As the 2025 tax filing season begins, retirees can start planning for next year to reduce their 2026 tax bill. Strategies like computing your tax bracket, estimating total income, considering a Roth conversion, and taking required minimum distributions are key steps to take now. Planning ahead can lead to significant tax savings in the future.

When considering a Roth conversion, it’s important to shift savings strategically to minimize tax impact. Converting just enough funds to stay in a lower tax bracket can be beneficial. However, timing is crucial, and consulting with a financial adviser or accountant is recommended to navigate potential pitfalls and ensure a smooth process.

Skipping required minimum distributions (RMDs) can result in costly penalties, ranging from $1,160 to $2,900. With approximately 8.7 million RMD-age IRA holders nationwide, it’s crucial to understand the rules and deadlines for taking these mandatory withdrawals. Failure to comply can lead to hefty fines and impact your overall tax situation.

The state and local tax (SALT) deduction, now allowing up to $40,000 for single filers ($20,000 for married filing separately), is a valuable option for reducing taxable income, especially for retirees in high-tax states like New York, Connecticut, New Jersey, and California. By itemizing deductions on federal returns, retirees can potentially save more on taxes and take advantage of other deductions.

Kerry Hannon, a Senior Columnist at Yahoo Finance, offers valuable insights on retirement planning and tax strategies. Her expertise in career and retirement planning, as well as financial education, provides readers with practical tips to optimize their financial future. Stay informed with her latest articles and guidance on personal finance topics.

Read more at Yahoo Finance: 6 smart moves for retirees to make now to save on next year’s taxes