5 Smart Ways to Use Your 2025 Tax Return in 2026

Your tax return is more than paperwork — it’s a snapshot of your real income, your effective tax rate, and opportunities you can act on. In this video, Michael Alman shares the five smartest moves to make with your 2025 return heading into 2026.

Video transcript

Congratulations! You’ve survived tax season. Whether you received a refund or had to pay the IRS, your 2025 return contains valuable insights most people overlook. Hi, I’m Michael Alman with Patriot Asset Advisors. Today I’m sharing the five smartest moves you could consider right now using that fresh return — the exact steps we walk through with our clients every spring. Your tax return shows your real income, your effective tax rate, and opportunities you can act on before the year gets busy. Taking action now can save you money and reduce stress throughout 2026.

1. Adjust your tax withholding. A big refund means you gave the government an interest-free loan; owing a lot can lead to penalties. Update your W-4 with your employer, or adjust your quarterly estimated payments if you’re self-employed. Even small changes can put hundreds or thousands of dollars back in your pocket this year — money you could use to increase 401(k) savings, build liquidity, or pay down debt faster.
2. Build or replenish your emergency fund. Aim for three to six months of essential living expenses in a safe, liquid account like a high-yield savings or money market account. It isn’t glamorous, but it may be the smartest move on this list: a cash reserve keeps a surprise expense — home repairs, medical bills, a job transition — from becoming a major setback, and keeps you from using credit cards or tapping investments at the wrong time. Liquidity creates flexibility, and flexibility helps you make better decisions.
3. Max out tax-advantaged accounts. A refund can turn a one-time event into long-term compounding growth. Consider IRA contributions — a traditional IRA for a potential deduction, or a Roth IRA for tax-free growth — and HSA contributions if you’re eligible, which can offer deductions, tax-deferred growth, and tax-free withdrawals for qualified medical expenses. For 2026 you can contribute up to $7,500 to an IRA ($8,600 if you’re over 50), and up to $4,400 to an HSA for individuals or $8,750 for families, plus catch-up contributions if eligible. If you’re self-employed, look at whether a SEP IRA or solo 401(k) allows even higher contributions.
4. Reduce expensive debt. Paying off high-interest credit card debt creates a return that’s effectively guaranteed. If a card is costing you 18–20% or more, reducing that debt may be one of the best uses of your dollars — and beyond the math, lower debt improves your monthly cash flow.
5. Consider strategic Roth conversions. Look at which tax bracket your 2025 income put you in. If you’re in a lower bracket this year, a partial Roth conversion can make a lot of sense: you pay taxes now at today’s rate in exchange for tax-free growth and withdrawals later, and it can help reduce your future required minimum distributions.

Acting on even a few of these while your 2025 numbers are fresh can improve your financial picture significantly this year. Don’t let another year slip by without using your tax return as a road map. If you’d like help reviewing your specific 2025 return and creating a personalized 2026 plan, visit our website to schedule a complimentary tax and retirement checkup with Patriot Asset Advisors.