A Year-End Tax Planning Checklist for Silicon Valley Households

The final quarter is when most tax decisions for the year become irreversible. A structured review in October or November leaves time to act.

Tax planning in the Bay Area has a distinctive shape. Income arrives unevenly through RSU vests and bonuses, equity decisions have multi-year consequences, and California's rates make every threshold more expensive to cross. Most moves that reduce a tax bill must be completed by December 31, and some need lead time. The following review is organized by topic; which items matter most depends on the year you have had.

Project the year before acting

Every other item depends on a reasonable estimate of 2026 income and tax. Pull year-to-date pay stubs, RSU vesting statements, brokerage gain and loss reports, and any K-1s or rental figures, then add the vests and bonuses still expected before year-end. The point is to know which federal bracket you will land in, whether you are near the $545,500 or $613,700 taxable income thresholds where the long-term capital gains rate rises to 20%, and whether you are approaching the AMT exemption phase-out, which begins at $500,000 for single filers and $1,000,000 for joint filers in 2026. A projection also reveals whether withholding is on track.

Withholding and estimated payments

Supplemental withholding on RSUs is 22% federally and 10.23% for California, which is often below a high earner's actual marginal rate. If the projection shows a shortfall, increasing wage withholding for the remaining pay periods can help, because withholding is treated as paid evenly through the year. The IRS estimated tax page describes the quarterly alternative, with the final 2026 payment due January 15, 2027. Consider whether you meet the prior-year safe harbor, discussed in a separate Insights article.

Retirement and health accounts

Check that 401(k) deferrals will reach the 2026 limit of $24,500, plus $8,000 catch-up at 50 or $11,250 at ages 60 through 63, since deferrals must run through payroll before year-end. If your plan allows after-tax contributions, the total 415(c) limit of $72,000 leaves room for mega backdoor Roth contributions. HSA contributions can reach $4,400 for self-only and $8,750 for family coverage. IRA contributions and backdoor Roth steps can wait until the April filing deadline, but Roth conversions must be completed by December 31 and cannot be undone, so they belong on the fall agenda.

Equity compensation decisions

Year-end is when ISO holders reconsider exercise. Exercising in December means the bargain element counts toward this year's AMT, while waiting until January defers it a full year and lets you see more of the company's trajectory; either way the exercise is reported on Form 6251 and documented on Form 3921 under the rules in IRS Topic 427. Employees who exercised early in the year and have watched the stock fall may consider whether selling before December 31 to create a disqualifying disposition, which can eliminate the AMT adjustment, makes sense for them. Insiders should check trading window dates, since a late-December sale can collide with a blackout.

Harvesting and portfolio hygiene

Review the taxable brokerage account for positions with unrealized losses that could offset gains realized earlier in the year, keeping in mind that net losses beyond gains are deductible against ordinary income only up to $3,000 a year and that the wash sale rule disallows a loss if a substantially identical security is bought within 30 days before or after, across all accounts including a spouse's. Mutual fund distributions in December can create taxable income without any sale, which is a reason to check estimated distribution dates before adding to a fund in a taxable account.

Charitable giving

Beginning in 2026, itemized charitable deductions are subject to a 0.5% of AGI floor, and the benefit is capped at 35% for taxpayers in the 37% bracket. Donating appreciated stock held more than a year rather than cash avoids the capital gain on the donated shares. Contributions to a donor-advised fund must be received by December 31 to count, and transferring securities can take a week or more.

Gifts, estate, and family

The 2026 annual gift exclusion is $19,000 per recipient, and unused exclusion does not carry forward. Families with children may consider 529 contributions, and those with children born between 2025 and 2028 may look at the new Trump accounts, which allow $5,000 per year. A year with a marriage, birth, home purchase, or job change is also a prompt to update beneficiary designations and withholding elections.

This checklist is educational only and is not tax, legal, or investment advice. Each item involves trade-offs and deadlines that depend on individual facts, and readers should consult a qualified tax professional before acting.

Important Disclosures

Important Disclosures: Propulsion Capital Management is an investment adviser registered with the State of California Department of Financial Protection and Innovation. Registration does not imply a certain level of skill or training. This article is provided for general informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice, nor an offer or solicitation to buy or sell any security or to adopt any particular investment strategy. The information is believed to be accurate as of the date of publication but is subject to change without notice; tax laws and regulations change frequently and their application depends on individual facts and circumstances. Nothing herein should be relied upon as a substitute for personalized advice from a qualified professional. Investing involves risk, including the possible loss of principal, and past performance is no guarantee of future results. Diversification does not ensure a profit or protect against loss. Any examples are hypothetical, are for illustrative purposes only, and do not reflect the experience of any client. Links to third-party websites are provided for convenience; Propulsion Capital Management does not endorse, and is not responsible for, the content of third-party sites. Propulsion Capital Management does not provide tax or legal advice; please consult your tax adviser or attorney regarding your specific situation.