As the year winds down, your to-do list probably fills up with holiday plans, family gatherings, and maybe even some last-minute shopping. But before the ball drops on 2025, it’s worth taking time to check in on another list—your year-end tax moves. Strategic planning now can make April a lot less stressful (and potentially less expensive).
Here are a few strategies that may be worth discussing with your financial advisor or tax professional before year-end:
Put Market Ups and Downs to Work
No one likes seeing red in their portfolio, but some losses can actually work in your favor. By selling investments that are down, you can offset gains elsewhere in your portfolio and reduce your taxable income.
Example: If you realized $10,000 in capital gains this year but sold $7,000 worth of losses, you’d only owe taxes on $3,000 of gains. You can also use up to $3,000 in excess losses to offset ordinary income, with the rest carried forward to future years.
Give Your Future Self a Roth Boost
If you’re in a lower tax bracket this year - or if you think tax rates are likely to rise in the future - a Roth conversion may make sense. Converting pre-tax retirement savings (like from a traditional IRA) to a Roth IRA means you’ll pay taxes now, but your money can grow tax-free going forward. Done strategically, conversions allow you to “fill up” your current tax bracket without bumping into a higher one.
Why it matters: Roth accounts don’t have required minimum distributions (RMDs), which gives you more flexibility in retirement.
Maximize Your Giving
The end of the year is a natural time for charitable giving, and the tax code rewards generosity. Donating appreciated assets (like stock that has gone up in value) instead of cash lets you avoid paying capital gains taxes while still getting the full deduction for the fair market value.
If you’re not sure where to give - or you want to make giving part of your long-term financial plan - consider a donor-advised fund (DAF). It allows you to make a large, deductible contribution this year, but distribute funds to charities over time.
Bundle Your Deductions
If you usually fall just short of the itemizing threshold, consider “bunching” deductions into a single tax year. By grouping charitable donations or big medical expenses in 2025, you may be able to claim more than the standard deduction and save a little extra.
Double-Check Withholdings
If you’ve had big income changes in 2025 - like a raise, bonus, investment sale, or self-employment income - it’s a good idea to check your tax withholding and estimated payments. Underpaying can lead to penalties, while overpaying is essentially giving the IRS an interest-free loan. Adjusting now may save you a headache later.
Remember Your RMDs
If you’re 73 or older this year, don’t forget those required minimum distributions (RMDs). Missing them can trigger big penalties. A qualified charitable distribution (QCD) lets you send money directly from your IRA to a charity you care about and keeps it out of your taxable income.
Don’t Forget Retirement Contributions
Maxing out your 401(k), 403(b), or IRA contributions before year-end is one of the simplest ways to cut your taxable income. Contribution limits often increase year to year, so making the most of the current allowance keeps you on track for long-term savings while lowering your current tax bill.
The end of the year is more than holiday parties and resolutions - it’s an opportunity to set yourself up for financial success in 2026 and beyond. Everyone’s situation is different, so before making changes, it’s best to talk with your financial advisor and CPA.
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