Reviewing your portfolio for tax efficiency, especially during periods of volatility, is a common part of ongoing portfolio management. Understanding your overall tax situation can help you manage realized and unrealized gains and losses more deliberately.

What a Mid-Year Tax Review Covers:

· The household's portfolio performance overview

· The tax consequences of trading and rebalancing

· Tax-efficient portfolio creation

· Taxable YTD reporting

· Realized and unrealized gains and losses.

· Dividends and distributions YTD

Because portfolio values change throughout the year, and those changes can affect your tax situation, it can be helpful to review tax strategies with a financial professional more than once a year.

Ideas to Help Offset Income and Lower Taxes

Examining and updating one's W-4 is a great start. However, there are a few more ways that may help offset one's personal tax liability.

· Increase pre-tax retirement contributions – Consider contributing up to IRS limits, including catch-up contributions if you're 50 or older. Beginning in 2026, higher earners may be required to make 401(k) catch-up contributions on a Roth (after-tax) basis, which doesn't reduce current taxable income.

· Fund an FSA or HSA – HSA contributions require enrollment in a qualifying high-deductible health plan. Most FSA balances must be used within the plan year, so contribute only what you expect to spend.

· Give to charity – Beginning in 2026, taxpayers who don't itemize may deduct up to $1,000 ($2,000 for joint filers) in cash gifts to qualified charities, while itemizers can deduct only gifts above 0.5% of adjusted gross income. Arizona also offers state tax credits for donations to certain qualifying charitable organizations.

· Consider a donor-advised fund (DAF) – A DAF can allow you to bunch several years of giving into one year for a potential itemized deduction. Gifts to DAFs do not qualify for the new non-itemizer deduction.

· Qualified charitable distributions (QCDs) – IRA owners age 70½ or older can give directly from an IRA to charity. QCDs are excluded from taxable income and can count toward required minimum distributions.

· Tax-loss harvesting – Selling investments at a loss may offset realized gains in taxable accounts. The wash-sale rule disallows the loss if a substantially identical investment is purchased within 30 days before or after the sale.

Tax Efficiency in Retirement

A financial professional's tax-efficiency tools may provide insight into asset distribution needs for those approaching retirement or already retired.hey can help design a portfolio that seeks to be both tax-efficient and aligned with your goals throughout retirement, including how assets are withdrawn, spent, or positioned to pass to heirs.

Mid-year is a practical time to review your portfolio and plan for tax efficiency for the rest of the year. If you started planning early in the year, a mid-year check-in is a natural next step.