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The last thing you want to think about now is taxes. You’ve just completed your return, and hopefully received your refund. Thinking about your taxes for next year is like asking if you want dessert after a five-course gourmet meal — ugh!

But the steps you take now to prepare could help you avoid a big tax bill next year at this time, so you should be aware of what’s changed.

As of early April, Americans received more than $247 billion in tax refunds on their 2025 tax returns — about $30 billion more than last year. The additional refunds came because of changes in tax law on tips and overtime, and because of the extra $6,000 credit given to seniors. But the remaining $200 billion in refunds reflects excess withholding — i.e., the interest-free loan taxpayers made to the U.S. Treasury.

Now is the time to adjust your withholding to the proper level for next year. If that creates additional income in your paycheck, you should increase your retirement plan contributions. That money could be working for you, instead of the government.

And conversely, if you have untaxed income from a side job or selling things online, you’ll want to make provision to pay taxes on a quarterly basis (see below).

Social Security taxes come directly out of your paycheck. You see it on your paycheck as FICA, which stands for Federal Insurance Contributions Act. This is not a “voluntary” contribution!

The FICA tax rate is 15.3% — which includes 12.4% for Social Security and 2.9% for Medicare. Employees pay half the tax, and employers pay the other half. If you are self-employed, you pay the whole tax. All wages and self-employment income are subject to the Medicare portion of the tax. But there is an annual limit on the portion of wages and self-employment income that are subject to the Social Security tax.

For 2026, that “wage base” is rising — along with so many other things. The wage base this year will rise to $184,500 — up from $176,100 for 2025. If your wage income is higher than that level, you’ll see more money in your paycheck after you’ve paid in full. But it will take longer to reach that point this year!

(And if you’re earning over $200,000 a year filing singly, or $250,000 filing jointly, there is an additional 0.9% Medicare tax that will be taken out of your paycheck.)

If you’re on a tight budget, it pays to preview the net amount — your spendable income — after taxes and deductions.

Many retirees heave a sigh of relief that they no longer have to deal with payroll deductions. But they may forget that — like self-employed people — they might have to make quarterly tax payments to stay current with the IRS. That’s why you should have a quick visit with your CPA or tax preparer to calculate the amounts you should pay in quarterly online estimates.

As a reminder, in addition to self-employment income, all income from pensions, dividends, interest, retirement plan distributions and even a portion of your Social Security benefits could be subject to ordinary income taxes. That’s why you should start planning now, based on your own situation.

If you take a sudden big gain in income because of a Roth conversion, or if you sell an investment property and incur capital gains, you’ll need to make provisions to pay taxes on those amounts as well.

You’re “safe” if you’ve paid in at least 100% of what you owed last year, or 90% of what you’ll owe this year. Still, it’s likely better to be prepared to avoid a big tax bill next April. Work with your planner to make sure this doesn’t come as an expensive surprise — or penalty.

And just when you’ve settled into a comfortable retirement routine for your taxes, you’ll reach age 73 (or age 75 starting in 2033 for those born in 1960 or later), when you must start taking required minimum distributions (RMDs) from all your retirement accounts (unless you are still working for a company and participating in its 401(k) plan).

As I’ve noted in previous columns, you can wait to take your RMD until year-end. But you already know the amount, since it is based on the value of your retirement accounts at the end of 2025. If you decide to spread out the RMDs on a monthly or quarterly basis, ask your custodian to withhold 15% or 20% in taxes to avoid surprises.

All money withdrawn as an RMD is considered ordinary income, and subject to the appropriate taxes. It can impact your tax bracket. And it might also impact your Medicare Parts B and D premiums!

Tax-time comes every year in April. But you don’t have 11 months to simply forget about income taxes. Planning ahead could save you money and aggravation. And that’s The Savage Truth.

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(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)

©2026 Terry Savage. Distributed by Tribune Content Agency, LLC.