Midyear Tax Planning: Opportunities to Save Now

TL;DR: Midyear is one of the best times to review your tax position. By checking your bracket, timing medical expenses, and harvesting investment losses before December, you can reduce your tax bill—this year or next—without scrambling at year-end.

Most people don't think about taxes until April. But by then, the best opportunities to reduce what you owe have already passed. A midyear check-in gives you enough runway to make meaningful changes—adjustments that can lower your bill this year or set you up for a stronger position next year.

Here's where to start.

Are You in the Right Tax Bracket?

Your tax bracket determines how much of your income gets taxed at what rate. Midyear is a good time to estimate where you'll land by December 31.

If your income has increased—through a raise, a bonus, or a new revenue stream—you may be approaching the next bracket. That opens up opportunities to reduce taxable income now, whether through increased retirement contributions, accelerating deductible business expenses, or other strategies.

On the flip side, if your income is lower than expected this year, it may make sense to accelerate income into this year instead of deferring it. Lower income means a lower rate—and that's an opportunity worth capturing.

What Medical Expenses Have You Accumulated?

Medical expenses are only deductible when they exceed 7.5% of your adjusted gross income (AGI). That threshold can feel out of reach—until you actually add things up.

Take stock of what you've spent so far: premiums, prescriptions, procedures, dental work, vision care, and other qualifying costs. If you're already close to the threshold, it may be worth timing any upcoming discretionary medical expenses—like elective procedures or eyeglasses—before December 31. Bunching those costs into a single tax year can push you over the threshold and generate a real deduction.

Are Your Investment Gains and Losses Working for You?

Markets move. That means your portfolio may look very different today than it did in January. Midyear is a smart time to review unrealized gains and losses across your taxable accounts.

If you're sitting on losses, consider whether tax-loss harvesting makes sense. Selling underperforming investments at a loss can offset capital gains elsewhere in your portfolio—reducing your overall tax liability. Losses that exceed your gains can also offset up to $3,000 of ordinary income, with any remaining balance carried forward to future years.

At the same time, if you have investments with large unrealized gains, be deliberate about timing. Understanding whether those gains would be taxed at short-term or long-term rates—and planning accordingly—can make a significant difference.

Why You Shouldn't Wait Until Year-End

Year-end tax planning is common. Midyear tax planning is smarter.

By the time December rolls around, your options narrow. Some strategies—like making contributions to certain retirement accounts, adjusting withholding, or restructuring investment positions—need time to execute properly. Others depend on decisions made earlier in the year that can't be undone.

Starting now gives you six months to act strategically rather than reactively. That's enough time to model different scenarios, consult with your advisor, and implement changes without the pressure of a looming deadline.

Take Control of Your Tax Position Before Year-End

Tax planning isn't a once-a-year event. The most effective strategies happen throughout the year, when you still have options.

At SD Mayer, we help businesses and individuals identify opportunities that are easy to miss when you're focused on day-to-day operations. If you haven't reviewed your tax position this year, now is the right time to start. Reach out to the SD Mayer team to schedule a midyear planning conversation.

Frequently Asked Questions

When is the best time to start midyear tax planning?
Ideally, between June and August. This gives you enough time to estimate your full-year income, identify gaps, and implement changes before the year-end window closes.

Can tax-loss harvesting reduce my ordinary income?
Yes, but with limits. Capital losses can offset capital gains dollar-for-dollar. If losses exceed gains, up to $3,000 can be applied against ordinary income per year, with the remainder carried forward.

How do I know if my medical expenses are deductible?
Medical expenses are deductible to the extent they exceed 7.5% of your AGI. Only qualifying expenses as defined by the IRS count toward the threshold, so it's worth reviewing what you've spent with a tax advisor.

What happens if I don't adjust my withholding mid-year?
You may end up underpaying or overpaying your taxes. Underpayment can result in penalties; overpayment is essentially an interest-free loan to the government. Either way, a midyear review helps you get it right.