8 Year-End Tax Moves to Consider Before December 31, 2025

The clock is ticking on 2025, and so are your opportunities to reduce your tax bill before the year ends. The final months of the year are when many of the most powerful year-end tax planning strategies can be implemented, but too often people wait until it is too late to take action. Reviewing your finances now gives you time to make thoughtful adjustments, take advantage of available deductions, and position yourself for a stronger start in 2026. A few smart moves today can mean thousands saved tomorrow.

1. Maximize Your Retirement Contributions

One of the most effective ways to reduce taxable income is by contributing to tax-advantaged retirement accounts. For 2025, the contribution limits for 401(k), 403(b), and 457 plans are $23,500 for employee salary deferrals and $70,000 for the combined employee and employer contributions. Starting this year, those between the ages of 60 and 63 are eligible to contribute up to $11,250 as a catch-up contribution, if your plan allows it. For those 50 to 59 or 64 or older, there is a catch-up contribution amount of $7,500. Making sure you are contributing enough to capture any employer match, and ideally pushing closer to the annual maximum, is essential.

Those eligible for Traditional or Roth IRAs should also review their contribution plans. Contributions to a Traditional IRA may be tax-deductible, while Roth IRA contributions grow tax-free. Although IRA contributions can be made until April 15, 2026, completing them before the end of the year can help simplify your cash flow.

If your income is lower than usual this year, you may want to explore a Roth conversion – shifting funds from a pre-tax IRA to a Roth IRA and paying taxes on the conversion now to enjoy tax-free withdrawals in the future. This can be especially powerful in years when your income places you in a temporarily lower tax bracket or before tax rates increase after 2025. For a more in-depth look at how Roth conversions work and when they make sense, see our full article on the topic.

2. Evaluate Your Tax Bracket and Future Income

Understanding where your income falls within the tax brackets can help you plan more strategically. If you are approaching the top of your current marginal bracket, it may make sense to defer income where possible or accelerate deductions to remain in a lower bracket. Conversely, if your income will rise next year (due to a bonus, business income, or investment sale), consider pulling forward income or completing a Roth conversion this year to lock in today’s tax rates.

It is also worth keeping an eye on other important thresholds. Higher income can trigger additional taxes or costs, such as the Net Investment Income Tax (NIIT) or Income-Related Monthly Adjustment Amount (IRMAA) surcharges for Medicare. Likewise, long-term capital gains have their own bracket system, meaning you could sell appreciated investments at a 0% federal tax rate if your income is below certain levels. Coordinating these moving parts can help you stay within favorable ranges, avoid IRMAA surcharges, and reduce unintended tax consequences.

3. Make the Most of Charitable Giving

Year-end is a natural time to give back, and doing so strategically can deliver worthwhile tax benefits. If you regularly give to charity, consider “bunching” several years’ worth of donations into one year so you can exceed the standard deduction and take advantage of itemizing. Establishing a Donor-Advised Fund (DAF) can make this easier: you receive the deduction now but can recommend grants to charities over time. You can learn more about how DAFs work and when they make sense in our dedicated article.

Another highly effective strategy is donating appreciated securities rather than cash. By giving investments that have grown in value, you avoid paying capital gains taxes and still receive a deduction for the fair market value of the asset.

For retirees, Qualified Charitable Distributions (QCDs) are another powerful tool. If you are age 70½ or older, you can donate up to $108,000 in 2025 (indexed for inflation) directly from your IRA to a qualified charity. QCDs count toward your required minimum distribution (RMD) and are excluded from your taxable income. We cover this strategy in more depth in our dedicated article on QCDs.

4. Manage Investment and Capital Gain Exposure

Investment decisions made in the final quarter of the year can have a major impact on your taxes. Review your taxable accounts (such as a trust account or brokerage account) to identify opportunities for tax-loss harvesting – selling investments that have declined in value to offset realized gains elsewhere. If your losses exceed your gains, you can deduct up to $3,000 against ordinary income and carry forward any additional losses for future years. Just be mindful of the wash-sale rule, which disallows a loss if you purchase or repurchase a substantially identical security within 30 days.

Now is also a good time to rebalance your portfolio. Market performance throughout the year may have caused your asset allocation to drift from your target mix of stocks and bonds. Rebalancing not only aligns your portfolio with your long-term goals but can also be done in a tax-efficient way when paired with loss harvesting or strategic sales.

If you hold mutual funds in taxable accounts, check their distribution schedules, as they typically distribute income and capital gains toward the end of the year. Buying a fund just before it makes a taxable distribution can leave you with an unnecessary tax bill, so consider waiting until after distributions are paid to make new purchases.

5. Review Tax-Efficient Savings Accounts

Tax-advantaged savings vehicles beyond retirement accounts can also help you lower your taxable income. Health Savings Accounts (HSAs) remain one of the most tax-efficient tools available, offering triple tax benefits: deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. For 2025, you can contribute up to $4,300 if you are covered by a high-deductible health plan just for yourself, or $8,550 for families, with an additional $1,000 catch-up for those age 55 or older. For more information on maximizing your HSA, refer to our in-depth post on the topic.

If you have a Flexible Spending Account (FSA), review your balance before the end of the year. While some employers allow limited carryovers or grace periods, many plans require that unused funds be spent before December 31. Qualified expenses can include medical, dental, or vision care, so check your plan rules to avoid forfeiting funds.

Families saving for education should also consider contributing to a 529 college savings plan before year-end, as some states offer tax deductions or credits for contributions. While most states’ plans have a deadline to qualify for an annual state income tax benefit of December 31, some states have contribution deadlines in April, so check your state’s plan to see what your deadline is. These plans can be powerful multi-generational wealth tools, especially with the ability to transfer unused balances to a Roth IRA under new federal rules.

6. Stay On Top of RMDs

If you are age 73 or older, ensure that your Required Minimum Distributions (RMDs) have been taken before December 31. Missing an RMD can result in a 25% excise tax on the amount not withdrawn; however, this can be reduced to 10% if corrected within two years. Remember that RMDs from multiple IRAs can be aggregated and taken from a single account, while RMDs from employer plans, such as 401(k)s, must be calculated and distributed separately.

If you inherited an IRA, confirm the applicable distribution rules. Under the SECURE Act, most non-spousal beneficiaries must deplete inherited IRAs within 10 years, and in some cases, annual RMDs are still required during that period. Proper planning can help you avoid costly mistakes and optimize your withdrawal strategy.

7. Review Withholdings and Estimated Payments

Now is also the time to confirm that you have paid enough tax throughout the year. Use the IRS’s Withholding Estimator to check your projected liability and make sure you have met safe harbor thresholds – generally 90% of the tax you owe for the current year, or 100% of the tax you owed for the previous year, or 110% of the tax you owed from last year if your prior year’s adjusted gross income was over $150,000 (over $75,000 if married filing separately). Adjusting withholdings or making an estimated payment before year-end can help you avoid penalties and surprises at tax time.

If your income has fluctuated significantly this year (perhaps due to a bonus, investment gains, or business changes), consider coordinating with your CPA or financial planner to ensure your withholdings align with your actual 2025 income.

8. Prepare for Potential Tax Law Changes

The recently enacted One Big Beautiful Bill Act (OBBBA) has reshaped the tax landscape for individuals and families, locking in some provisions from prior law while introducing several new opportunities (and complexities) for the years ahead.

Under OBBBA, the lower tax brackets and higher standard deduction established under the 2017 Tax Cuts and Jobs Act are now permanent. However, the new law also introduces temporary provisions that may affect your 2025 and 2026 returns.

For example, seniors age 65 and older are now eligible for a temporary $6,000 deduction ($12,000 for joint filers) from 2025 through 2028, which phases out for higher-income households. The State and Local Tax (SALT) deduction cap has been temporarily increased to $40,000, up from $10,000 under prior law, offering short-term relief for taxpayers in high-tax states. Additionally, several enhanced credits and deductions, including the expanded Child Tax Credit, adjustments to the Alternative Minimum Tax (AMT) thresholds, and the continuation of the estate tax exemption at $15 million per person, will shape planning decisions over the next few years.

Since several of these provisions are temporary, 2025 is a crucial window for action. Coordinating strategies can help capitalize on today’s favorable rules while preparing for what lies ahead. For a deeper dive into these changes, see our comprehensive post on The One Big Beautiful Bill Act.

The Bottom Line: Get Organized Now, Not Later

Year-end tax planning is not about scrambling to find last-minute deductions. It is about being proactive and taking advantage of every opportunity available before December 31 to keep more of what you earn. The strategies above can help you minimize your tax burden, optimize your savings, and start 2026 from a position of strength.

The final months of the year are also an ideal time to get your documents in order. Create digital folders for W-2s, 1099s, charitable receipts, investment statements, and records of deductible expenses. Having everything organized now makes tax season less stressful and helps your financial team prepare an accurate and timely return.

If you are unsure which of these steps apply to your situation, schedule a complimentary, no-obligation call with us to ensure you are making the most of every opportunity before the window closes.

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About the Author

Holzberg Wealth Management is a family-owned and operated financial planning and investment management firm based in Marin County, CA. As your financial advisors, we serve you as a fiduciary and are fee-only, so we never receive commissions of any kind. We help individuals and families like you in the greater San Francisco Bay Area and nationwide with the financial decision-making process to organize, grow, and protect your assets.

** This writing is for informational purposes only. The author and Holzberg Wealth Management do not guarantee or otherwise promise any results that may be obtained from using this report. No reader should make any investment decision without first consulting their financial advisor and conducting their own research and due diligence. These commentaries, analyses, opinions, and recommendations represent the personal and subjective views of the author and do not constitute a recommendation, offer, or solicitation to make any securities transaction. The information provided in this report is obtained from sources that the author believes to be reliable. External links to third parties are being provided for informational purposes only. Holzberg Wealth Management is not affiliated with the third-party websites linked to, unless otherwise explicitly stated, and does not constitute an endorsement or approval by Holzberg Wealth Management of any of the third party’s products, services, or opinions.