One Month Check In

Year-End Tax Moves to Make Before December 31, 2025

As we enter the final months of 2025, now is the time to take decisive action on strategies that can reduce your tax bill and position you for a strong start in 2026. Proactive planning before December 31 can unlock meaningful savings and ensure you’re making the most of the current tax environment.

At Evolved Tax, we’ve highlighted the most time-sensitive steps to consider before year-end.

1. Maximize Retirement Contributions

Before December 31, make sure your retirement savings are fully optimized for 2025. The contribution limits are:

• 401(k): $23,500 (plus $7,500 catch-up if age 50+)
• Traditional or Roth IRA: $7,000 (plus $1,000 catch-up if age 50+)

For self-employed individuals, funding a SEP or Solo 401(k) can provide a significant deduction. If you expect higher income in retirement, consider a Roth conversion while rates are favorable.

2. Complete Charitable Giving Before Year-End

Charitable giving is one of the most effective ways to generate meaningful tax savings. To receive a 2025 deduction, contributions must be made by December 31. Strategies include:

• Donating appreciated securities instead of cash to avoid capital gains
• “Bunching” donations for multiple years into 2025 for a larger deduction
• Using a Donor-Advised Fund (DAF) to claim a deduction now while granting over time
• Making Qualified Charitable Distributions (QCDs) directly from your IRA (if age 70½ or older) to satisfy RMDs tax-free

3. Review Capital Gains and Investment Positions

Now is the time to take stock of your portfolio:

• Harvest losses to offset realized gains and reduce taxable income
• Rebalance investments while being mindful of holding periods and wash-sale rules
• Evaluate whether to realize or defer gains based on your income projections and long-term investment goals

Strategically managing capital gains and losses before year-end can have a major impact on your overall tax liability. Most brokerages will offer tax loss harvesting while avoiding any consequence of the wash sale rules.

4. Assess Whether You Can Take the Increased State and Local Tax (SALT) Deduction

The One Big Beautiful Bill Act has allowed an increased SALT deduction starting in 2025. Taxpayers earning less than $500,000 (filed jointly) can deduct up to $40,000 of state and local taxes paid. This presents an incentive to prepay any real estate taxes owed, or accelerate Q4 estimated tax payments before December 31^st.

5. Time Income and Deductions Strategically

For individuals and business owners, the final quarter of the year is your last chance to decide whether to accelerate income or defer it into 2026.

• If you expect higher income next year, consider accelerating deductions (such as retirement contributions or charitable gifts) into 2025.
• If 2025 has been an unusually high-income year, explore options to defer income where possible to reduce your tax exposure.

Your optimal strategy depends on your specific financial situation so coordination with your advisor is key.

6. Use the Annual Gift Exclusion

This year, you can give up to $18,000 per recipient ($36,000 per couple) without reducing your lifetime exemption or triggering any filing requirements. These gifts must be made before December 31 to qualify for 2025. It’s a simple but powerful tool for transferring wealth tax-free over time.

7. Confirm Withholding and Estimated Payments

Before year-end, check your withholding and estimated tax payments to make sure they align with your actual 2025 income. Reviewing now can help you avoid underpayment penalties and smooth your cash flow heading into next year.

Take Action Before the Year Closes

The final months of 2025 present valuable opportunities to reduce taxes, strengthen your financial position, and plan ahead with confidence. Year-end planning is about being proactive capturing every available benefit before the calendar resets.

At Evolved Tax, our advisors specialize in customized tax strategies for high-net-worth individuals, private equity funds, and start-ups. Schedule your year-end planning session today to ensure you’re maximizing every opportunity before December 31.