July obviously means Fourth of July celebrations in the United States. But this summer month is full of other activities, including some tax-related moves you should consider. Here are six suggestions. (Photo by frank mckenna on Unsplash)
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July kicks off mid-summer here in the United States with a literal bang. Fireworks already are popping in my neighborhood, as my impatient neighbors get a head start on Independence Day celebrations.
But this second month of summer also has a tax connection beyond the tea levy that spurred nascent Americans to fight for our freedom from Great Britain. s important when it comes to taxes.
July 1 is the midpoint of the tax year. So, the ol’ blog’s regular monthly tax moves this July get a subtitle: Mid-year Tax Check-up Time.
With six months to go in 2026, here are six tax situation reviews and, where necessary, moves to make that can help put, or keep, you on the best track for the rest of this year and the coming filing season.
1. Check your payroll withholding. Yeah, I know. I say this in almost every monthly tax moves post. But adjusting your paycheck withholding is an easy step, and one that can pay off now and when you file your 2026 return.
Your goal is to pay as close as possible your eventual Internal Revenue Service tax bill. True, over-withholding will give you a big refund. But the Bank of Uncle Sam doesn’t pay interest. And you could find yourself in a financial crunch if you need that withheld money before tax refund time to cover an emergency expense.
At the other end of the tax spectrum, if you end up owing when you file you have to come up with that cash. That could be a major problem if you end up owing more than you expected.
Use the IRS Tax Withholding Estimator online tool to determine the more-accurate amount to have withheld from your paychecks. Then use that information to fill out a new Form W-4, Employee’s Withholding Allowance Certificate and give it to your payroll administrator.
Doing so now will spread the change over six months. That longer time frame is particularly welcome if you’re increasing your withholding amount, since it will lessen a bit the tax bite of the year’s remaining pay periods.
2. Review life changes that could affect your taxes. There’s an ongoing political debate about affordability, but for many Americans the matter is settled. Times are tougher economically and they’ve taken on added work during the summer.
That added summer job income to supplement your full-time salary is just one life situation that will affect your taxes. You can account for the tax due on these additional earnings by upping your regular paycheck’s withholding, as noted in mid-year move #1. Or, if you prefer, you can account for the tax you owe on the added income by making estimated tax payments; the next one, for income earned June 1 through Aug. 31, is due Sept. 15.
In addition to added season work, there are plenty of other changes to your personal life that also will likely affect your tax situation.
A common one is marriage. Your newly merged lives definitely will mean tax changes. Other major life events that tend to have tax implications are the birth or adoption of a child, buying house, selling a residence, retiring, and divorce.
Speaking of children, if your youngster is attending day camp this summer, hold on to those receipts. You might be able to count the camp’s costs toward a 2026 tax year claim of the child and dependent care tax credit.
Even some less dramatic events, such as buying a new vehicle, could affect your tax bill, thanks to changes enacted as part of the Republicans’ One Big Beautiful Bill Act (OBBBA). Check out the new laws yourself, or talk with your tax preparer, to ensure that you maximize these tax opportunities this year.
Whatever life changes, large or small, you encounter this year, be aware of how they might affect your taxes and make sure you are ready. It could be as simple as taking the change into account when adjusting withholding, or setting up a plan to ensure you don’t miss any of the associated tax breaks.
3. Increase your retirement contributions. Did your withholding review result in you getting a bit more in each paycheck for the rest of the year? Great! But don’t spend it. Instead, add it to your retirement savings.
If you have a workplace plan, such as a 401(k), simply increase the amount you’re automatically contributing each pay period by the amount your pay increased when you adjusted your withholding. Since those new workplace retirement dollars previously were going to Uncle Sam as taxes, you won’t even miss them.
And if your employer doesn’t offer a workplace retirement plan, put your income bump into an IRA. For most people, a Roth IRA is the best choice, since the withdrawals when you retire aren’t taxed. Some people, however, prefer a traditional IRA because they get a tax deduction for the amount they put into this retirement vehicle.
4. Check out a Trump Account for your child. The OBBBA also created special tax-advantaged investment accounts for children younger than 18. Dubbed Trump Accounts, they officially launch on July 4. In most cases, parents or legal guardians will open and manage accounts on behalf of their children. They also will be able to manage the Trump Account with a special app.
The accounts feature a $1,000 U.S. Treasury contribution for eligible children born between 2025 and 2028. You also can contribute $5,000 per year to a child’s account to maximize its growth.
Trump Account funds will grow tax-deferred and can be used to pay education costs or buy a home. The young person for whom the account was opened can access the money upon reaching age 18 without penalty as long as it is used for qualified expenses such as paying education expenses, buying a first home, or starting a business. Or the money can remain as a traditional IRA, which it what it will be converted into once the young person turns 18.
5. Do some other tax-favored educational savings plan homework. If your youngster’s education is your primary concern, a qualified tuition programs might be a better fit for you and your student.
Popularly known as 529 plans (the name comes from the tax code section that governs these savings), these accounts offer an Uncle Sam sanctioned way to save money to pay for eligible kindergarten through college expenses.
Money put into a 529 grows tax-free at federal and state levels. There’s no federal tax break for the contributions, but some states do offer tax breaks. When the money is withdrawn to pay qualifying college costs, there’s no tax on that amount either.
6. Hire a tax professional. Remember back in the second mid-year move when I suggested you talk with your tax preparer about how the OBBBA changes could affect you? If you don’t have a tax adviser, now is the time to get one.
With the main tax filing season over, most tax pros are willing to consider taking on new clients. And hiring a reputable tax professional now will get you tax prep advice well beyond simply completing and filing your Form 1040 next year.
Of course, you must do some groundwork before hiring professional tax help.
You need to know what types of tax advisers are available, and how their training and services mesh with your personal tax needs. And you definitely want to vet any tax preparer before your you’re your tax and financial life over to that person.
These, and other tax pro considerations, are discussed in my post from last July on Tax law changes highlight the importance of professional tax help.
Back to non-tax summer fun: OK, I know you have other things to think about this month, starting with your July 4 festivities and planning a summer vacation, so I’ll end this Mid-Year Tax Moves post here.
But do take some time between other more appealing summer activities to think about your taxes. Where these tax moves apply to you, make them as soon as possible.
They could help make you least a little more independent of tax costs and concerns, this July and beyond. And with that, I return you to your regularly schedule July summer fun.
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