10 Year-End Tax Moves Chabad Families Should Know About Before December 31
For many Chabad families, taxes aren’t something they think about until April. But by then, some of the most useful opportunities to reduce their tax bill have already passed • Full Article
For many Chabad families, taxes aren’t something they think about until April. But by then, some of the most useful opportunities to reduce their tax bill have already passed.
This year, in particular, there are changes worth knowing about. To name a few: new deductions for charitable giving, expanded education savings rules and just-debuted accounts for young children that could have real financial implications for families already managing substantial yeshiva tuition bills and regular tzedakah commitments.
As Yair Klyman, founder of Klyman Financial, I work closely with Jewish families and see how often these opportunities get overlooked. Let me help you avoid that: here are ten tax moves worth considering before December 31.
- A New Tax Deduction for Tzedakah, Even if You Don’t Itemize
For years, families taking the standard deduction generally received no additional federal income tax deduction for their charitable contributions. That changes in 2026.
Under the new rules, individuals who don’t itemize can deduct up to $1,000 in qualifying cash donations, while married couples filing jointly can deduct up to $2,000.
For families already giving maaser, this is worth understanding: the deduction applies to eligible charitable organizations, not donations made directly to individuals, and contributions to donor-advised funds don’t qualify.
The important distinction is that this is a deduction, not a dollar-for-dollar tax credit. Still, it’s a benefit many families previously couldn’t claim.
- Paying Yeshiva Tuition? Understand the New 529 Rules
For families with several children in yeshiva, tuition can easily become one of the largest expenses in the household budget.
Starting in 2026, the federal limit on tax-free 529 withdrawals for qualifying K–12 educational expenses increases to $20,000 per beneficiary annually. That creates additional flexibility for families using education savings accounts.
But there’s an important catch for New Yorkers: New York doesn’t follow the federal treatment of K–12 withdrawals. Families using their 529 accounts for elementary or secondary school tuition may have to repay state tax benefits previously received on contributions.
The federal rules have become more generous, but that doesn’t automatically make a 529 withdrawal the best financial decision for every New York family.
- Increase Retirement Contributions Before Your Final Paycheck
Retirement savings are easy to postpone when there are immediate expenses demanding attention, especially in larger households.
But increasing contributions to a traditional 401(k) or 403(b) can reduce current taxable income while building retirement savings.
For 2026, the employee contribution limit is $24,500. Workers age 50 and older generally qualify for an additional $8,000, while those ages 60 through 63 may contribute an additional $11,250 instead, subject to plan rules.
Unlike IRA contributions, workplace salary deferrals generally must come from pay earned during the calendar year.
That makes December’s final payroll an important deadline. Once it passes, there’s usually no opportunity to make up missed employee deferrals for 2026.
- Make Sure Your Tzedakah Is Properly Documented
There’s a difference between giving tzedakah and claiming a charitable tax deduction: helping a family directly, supporting someone facing financial hardship or handing money to a meshulach may be meaningful acts of generosity, but donations made directly to individuals generally aren’t deductible on a federal income tax return.
Contributions to qualifying charitable organizations, including eligible Chabad Houses, may be deductible.
For any individual contribution of $250 or more, the IRS requires a written acknowledgment from the organization that meets specific requirements.
Before December ends, review your charitable contributions, confirm which organizations qualify and request any missing documentation. A little paperwork now can prevent considerable frustration when filing your return.
- Consider Whether Grouping Charitable Donations Makes Sense Another change taking effect in 2026 affects families who itemize their deductions.
Under the new rules, charitable contributions generally become deductible only to the extent they exceed 0.5% of adjusted gross income.
For example, a household with $200,000 in adjusted gross income would face a $1,000 threshold before its itemized charitable contributions begin generating a deduction.
For some families, concentrating planned charitable giving into one tax year rather than spreading it evenly across several years may produce a better tax result.
A donor-advised fund can sometimes facilitate this approach by allowing a qualifying contribution now while distributing grants to charities later.
The calculation depends on the household’s broader tax situation, so it’s worth reviewing before making a large year-end contribution.
- Shluchim: Review Your Housing Allowance Before 2027 Begins
For shluchim receiving compensation for qualifying ministerial services, housing allowances can be an important part of financial planning.
Under federal tax rules, an eligible minister’s properly designated housing allowance may be excluded from federal income tax, subject to applicable limits. However, it generally remains subject to self-employment tax.
The timing is especially important. The allowance must be officially designated before the compensation is paid.
That means December is a good opportunity for a shliach and the organization’s board to review compensation arrangements and document an appropriate housing allowance for 2027.
Eligibility and the amount that can be excluded depend on the individual’s circumstances, so the designation should be reviewed with an accountant familiar with clergy taxation.
- Have a Young Child? Look Into the New Trump Accounts Families with young children have another new savings opportunity to understand.
Under the federal Trump Accounts program, eligible U.S. citizen children born between January 1, 2025 and December 31, 2028 may qualify for a one-time $1,000 government contribution to a designated investment account.
Parents or guardians can initiate the process using IRS Form 4547. Families and other eligible contributors may also make contributions, generally subject to a combined annual limit of $5,000.
These accounts come with specific investment and withdrawal rules, and the government contribution is not an immediate income tax deduction for parents.
For families welcoming a child during this period, it’s worth reviewing the eligibility requirements and enrollment process rather than overlooking a new benefit.
- Remember That IRA Contributions Have a Different Deadline
Not every tax-saving opportunity disappears on December 31.
For 2026, the IRA contribution limit is $7,500, with an additional $1,100 catch-up contribution available to eligible individuals age 50 and older.
Unlike workplace retirement contributions, eligible IRA contributions for 2026 can generally be made until April 15, 2027.
Whether a traditional IRA contribution is deductible depends on income, filing status and participation in workplace retirement plans. Roth IRAs operate under different tax rules and income restrictions.
The distinction matters for families deciding how to allocate limited savings before year-end. December may be the deadline for certain retirement decisions, but IRA contributions generally allow additional time.
- For Grandparents Over 70½, Consider Giving Directly From an IRA
Older family members who regularly support Chabad Houses, schools or other charitable organizations may have an additional tax-efficient way to give.
A qualified charitable distribution allows eligible IRA owners age 70½ or older to transfer funds directly from an IRA to a qualifying charity without including the eligible distribution in taxable income.
For 2026, the annual limit is $111,000 per eligible individual.
These distributions can also satisfy some or all of an applicable required minimum distribution, without the amount being taxed as ordinary income.
The transfer must go directly from the IRA custodian to the eligible organization, and special rules apply. Because required minimum distributions are generally due by December 31, the timing deserves attention.
- Start Planning for a New Yeshiva Scholarship Tax Credit in 2027
One of the more significant developments for families supporting Jewish education doesn’t actually begin until next year.
Starting January 1, 2027, a new federal program will offer eligible taxpayers a credit of up to $1,700 for qualifying cash contributions to approved scholarship-granting organizations in participating states.
New York has announced that it will participate, potentially opening another avenue for supporting scholarships at eligible Jewish schools.
Unlike a deduction, a tax credit can reduce federal income tax liability dollar for dollar, subject to the program’s rules.
This is not a 2026 tax break, and families shouldn’t assume that any donation to a yeshiva will qualify. But it is an important development to discuss when planning charitable giving for the coming year.
The Bottom Line
The point of year-end tax planning isn’t to make financial decisions simply because a deadline is approaching but to understand which opportunities fit a family’s circumstances before they expire.
That matters more than ever before for Chabad families balancing tuition, household expenses and charitable commitments, among other financial responsibilities.
Before December 31, I encourage families to sit down with their accountant or tax preparer and review what’s changed for 2026. Some decisions can wait until April, sure, but others cannot, and knowing the difference could make a meaningful difference to the family’s finances.
Important Disclosures
This article is provided for general informational and educational purposes only and should not be construed as personalized investment, financial, legal, or tax advice. The information is based on federal and state tax laws and regulations in effect as of the date of publication and may be subject to change.
Tax benefits, deductions, credits, contribution limits, and eligibility requirements depend on individual circumstances and applicable federal and state laws. Not all strategies discussed will be appropriate or available to every individual or family.
Information has been obtained from sources believed to be reliable; however, its accuracy or completeness cannot be guaranteed.
Readers should consult with their tax advisor, accountant, or other qualified professional before implementing any tax planning strategy or making financial decisions based on this information.
Advisory services are offered through Klyman Financial, a DBA of ThePARTNERS Wealth Management, an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training.
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