors can help. Our airline-specialized advisors understand the complexities of your airline’s compensation package, retirement benefits, and the financial decisions that come with your career. Backed by an in-house team of specialists across investments, tax planning, estate planning, and retirement strategies, we provide tailored guidance to help you coordinate these moving parts into a comprehensive financial strategy aligned with your long-term goals.
To learn how Allworth Airline Advisors can help you make the most of your year-end planning opportunities, call 800-321-9123 or visit AllworthAirline.com.
