Year-End Tax Planning — Don’t Leave Savings on the Table
The final months of the year bring busy schedules filled with family, holidays, and business wrap-ups. But it’s also the most important window to revisit your tax and investment strategy. The moves you make between now and December 31 can have a lasting impact on your tax bill, retirement savings, and overall financial health.
Rather than waiting until tax season to react, proactive year-end planning allows you to take control. Here are several strategies that can help individuals, families, and business owners maximize their opportunities.
1. Harvesting Gains & Losses
Markets fluctuate throughout the year, and not every investment will perform the way you expect. That doesn’t mean losses are wasted. By strategically selling certain investments at a loss, you can offset taxable gains elsewhere in your portfolio. This is called tax-loss harvesting.
Example: If you sold stock A with a $10,000 gain, selling stock B with a $7,000 loss reduces your taxable gain to just $3,000.
Losses beyond your gains can offset up to $3,000 of ordinary income annually, with the remainder carried forward.
This strategy can be particularly useful for investors who rebalanced portfolios during 2025’s market volatility.
2. Maximize Retirement Contributions
Retirement accounts remain one of the most effective tools for reducing taxable income. Year-end is the deadline for many contribution opportunities.
401(k) Plans: For 2025, you can contribute up to $23,000 ($30,500 if you’re age 50+).
Traditional IRAs: Contributions may be deductible, depending on income levels.
SEP IRAs for Business Owners: Contributions can be up to 25% of compensation, capped at $69,000 for 2025.
Even small increases in contributions before December 31 can have a meaningful long-term compounding effect while lowering your current tax liability.
3. Charitable Giving Strategies
The end of the year is when many people make charitable contributions, and there are tax-smart ways to do it.
Donor-Advised Funds (DAFs): Contribute a lump sum now, take the deduction in 2025, and distribute gifts to charities over time.
Qualified Charitable Distributions (QCDs): If you’re age 70½ or older, you can direct up to $100,000 per year from your IRA to a qualified charity. These distributions count toward your required minimum distribution (RMD) and reduce taxable income.
Appreciated Assets: Donating securities instead of cash allows you to avoid capital gains taxes while still claiming the deduction for the fair market value.
4. Business Owner Benefits
For entrepreneurs, year-end tax planning is especially valuable. The tax code offers multiple incentives that can reduce liability and free up cash flow.
Section 179 Deductions: Deduct the full purchase price of qualifying equipment or software placed in service during the year.
Review Payroll Optimization: Ensure reasonable salaries for owner-operators and consider year-end bonuses to shift deductions into the current tax year.
Retirement Plans: Establishing or contributing to a 401(k), SIMPLE IRA, or SEP IRA can significantly reduce taxable income while providing employee benefits.
5. Don’t Overlook the Basics
Sometimes the most effective strategies are the simplest:
Confirm you’ve withheld enough taxes to avoid penalties.
Review flexible spending account (FSA) balances so you don’t lose unused funds.
Revisit beneficiary designations to ensure they’re up-to-date.
The Bottom Line
December 31 isn’t just the end of the calendar year—it’s the deadline for many of the most impactful tax strategies. By addressing items like tax-loss harvesting, retirement contributions, charitable giving, and business-owner deductions now, you can reduce your tax burden and set yourself up for a stronger start in 2026.
Don’t wait until April to find out what you could have done differently. Year-end is your opportunity to act.
This material is for informational purposes only and should not be construed as tax or legal advice. Please consult with a qualified tax advisor or legal professional before making financial decisions. Past results do not guarantee future outcomes.
