Financial Planning Tip February 2026

February 2026

You might be overpaying your taxes. New federal tax laws mean that 2025 refunds are expected to be $1,000 higher than in 2024. For higher-income taxpayers, this amount could be more like $10,000. These rules also apply to 2026 taxes, so now is the time to adjust the amount of money that you send to the government from your paycheck or from estimated taxes. Things may change significantly if you have income from tips or overtime, if you paid car loan interest, if you’re over 65, or if you pay significant state/local taxes.

If you have a job and your employer withholds taxes from your paycheck, ask them about filling out a new W-4. The current form takes into account the new tax rules. Once you fill out this form, your employer can adjust your withholding to the appropriate amount.

If you pay estimated taxes, ask your tax preparer or accountant to assess how much you owe in estimates for 2026. Especially if you get a big refund in 2025, this will be essential.

Why not overpay your taxes and get a big refund next year? That amounts to giving the government a big interest-free loan. If saving is your goal, it is much better to put that money in an account or investment that would earn interest during the year.