March Madness—Smart Tax Moves That Save You Money

March Madness—Smart Tax Moves That Save You Money

The April 15^th tax deadline is just around the corner. For some, you’ll file and be done with the madness sometime in March. Others will sneak in just under the deadline.

You may carve out some time to file with a software package. Or, given the complexity of your situation, you hand off your records to your tax advisor.

That said, whether you put an “exclamation point” on the 2025 tax year over the coming weeks or file an extension, this is an opportune time to offer up smart tax moves that can save you money when you file and put you on the path to saving money in tax year 2025 and 2026.

1. Do you obtain your insurance through the Affordable Care Act (also known as Obamacare)? If you are receiving a subsidy for your monthly premium, you want to be very careful that your income does not exceed eligibility—400% of the poverty line. Please note that enhanced subsidies expired in 2025, and the so-called “benefits cliff” returns in 2026.

Also, please note that some state calculators might not have the latest 2026 income guidelines. If you have questions, we can help guide you.

Income limits are based on modified adjusted gross income (MAGI). For most, your AGI (adjusted gross income) is identical to your MAGI.

What is MAGI? It’s not a line on your tax return. MAGI equals AGI + certain adjustments added back in. The adjustments can vary by situation and include non-taxable Social Security payments and foreign earned income exclusions.

Reviewing the guidelines for the 48 contiguous states plus D.C., the poverty line in 2026 is $15,960 for a household of one.

If that individual earns just $1 more than 400% of the poverty line, approximately $63,840, he/she will be required to repay the entire premium, which could mean a tax bill approaching $10,000. It depends on the person’s age. The older the individual and the lower the initial income estimate, the greater the subsidy.

Younger folks will receive a much lower premium. Still, you’ll be forced to return it if your income exceeds the threshold.

For a family of two, the threshold is approximately $86,560. If you receive that monthly subsidy, you could be liable for up to $20,000 if the limit is exceeded.

That is a painful awakening, and one must be careful with wages, dividends, interest, capital gains, and retirement withdrawals, which risk pushing a recipient of the subsidy over the limit.

If you would like assistance, we can model not just tax brackets but also effective marginal rates that are created by lost benefits when doing tax planning, including ACA.

2. MAGI also affects Medicare premiums. For those with higher AGIs, you can expect to pay an additional amount for insurance.

For example, individuals with a MAGI above $109,000 up to $137,000 and married couples with a MAGI above $218,000 up to $274,000 will pay an additional $81.20 per month for Part B and an additional $14.50 per month for prescription drug coverage, according to Social Security.

This rises to an additional $487 and $91 per month for individuals with a MAGI equal to or above $500,000 and married couples with a MAGI equal to or above $750,000.

With this in mind, let’s review various ways you may lower your MAGI for tax years 2025 and 2026.

1. Are you eligible to contribute to a traditional IRA? For 2025, the total contributions you make for all of your traditional and Roth IRAs must not exceed $7,000 ($8,000 if you’re age 50 or older). The last day to make a contribution for tax year 2025 is April 15, 2026.

For tax year 2026, the total contributions you make each year to all of your traditional IRAs and Roth IRAs may not exceed $7,500 ($8,600 if you’re age 50 or older), or if less, your taxable compensation for the year.

For example, if your taxable compensation is low—let’s say $3,000—your contribution cannot exceed $3,000 for that year.

Consider a spousal IRA—an IRA owned by a nonworking person with a working spouse.

While Roth IRAs can be quite advantageous, as withdrawals are designed to be tax-free if certain rules are met, your contribution is not tax deductible and won’t lower your MAGI.

You can contribute to a traditional or Roth IRA even if you participate in another retirement plan through your employer or business. However, you may not be able to deduct all your traditional IRA contributions if you or your spouse participates in another retirement plan at work. Roth IRA contributions are limited if your income exceeds a certain level.

If you are self-employed, you may consider a SEP-IRA, which has much higher contribution limits—for 2025, the limit is 25% of an employee’s total compensation, up to $70,000. The SEP IRA contribution limit for 2026 is 25% of an employee’s total compensation, up to $72,000.

You can set up a SEP plan for a year that is as late as the tax due date (including extensions) of your business’s income tax return for that year. In other words, if you haven’t filed your 2025 business return, you may consider a SEP-IRA for 2025.

2. Is your health insurance plan HSA- (health savings account) eligible? If so, you may contribute up to $4,300, or $5,300 if you are 55 or older.

In tax year 2026, that rises to $4,400, or $5,400 if you are 55 or older. You have until the tax deadline to make the contribution—April 15 for tax year 2025.

Withdrawals used for eligible healthcare expenses are tax-free.

If you are 65 or older, you may withdraw from your HSA to pay for Medicare premiums. Additionally, you may also withdraw from an HSA without penalty for non-qualified expenses if you are over 65, but you will pay taxes on the withdrawal. There are no required minimum distributions (RMDs).

3. Required RMDs. will increase your AGI and MAGI.

Deadlines for RMDs—You generally must start taking withdrawals from your traditional IRA, SEP IRA, SIMPLE IRA, and retirement plan accounts when you reach age 73.

You have until April 1^st of the year after you turn 73 to take your first RMD.

If you turned 73 in 2025, your first RMD is due by April 1, 2026, and your second RMD is due by December 31, 2026.

If you turn 73 this year, you may wait until April 1, 2027, to take your first RMD, but if you place two RMDs into tax year 2027, you run the risk of landing in a higher tax bracket in 2027.

The One Big Beautiful Bill Act (OBBBA) creates several new tax benefits, including—

1. Beginning in the 2026 tax year, non-itemizers may deduct cash donations to an eligible charity—up to $1,000 for single filers or $2,000 for married couples filing jointly. Please note that only CASH donations are eligible for a deduction. Noncash items, such as clothing or household goods, donated to a charity do not qualify.

For those in the 37% bracket, only 35% of the donation is tax-deductible.

Itemizers that make charitable contributions may claim a tax deduction to the extent that qualified contributions exceed 0.5% of their AGI. For example, a couple with an AGI of $300,000 could only deduct charitable donations in excess of $1,500.

2. Here’s something worth keeping in mind. Starting in 2027, the OBBBA introduces a new tax credit that allows you to claim up to $1,700 per person when you donate to organizations that provide scholarships for private or religious K–12 schools.

You can take this credit even if you don’t itemize your deductions.

3. Additionally, as we’ve discussed before, there are new benefits that apply to overtime, tips, and Social Security.

Because tax rules are complicated, we’re here to help where we can. For advice specific to your circumstances, your tax advisor can provide personalized guidance.

February hits a roadblock

After an upbeat start to the year, uncertainty crept into market sentiment last month, compliments of artificial intelligence. Yes, that’s right—AI. AI has been a powerful driver over the last couple of years, but fears that AI could disrupt profitable models encouraged some investors to re-evaluate long-held positions.

The software sector has seen one of the sharpest retreats, with a Standard & Poor’s index of software companies falling about 20%, according to Yahoo Finance.

Source: Wall Street Journal, MSCI.com, Bloomberg, MarketWatch
MTD returns: January 30, 2026—February 27, 2026
YTD returns: December 31, 2025–February 27, 2026
**in US dollars

Recent releases from AI developers have raised fears that certain software-as-a-service models may face pricing pressure or declining demand, as new tools take on legal, analytical, and administrative work.

Massive AI expenditures by major firms are also raising questions, even as demand for AI-related services is soaring.

Perhaps this is simply a wave of profit-taking after an exceptional run-up. The sharp decline in software also appears to reflect a “shoot first, ask questions later” reaction. It’s not as though AI models are on the verge of displacing well-established firms, many of which just reported strong quarterly earnings.

However, instead of cannibalizing software companies, others argue that the fear is exaggerated, as AI might boost efficiency as firms create new software products.

Other sectors, including energy, industrials, materials, and consumer staples, have generated double-digit returns since the beginning of the year, according to StockCharts.

Tariffs overturned in landmark ruling that’s set to reshape policy

Well, not all tariffs, but the tariffs the president has predominantly used since taking office last year, including the so-called Liberation Day tariffs imposed last April.

In a landmark ruling, the Supreme Court struck down tariffs enacted under the International Emergency Economic Powers Act (IEEPA).

Nonetheless, the president remains undeterred in his desire to use tariffs to shape U.S. trade policy.

He has other options at his disposal. With the exception of one untested Depression-era law, other avenues available to him are not as sweeping as the ones used under IEEPA.

Some require formal investigations. Others limit the tariff and duration.

Private credit—lending provided by non-bank institutions—has become an issue for some investors.

Private credit has grown rapidly in recent years, but transparency is also limited since loans are often illiquid and lightly regulated. As economic growth moderates, there are some concerns that stress in private credit could surface unevenly.

It’s not a big problem today, but it’s an issue that bears watching.

I trust you found this review to be insightful. If you have any questions or simply want to talk through your portfolio or other financial goals, please don’t hesitate to reach out to me or anyone on our team.

We’re always here for you.

Thank you for choosing us as your trusted financial advisor. We deeply value your confidence and are honored to help you navigate your financial journey.