Can you believe it’s already December, and how quickly time seems to fly as we get older? As we age, each year is a smaller fraction of our lives, making time pass faster.
You didn’t open this blog to read an explanation for why time seems to fly, though. Hopefully, you are interested in ways to reduce your tax bill. If so, you will find some 2025 year-end tax planning ideas to help you lower your tax bill in both 2025 and 2026.
Many people don’t often think about taxes. Perhaps they come to mind when they start receiving their tax documents in the mail. Or, when they prepare their return. If someone else prepares your return, it could be a bit of out-of-sight, out-of-mind. Unless, of course, you owe money when you file your return.
Unfortunately, by the time the calendar flips to the new year, you can’t do much to reduce last year’s tax bill. You might be able to fund an IRA, a Simplified Employee Pension (SEP), or an HSA. But that’s about it.
We still have a few weeks to go in 2025. In October, I reached out to Apprise’s clients to see if they wanted to meet to discuss tax planning ideas before the end of the year. Many of them took me up on the offer.
In this video, I talked with Carl Richards about the importance of tax planning, not just tax reporting.
Let’s look at some of the things you can do to lower your tax bill this year and in future years, before the clock strikes midnight on December 31.
Key Takeaways
- You still have time in December to use 2025 year-end tax planning strategies that can lower what you owe for 2025 and put you in a better position for 2026.
- Reviewing 401(k), IRA, backdoor Roth IRA, and HSA contributions before year-end helps you make better use of the higher 2025 and 2026 contribution limits.
- Thoughtful charitable giving, including appreciated stock, donor-advised funds, and qualified charitable distributions, can increase your impact and reduce taxes, especially with new rules under OBBBA starting in 2026.
- Tax-loss harvesting and tax-gain harvesting can both be helpful tools. Which one fits best depends on your income level, your holdings, and whether you are in the 0% capital gains bracket.
- Roth conversions remain one of the most powerful 2025 year-end tax planning strategies. Still, you want to watch how conversions interact with the SALT cap, the new senior deduction, IRMAA, and other OBBBA changes.
- If you are facing a new beginning, using 2025 year-end tax planning to align your tax decisions with your next chapter can help you use your TEAM of capital—Time, Energy, Attention, and Money—in ways that support what matters most to you.
1. Maximize Workplace Retirement Contributions
In 2025, you can contribute up to $23,500 to a workplace retirement plan, such as a 401(k) or a Roth 401(k). If you are 50 or older, you can contribute an additional $7,500, bringing your total to $31,000. As part of your 2025 year-end tax planning, check to see if you can increase contributions before year-end.
If you can’t max out, you can still consider increasing your savings rate for the last month of the year. At a minimum, if your employer offers a match, be sure to contribute enough to receive it.
Tips for 2026
In 2026, the base contribution increases to $24,500, and those 50 or older can add another $8,000. If you want to contribute the same amount each paycheck, don’t forget to change your withholding percentages before you receive your first paycheck in January.
Starting in 2026, if you earned more than $150,000 in FICA wages in the prior year (wages subject to Social Security taxes), your catch-up contributions must go into the Roth (after-tax) portion of your plan. If your plan doesn’t offer a Roth option, you can no longer make a catch-up contribution.
You will also want to coordinate Roth catch-ups with your broader tax plan, especially under the new OBBBA rules.
2. Maximize Individual Retirement Account Contributions
If eligible, you can contribute up to $7,000 to an IRA or Roth IRA in 2025. Those 50 or older can contribute another $1,000. For many households, reviewing IRA options is a core part of 2025 year-end tax planning. This Nerd Wallet article includes a table of the income limits for deductible IRA contributions. You can still make non-deductible IRA contributions if your income exceeds the limit. However, if eligible (see #3 below), the backdoor Roth strategy is preferred over a straight non-deductible IRA contribution.
Your eligibility for Roth IRA contributions phases out for single filers with Modified Adjusted Gross Income (MAGI) between $150,000 and $165,000. For married couples filing jointly, it phases out between $236,000 and $246,000.
Remember that, if eligible, you have until April 15, 2026, to contribute to your Individual Retirement Accounts and claim the contribution on your 2025 tax return. Also, if only one spouse works, the other can make a spousal IRA contribution provided the income limitations do not apply.
Tip for 2026
In 2026, the contribution limit increases to $7,500 plus a catch-up contribution of $1,100.
3. Backdoor Roth IRA
If your income is too high, you can’t contribute to a Roth IRA directly. Instead, you can use the “Backdoor Roth” strategy.
This strategy involves making a non-deductible contribution to an IRA and then converting it to a Roth IRA. Non-deductible IRAs only really work if you carefully track basis and avoid pro rata surprises later.
If you want to employ this strategy, you must ensure that you have a $0 pre-tax balance in your traditional IRA, rollover IRA, SEP IRA, and SIMPLE IRA on December 31. If you don’t, the conversion will be partially taxable. You can read more in “Wealth Unlocked: Navigating the Benefits of Backdoor Roth IRAs.” For higher-income earners, a backdoor Roth IRA can be one of the most powerful 2025 year-end tax planning strategies.
4. Optimizing Charitable Contributions
If you plan to donate to charity before the year ends, there are several strategies you can consider to help maximize your tax benefit.
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- Donate appreciated shares instead of cash.
- Bunch your charitable deductions.
- Make a qualified charitable contribution (you must be at least 70 ½ years old) from your IRA.
- Consider a Donor-Advised Fund (DAF)
When you donate appreciated stock, you can deduct the full market value of the shares (up to 30% of your AGI for public charities). You don’t pay capital gains taxes on the increased value of the shares.
Bunching charitable deductions is a strategy in which you time your contributions so that more of them occur in the same year. This approach allows you to claim the standard deduction in some years and itemize deductions in others. On a net basis, this can provide a larger total deduction over a few years.
A qualified charitable contribution (QCD) from your IRA allows you to withdraw money from your IRA and donate it directly to a charity without paying tax on the amount withdrawn. (In 2025, the cap for QCDs is $108,000.) This approach is more tax-efficient than paying tax on the amount withdrawn and then claiming a tax deduction. If you have started taking required minimum distributions (RMDs), a QCD can also satisfy some or all of your RMD.
A donor-advised fund (DAF) represents a separate charitable account maintained and operated by a tax-exempt sponsoring organization. You can receive an immediate tax deduction for any gifts in the year you make them (subject to IRS limitations). However, you can make grants over time.
Non-itemizers may want to delay some cash gifts until 2026 to take advantage of the new above-the-line deduction, while regular itemizers may prefer to accelerate giving into 2025 to avoid the 0.5% floor.
You can read more about each of these strategies in my blog, “Supporting Women’s New Beginnings: Tax-Efficient Charitable Giving.”
Tip for 2026
Effective with the 2026 tax year, a new deduction for cash contributions was adopted. It allows taxpayers who do not itemize their deductions to deduct up to $1,000 (singles) and $2,000 (married couples filing jointly). Those who itemize deductions can deduct charitable contributions only to the extent they exceed 0.5% of adjusted gross income (AGI). If you itemize deductions, you may want to make more deductions in 2025 when the 0.5% limitation does not apply.
In 2026, the QCD cap increases to $111,000.
5. Maximize Benefits of a Health Savings Account
As discussed in more detail in “A Comprehensive Review of Health Savings Accounts,” HSAs provide many tax benefits. In fact, they are triple tax-free, making them more tax-advantaged than either an IRA or a Roth IRA. You receive a tax deduction for amounts contributed to an HSA. You can invest your HSA funds and benefit from tax-free growth. In addition, withdrawals used for qualified medical expenses are tax-free.
In 2025, you can contribute $4,300 for individuals or $8,550 for families if you participate in a High-Deductible Health Plan (HDHP). Individuals age 55 and older can contribute an additional $1,000. You can make contributions for 2025 until April 15, 2026.
Please note that to contribute to an HSA, you must meet the following criteria:
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- You are covered by an HSA-eligible HDHP.
- You do not have other disqualifying coverage.
- You are not enrolled in Medicare.
Tip for 2026
In 2026, the contribution limits increase to $4,400 for an individual and $8,750 for a family. The catch-up contribution amount is unchanged at $1,000.
The maximum deductible for an HDHP increases from $1,650 to $1,700 for individuals and from $3,300 to $3,400 for families in 2026.
Here is a quick comparison of key contribution limits and health plan thresholds for 2025 and 2026 that matter for your 2025 year-end tax planning.
Key 2025 vs 2026 Contribution and Limit Numbers
| Item | 2025 | 2026 |
| 401(k), 403(b), most 457 employee contribution (under 50) | $23,500 | $24,500 |
| 401(k), 403(b), most 457 catch up contribution (age 50+) | $7,500 | $8,000 |
| Traditional and Roth IRA contributions (under 50) | $7,000 | $7,500 |
| IRA catch-up contribution (age 50+) | $1,000 | $1,100 |
| HSA contribution, self-only | $4,300 | $4,400 |
| HSA contribution, family | $8,550 | $8,750 |
| HSA catch-up contribution (age 55+) | $1,000 | $1,000 |
| HDHP minimum deductible, self-only | $1,650 | $1,700 |
| HDHP minimum deductible, family | $3,300 | $3,400 |
Figures reflect current IRS guidance for retirement plan limits and HSA or HDHP rules as of late 2025.
6. Tax Loss Harvesting
After a difficult start to the year, the stock market has delivered solid returns so far in 2025. As of the market’s close on Friday, December 5, 2025, the S&P 500 Index is up 16.8%. The bond market has also delivered gains. However, especially if you own individual stocks, your account could include stocks/ETFs that are worth less than you originally paid. You can use any losses to offset gains from other investments. Plus, you can claim up to a $3,000 capital loss deduction on your tax return. You can carry forward losses exceeding $3,000 forever.
Called tax loss harvesting, this strategy can lower your taxable income and, correspondingly, reduce your overall tax bill.
If you want to maintain your exposure to the stock market, you can also sell a security and buy a similar security (e.g., replace an S&P 500 Index fund with a total market index fund). If you own individual stocks, you could also sell a stock in one industry and replace it with a competitor’s stock.
You don’t want to forget the wash sale rule when implementing this strategy. You cannot buy the same or a substantially identical security within 30 days before or after the sale. This rule applies across all account types under your household’s control, meaning you can’t sell a stock you hold in your taxable account and repurchase it within 30 days in a tax-deferred account. If you sell and repurchase within 30 days before or after the sale, it will be a wash sale. If that happens, you cannot deduct the loss.
Please keep in mind that wash sales apply to losses, not gains.
7. Tax Gain Harvesting
If your taxable income falls below $48,350 ($96,700 for MFJ) in 2025, you may want to consider selling (and repurchasing) appreciated securities. Why? This technique increases the cost basis of your investment. It also lowers your future tax liability. Remember that, as stated above, the wash-sale rules apply only to losses, not gains.
Don’t forget about state taxes. If you pay state taxes on your gains, this strategy may not be as valuable. However, it could still be beneficial if, for example, your current and future state tax situations are different. Tax gain harvesting works best for those who live in states with no income tax, and/or no capital gains tax.
Tip for 2026
In 2026, the taxable income limit for 0% capital gains increases to $49,450 for singles and $98,900 for MFJ.
8. Roth Conversions
I saved Roth conversions, the most-used strategy among Apprise’s clients, for last. The most common retirement savings vehicle is a 401(k) or a traditional IRA.
Many favor these accounts because they receive a tax deduction for their contributions. What they may fail to consider is that they will owe ordinary income tax when withdrawing funds in the future. Diligent savers who regularly max out their savings can save a considerable amount in these accounts. They fail to realize how much in taxes they may pay when they withdraw the funds in retirement. Without proper planning, this can result in significant tax costs.
Roth conversions can give you greater control over how much you pay in taxes. In many cases, you can determine what marginal tax bracket you are comfortable filling and complete Roth conversions to fill that bracket. For some, that might be the 12% tax bracket. For others, it could be the 22% or 24% tax bracket. In some cases, it could even be the 32% tax bracket or higher.
Keep in mind that large Roth conversions can reduce or phase out some of your other tax benefits. For example, they can:
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- Interact with the SALT cap,
- Affect the new senior deduction,
- Influence IRMAA thresholds or the 3.8% net investment income tax.
For more on the benefits of Roth conversions, you can also read ”How Roth Conversions Can Help You, Your Surviving Spouse, and Your Heirs.”
9. Don’t Forget About the OBBBA (One Big Beautiful Bill Act).
Over the summer, the OBBBA was passed. It made some significant changes to deductions, credits, and retirement planning. I highlighted the key changes for investors and retirees in this blog.
When helping clients with estimated tax calculations and other tax planning, I have found that the changes to the state and local income tax (SALT) deduction and the Senior Deduction have the greatest impact. For example, a retired couple who ignores the new SALT limits and the Senior Deduction rules might be surprised to see their usual refund disappear in 2026, even though their income has not changed much.
FAQs: 2025 Year-End Tax Planning
1. What is 2025 year-end tax planning, and how is it different from just filing my return?
2025 year-end tax planning means using the last weeks of the year to make choices that can still change what you owe for 2025 and in future years. That includes steps like adjusting 401(k) contributions, making charitable gifts, doing Roth conversions, and harvesting gains or losses. Filing your return is mostly backward-looking. Year-end planning is about being intentional before the year closes, so you do not just report what happened, you shape it.
2. Which moves absolutely have to be done by December 31, 2025?
You must complete most calendar-based strategies by December 31. That includes Roth conversions, tax-loss or tax-gain harvesting, required minimum distributions (RMDs), qualified charitable distributions (QCDs), and most charitable gifts, including donor-advised fund contributions. Workplace retirement plan deferrals must also be deducted from year-end paychecks. By contrast, you can generally make IRA and HSA contributions for the 2025 tax year up to April 15, 2026.
3. How do I know if tax loss harvesting or tax gain harvesting makes more sense for me in 2025?
Tax loss harvesting can help if you have positions trading below your purchase price and you expect to realize gains elsewhere, since realized losses can offset realized gains and up to $3,000 of ordinary income, with any excess carried forward. Tax gain harvesting can make sense if your taxable income falls within the 0% long-term capital gains bracket, which for 2025 is up to $48,350 for single filers and $96,700 for married couples filing jointly. In that case, realizing gains and immediately repurchasing can raise your cost basis without adding federal capital gains tax, although state taxes may still apply.
4. How late can I wait to contribute to my IRA or HSA for the 2025 tax year?
For 2025, you generally have until the federal tax filing deadline, currently April 15, 2026, to make IRA and HSA contributions that count for the 2025 tax year. That means you can use early 2026 to “top off” your 2025 IRA and HSA funding if cash flow is tight in December. Remember that salary deferrals into workplace plans like 401(k)s are treated differently and must be deducted from paychecks you receive by December 31, 2025.
5. What should I watch for with Roth conversions as part of 2025 year-end tax planning?
With Roth conversions, you choose to add income now in exchange for tax-free withdrawals later, so you want to be intentional about which marginal tax bracket you are filling. It helps to look at your projected 2025 income, consider how much room you have left in your target bracket, and model how a conversion would affect things like Medicare IRMAA surcharges, the OBBBA senior deduction, and your ability to use new or expanded deductions and credits in 2025 and 2026.
6. I am over 70½ and charitably inclined. How do qualified charitable distributions (QCDs) fit into my 2025 planning?
If you are at least 70½ and have IRA assets, a QCD lets you send money directly from your IRA to a qualified charity. For 2025, you can transfer up to $108,000 per person, and any amount you direct this way can count toward your RMD while keeping that distribution out of your adjusted gross income. That can help reduce the taxability of Social Security benefits, lower Medicare surcharges, and preserve new deductions and credits that are based on MAGI under the One Big Beautiful Bill Act. QCDs must be completed by December 31 for them to count for the 2025 tax year.
Closing Thoughts
When it comes to taxes, it pays to plan. While it’s getting late in the year, you still have some time to lower your tax bill now and in the future through thoughtful 2025 year-end tax planning.
Don’t wait to think about taxes until you start to receive 1099s, W-2s, and other documents in the mail. Even worse, don’t avoid the topic altogether and just hand your documents to your tax preparer without planning at all.
While it’s getting late in the year, you still have some time to lower your tax bill now and in the future. Lowering your tax bill can leave you with more money to spend on the things that matter most to you. It can also make it easier for you to align your TEAM of capital (Time, Energy, Attention, and Money) with what matters most to you. If you have questions about how the new OBBBA rules interact with your tax plan or what tax planning ideas you can implement now or in the future, please schedule a call. This can be especially helpful if you are facing a new beginning and want tax decisions to support that next chapter. You can also sign up for our weekly blog to receive it directly in your inbox.
Tax rules can change, and your situation is unique, so please consult your tax advisor before implementing these ideas. All limits are current as of December 2025.
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