Year-End Tax Planning

Year-End Tax Planning: 5 Key Moves to Consider Before December 31
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As the year draws to a close, now is an ideal time to review your financial picture and take advantage of tax-saving opportunities. Several important deadlines fall on December 31, and proactive planning can help reduce your tax bill and strengthen your long‑term financial position. Below are five key strategies to consider as you prepare for year-end.
 
1. Maximize Contributions and Meet Year-End Deadlines
Many tax-advantaged accounts require contributions or distributions before December 31. While IRA contributions can be made up to the tax-filing deadline, most workplace retirement plans such as 401(k)s and 403(b)s must be funded by year-end.
If you are age 73 or older, ensure you have taken your Required Minimum Distribution (RMD) to avoid penalties.
For families saving for education, 529 plan contributions may qualify for state tax benefits when completed by December 31.
 
2. Decide Whether to Itemize Deductions
Taxpayers can choose to take the standard deduction or itemize if eligible expenses exceed the standard amount. For 2025, the standard deduction is $15,750 for single filers and $31,500 for married couples filing jointly.
Itemizing may make sense if you have significant medical expenses, mortgage interest, charitable contributions, or state and local taxes (SALT).
New legislation temporarily raises the SALT deduction cap to $40,000, which may benefit households with higher property or income taxes.
Individuals age 65+ may also be eligible for an additional deduction.
 
3. Use Tax-Loss Harvesting to Offset Gains
If you hold investments in taxable accounts that have declined in value, tax-loss harvesting may help reduce your taxable income.
Selling investments at a loss can offset realized gains and reduce ordinary income by up to $3,000 per year, with unused losses eligible for indefinite carryforward.
Be mindful of the wash‑sale rule, which prohibits buying back a substantially identical investment within 30 days.
 
4. Evaluate a Roth Conversion
A Roth conversion involves moving money from a Traditional IRA to a Roth IRA and paying taxes on the converted amount today. This strategy may be advantageous if you expect higher income or higher tax rates in the future, or if you want to reduce future RMDs.
Market downturns can create ideal timing for conversions since lower account values may reduce the associated tax bill.
High earners may also consider backdoor or mega-backdoor Roth strategies if eligible.
 
5. Plan for Gifting and Charitable Contributions
For 2025, the annual gift-tax exclusion allows individuals to give up to $19,000 per person, or $38,000 per person for married couples who elect gift‑splitting.
Charitable giving can also provide meaningful tax benefits. Donating highly appreciated securities may allow you to avoid capital gains taxes while deducting the full fair market value if you itemize.
Starting in 2026, even non-itemizers will be able to deduct a limited amount of cash charitable contributions, making early planning important.
 
Final Thoughts
Thoughtful year-end planning is an opportunity to align your tax strategy with your broader financial and personal goals. As always, Traditions Wealth Advisors is here to help you evaluate your options and determine which strategies best fit your situation.
If you’d like to review your year‑end plan or discuss these strategies in more detail, please contact our team to schedule a conversation at 979-694-9100 or [email protected]
 
Source:
Fidelity Viewpoints: 5 year-end tax-saving moves. Oct 2025.
https://www.fidelity.com/learning-center/personal-finance/yearend-tax-planning