Year-End Tax Strategies That Matter: Smart Moves to Make Before the End of 2025

This month is a final opportunity to implement tax planning strategies to help lower your annual tax burden. With significant law changes taking effect in 2026, this year-end planning window could be more important than ever. While there are numerous ways to reduce your 2025 tax exposure, the following strategies tend to have the most impact for high-net-worth individuals and families.

Understanding the 2026 Tax Law Changes: Why Year-End 2025 Planning Matters

Before diving into specific strategies, it’s essential to understand why taking action before December 31, 2025, carries heightened urgency this year.

The OBBBA’s impact on charitable giving

The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, introduced significant changes to charitable deductions beginning in 2026 that make accelerating donations into 2025 particularly advantageous, including:

• A new 0.5% AGI floor for individual donors – Beginning in 2026, individual taxpayers who itemize will have their charitable deductions reduced by 0.5% of their adjusted gross income (AGI). For example, if your household has an AGI of $500,000, your total deductible charitable amount is reduced by $2,500. By making donations in 2025, you avoid this reduction entirely.

• Reduced deduction value for high earners – The tax benefit of itemized charitable deductions will be capped at 35% for taxpayers in the highest bracket (37% marginal rate), down from the current 37% deduction value. This means high-income earners will receive $350 in tax savings per $1,000 donated in 2026, compared to $370 in 2025.

• A new universal deduction for non-itemizers – Beginning in 2026, taxpayers who don’t itemize can deduct cash donations to charities up to $1,000 for single filers or $2,000 for married couples filing jointly. This provision doesn’t apply to contributions to donor-advised funds (DAFs) or private foundations.

• An estate tax exemption increase – The OBBBA also permanently increased the federal estate tax exemption to $15 million per individual or $30 million for married couples effective January 1, 2026, with annual inflation adjustments thereafter. This removes previous sunset uncertainty and creates new long-term planning opportunities.

Why act before December 31

Given these changes, 2025 represents the final year to maximize charitable giving tax benefits under current rules. Donations made before year-end will receive the full deduction value without the 0.5% AGI floor, making this a great time to accelerate your philanthropic impact.

Optimize Your Charitable Impact

If your goals include supporting charitable causes that are important to you, consider maximizing your impact before year-end. The following strategies can help you achieve both philanthropic and tax planning objectives.

Make an in-kind donation of stock or other appreciated assets

Rather than selling securities to fund your charitable donation, consider transferring the assets in-kind. Not only does doing so allow you to avoid capital gains tax on the sale but it also allows you to deduct the full market value of the securities on your itemized tax return. And, because charitable organizations are tax-exempt, the nonprofit that receives your donation can sell the securities and receive full market value, free from taxes. That’s a win-win for both you and the charity!

This strategy is particularly effective for highly appreciated assets held for more than one year. For example, if you purchased stock for $10,000 that’s now worth $50,000, donating the shares allows you to claim a $50,000 deduction while avoiding capital gains tax on the $40,000 appreciation. In the 37% tax bracket, this could generate up to $18,500 in tax savings from the deduction while supporting your favorite causes.

Establish a donor-advised fund (DAF)

A DAF lets you take a full tax deduction in the year you contribute to the DAF while allowing you to distribute assets to charities over time. This can be an especially effective strategy for reducing your taxable income during a high-income year while keeping your annual charitable goals intact.

Additionally, DAFs accept a wide variety of assets beyond cash, including publicly traded securities, private business interests, real estate and cryptocurrency, providing flexibility for donors with concentrated or illiquid holdings.

Bunch your donations

If you don’t currently meet the threshold for filing an itemized tax return, it may make sense to consider “bunching” your charitable donations. This refers to the strategy of combining several years’ worth of charitable donations into a single large donation. If your single-year donation is high enough, it will push you over the itemized filing threshold, which allows you to take a charitable deduction for the amount contributed.

For example, if you typically donate $5,000 to charities each year, it may make sense to “bunch” these contributions into a $25,000 donation every five years so that you can file an itemized tax return and claim a charitable deduction. This strategy is particularly effective when funneled through a DAF, as you can bunch your donations in a single year while distributing assets to charities over time.

For 2025, the standard deduction is $15,750 for single filers and $31,500 for married couples filing jointly. To benefit from itemizing, your total deductions — including charitable contributions; state and local taxes (up to $40,000 but can be limited to $10,000, depending on your AGI); mortgage interest; and medical expenses — must exceed these thresholds.

Leverage qualified charitable distributions (QCDs) if you’re 70 ½ or older

If you’re age 70½ or older, a QCD represents one of the more tax-efficient charitable giving strategies available. QCDs allow you to transfer up to $108,000 directly from your traditional IRA to qualified charities in 2025 ($216,000 for married couples if both spouses qualify).

The transferred amount counts toward satisfying your required minimum distribution (RMD) if you’re age 73 or older, but it doesn’t increase your adjusted gross income (AGI). This strategy provides the following advantages:

• Lower taxable income compared to taking the RMD and donating cash
• A potential reduction in taxes on Social Security benefits
• Avoidance or reduction of Medicare premium surcharges (IRMAA)
• No itemization required to receive the tax benefit
• The ability to exceed standard deduction limits without itemizing

Importantly, QCDs aren’t subject to the 2026 charitable deduction changes, making them an increasingly attractive option for older donors. The QCD must be made directly from your IRA to the charity by your IRA custodian — you can’t withdraw the funds yourself and then donate them.

Note that QCDs can be made from traditional IRAs, inherited IRAs and inactive SEP or SIMPLE IRAs but not from 401(k)s, 403(b)s or other employer-sponsored plans (though you can roll these accounts to an IRA first).

Support Your Loved Ones Through Strategic Giving

If your plans include providing financial support for loved ones, an annual gifting strategy can help maximize your impact without affecting your lifetime gift tax exclusion.

Maximize your annual gift tax exclusion

In 2025, the IRS allows individuals to give up to $19,000 per year, per recipient, without triggering a gift tax filing or reducing your lifetime gift and estate exemption. If you’re married, both you and your spouse can give $19,000 per recipient, for a total gift of $38,000 per recipient.

One benefit of giving assets throughout your lifetime is that gifts under the annual exclusion amount don’t reduce your lifetime gift and estate tax exemption ($13.99 million in 2025, increasing to $15 million in 2026). Larger gifts above the annual exclusion amount will chip away at your lifetime exemption but can still be a powerful estate reduction tool. And perhaps a more valuable benefit is that you have the joy of seeing the impact your financial support can have on your loved ones’ lives, which can be a priceless gift for you as well.

Consider making your 2025 annual exclusion gifts before December 31 to maximize this year’s exclusion amount. You can gift again on January 1, 2026, effectively doubling the transfer in a short timeframe.

Estate planning becomes particularly relevant given the permanent exemption increase, indexed for inflation, starting in 2026. While fewer estates will face federal estate taxes, strategic lifetime gifting can still reduce state estate taxes, remove appreciation from your taxable estate and support loved ones when they need it most.

Superfund Your College Savings

If your goals include paying education expenses for a loved one, a 529 college saving plan offers valuable tax-savings opportunities, including tax-exempt growth and tax-free distributions when the funds are used to pay for qualified educational expenses as well as the potential for state income tax benefits.

The annual 529 contribution limit is the same as the annual gift tax exclusion amount of $19,000 per individual per recipient or $38,000 per married couple per recipient. However, the IRS allows taxpayers to frontload up to five years’ worth of contributions in a single year through “superfunding.” That means you can give up to $95,000 per year per recipient as an individual or $190,000 if you and your spouse both wish to support a loved one’s educational aspirations.

Key rules for superfunding

Key rules for superfunding include:

• You must elect to treat the contribution as made ratably over five years on a Form 709 gift tax return.
• You can’t make additional annual exclusion gifts to that beneficiary during the five-year period without using your lifetime exemption.
• If the donor dies before the five-year period ends, a prorated portion returns to the taxable estate.

529 plans have become even more versatile, as the SECURE 2.0 Act allows up to $35,000 in unused 529 funds to be rolled over to a Roth IRA for the beneficiary (subject to certain conditions), providing added flexibility if education needs change.

Maximize Your Retirement Savings

Contributions to tax-deferred retirement accounts, such as 401(k)s and traditional IRAs, reduce your taxable income during the year in which they’re made. Maxing out your contributions can help limit your income tax exposure while building long-term wealth.

401(k) and 403(b) contribution limits for 2025

In 2025, the following limits apply to pre-tax employer-sponsored retirement plans:

Employee contribution limits:

• $23,500 under age 50
• $31,000 age 50+ ($23,500 + $7,500 catch-up contribution)
• $34,750 ages 60-63 ($23,500 + $11,250 “enhanced” catch-up contribution)

Employee and employer contribution limits:

• $70,000 under age 50
• $77,500 age 50+ ($70,000 + $7,500 catch-up contribution)
• $81,250 ages 60-63 ($70,000 + $11,250 “enhanced” catch-up contribution)

The enhanced catch-up contribution for ages 60-63 is a new provision that recognizes this critical pre-retirement period when many individuals have peak earning capacity and reduced financial obligations. If you’re in this age range, taking advantage of this higher limit can significantly boost your retirement readiness.

IRA contribution limits for 2025

In 2025, the following limits apply to IRA contributions:

• $7,000 under age 50
• $8,000 age 50+ ($7,000 + $1,000 catch-up contribution)

Remember that traditional IRA contributions may be tax-deductible depending on your income and whether you’re covered by a workplace retirement plan. The deduction phases out for single filers with modified adjusted gross income (MAGI) of $79,000-$89,000 and for married couples filing jointly with MAGI of $126,000-$146,000 when the contributing spouse is covered by a workplace plan.

Important deadline: While most year-end tax strategies must be completed by December 31, 2025, you have until April 15, 2026, to make IRA contributions for the 2025 tax year. However, 401(k) and 403(b) contributions must be made through payroll deductions and completed by December 31.

Consider strategic Roth IRA conversions

A Roth IRA conversion involves transferring funds from a traditional IRA or 401(k) to a Roth IRA and paying income tax on the converted amount in the year of conversion. While doing so creates an immediate tax liability, it offers compelling long-term benefits:

• Tax-free growth – All future earnings grow tax-free.
• Tax-free withdrawals – Qualified distributions in retirement are completely tax-free.
• No required minimum distributions (RMDs) – Roth IRAs aren’t subject to RMDs during the owner’s lifetime.
• Tax diversification – Gain flexibility to manage tax brackets in retirement.
• Estate planning benefits – Heirs receive tax-free withdrawals.

Optimal timing for Roth conversions:

• Low-income years – Early retirement, job transition or reduced work years.
• Market downturns – Convert depreciated assets and capture future appreciation tax-free.
• Filling lower tax brackets – Convert enough to “fill up” your current tax bracket without pushing into the next.
• Before RMDs begin – Reduce future RMD amounts and associated tax liability.

For example, if you’re single with $150,000 in taxable income, you’re in the 24% tax bracket (which extends to $197,300 in 2025). You could convert up to $47,300 while remaining in the 24% bracket. Ideally, taxes generated from the conversion are paid from non-retirement accounts to maximize the amount growing tax-free in your Roth IRA.

With the potential for tax rate increases in the future, Roth conversions in 2025 allow you to lock in today’s rates while eliminating future tax uncertainty on converted amounts.

Manage Your Required Minimum Distributions (RMDs)

If you’re age 73 or older, you must take RMDs from traditional IRAs, 401(k)s and similar retirement accounts by December 31, 2025. Failure to take your RMDs results in a steep penalty — 25% of the amount you should have withdrawn (reduced to 10% if corrected within two years).

Strategies to minimize the tax impact of RMDs

Strategies to minimize the tax impact of RMDs include:

• Qualified charitable distributions – As discussed earlier, donors age 70 ½ or older can donate up to $108,000 directly from IRAs to satisfy RMDs without increasing their taxable income.

• Roth conversions before RMDs begin – Converting traditional IRA assets to Roth IRAs before age 73 reduces future RMD amounts and eliminates RMD requirements on converted balances.

• Strategic withdrawal planning – If you’re in a lower tax bracket in 2025 than you expect to be in during future years, consider taking distributions beyond your RMD requirement to take advantage of current rates.

• Aggregate and allocate – If you have multiple IRAs, you can calculate the total RMD across all accounts but take the distribution from just one or several accounts, providing flexibility in your withdrawal strategy. Note that RMDs from 401(k)s must be taken separately from each plan, while IRA RMDs can be aggregated. If you’re still working at age 73 or older, you may be able to delay RMDs from your current employer’s plan (but not from IRAs or previous employers’ plans).

Harvest Investment Losses to Offset Gains

Tax-loss harvesting refers to the process of selling securities that have declined in value, realizing an investment loss then re-purchasing different investments that share similar risk profiles and expected returns. When done correctly, this strategy allows you to generate a tax deduction on the loss while maintaining your desired market exposure.

How tax-loss harvesting works

You can use investment losses to offset capital gains on a dollar-for-dollar basis. If your losses exceed your gains, you can deduct up to $3,000 of excess losses against ordinary income each year ($1,500 if married filing separately). Any remaining losses can be carried forward indefinitely to offset gains or income in future years.

For example, if you have $50,000 in capital gains and $30,000 in losses, you’ll owe tax on only $20,000 of net gains. If you have $60,000 in losses and only $50,000 in gains, you can deduct $3,000 against ordinary income in 2025 and carry forward $7,000 to 2026 and beyond.

Understanding the wash sale rule

It’s important to note that the IRS imposes a wash sale rule, which is intended to prevent investors from selling at a loss for the primary purpose of realizing a tax deduction while maintaining the same market position. You may inadvertently trigger the wash sale rule if you sell an investment at a loss and purchase a “substantially similar” investment within 30 days before or after the sale.

If you trigger the wash sale rule, you won’t be eligible for a tax deduction on the loss. Instead, the disallowed loss is added to the cost basis of the replacement security, effectively deferring the tax benefit until that position is sold.

Strategies to avoid wash sale violations include:

• Purchasing a similar but not “substantially identical” security, possibly in a different asset class or sector
• Waiting at least 31 days before repurchasing the same security
• Being mindful of automatic dividend reinvestment plans that may trigger wash sales

It’s wise to seek the guidance of a qualified wealth manager and tax advisor rather than attempting this strategy on your own. Professional guidance helps to ensure compliance while seeking to optimize your tax-loss harvesting strategy.

Year-end timing consideration: December is your final opportunity to harvest losses for the 2025 tax year.

Additional Year-End Tax Strategies to Consider

Beyond the major strategies outlined above, several additional year-end tax planning moves can further reduce your 2025 tax liability.

Maximize health savings account (HSA) contributions

If you’re enrolled in a high-deductible health plan (HDHP), HSAs offer a rare triple tax advantage:

• Tax-deductible contributions – Reduce your current year taxable income.
• Tax-free growth – Earnings accumulate without taxation.
• Tax-free withdrawals – Distributions for qualified medical expenses are tax-free.

2025 HSA contribution limits:

• $4,300 for self-only coverage
• $8,550 for family coverage
• $1,000 additional catch-up contribution if age 55+

Unlike Flexible Spending Accounts (FSAs), HSA funds roll over indefinitely — there’s no “use it or lose it” provision. This makes HSAs excellent vehicles for long-term healthcare savings and even retirement planning, as you can reimburse yourself for qualified medical expenses incurred years earlier (if you keep proper receipts).

Important deadline: While most year-end tax strategies must be completed by December 31, 2025, you have until April 15, 2026, to make HSA contributions for the 2025 tax year. However, if contributing via payroll deduction (with the additional tax benefit of avoiding payroll taxes), those contributions must be completed by December 31.

If you were enrolled in an HSA-eligible plan as of December 1, 2025, and remain enrolled in an HSA-eligible plan through December 31, 2026, you can contribute the full annual amount regardless of how many months you were enrolled during the year, thanks to the IRS “last-month rule.”

Business owner deductions: Section 179 and bonus depreciation

If you own a business, significant tax deductions are available for equipment and property purchases made before year-end, thanks to enhanced provisions under the OBBBA.

Section 179 expensing (enhanced for 2025)

• Maximum deduction– $2.5 million (up from $1.22 million in 2024)
• Phase-out threshold– $4 million (complete phase-out at $6.5 million)
• Applies to both new and used qualifying property
• Deduction limited to business taxable income (can’t create a loss)

100% bonus depreciation (reinstated and made permanent)

• 100% first-year depreciation for qualified property acquired and placed in service after January 19, 2025
• No dollar limit on eligible property
• Can create or increase a net operating loss
• Property acquired before January 19, 2025, remains subject to previous phase-out schedule (40% in 2025)

Strategic approach: Apply Section 179 first to assets that may not qualify for bonus depreciation or when you want selective expensing. Then apply 100% bonus depreciation to remaining qualified assets for full first-year expensing. This combined approach maximizes current-year deductions while preserving flexibility.

Qualifying property includes machinery, equipment, vehicles, computers, office furniture and certain building improvements. For businesses planning significant capital expenditures, timing purchases and installations before December 31, 2025, can generate substantial tax savings.

Make estimated tax payments to avoid penalties

If you’re self-employed or have significant income not subject to withholding (investment income, rental income, etc.), ensure you’ve made adequate estimated tax payments throughout 2025 to avoid underpayment penalties. The final quarterly payment for 2025 is due January 15, 2026.

Generally, you must pay at least 90% of your 2025 tax liability or 100% of your 2024 tax liability (110% if your 2024 AGI exceeded $150,000) to avoid penalties. If you’re short on your estimated payments, consider accelerating deductions into 2025 or making a larger fourth-quarter payment by the deadline.

You can also increase withholding from year-end salary, bonuses or retirement distributions, as withholding is treated as paid evenly throughout the year regardless of when it’s actually withheld.

Year-End Tax Planning Checklist

To ensure you don’t miss critical opportunities before December 31, 2025, use this comprehensive checklist:

Charitable giving

☐ Accelerate charitable donations to 2025 to avoid 2026 AGI floor.

☐ Donate appreciated securities held more than one year.

☐ Establish and/or contribute to a donor-advised fund.

☐ Make QCDs if age 70 ½ or older (up to $108,000).

☐ Bunch multiple years of donations if near itemization threshold.

Retirement and investment accounts

☐ Max out 401(k)/403(b) contributions ($23,500-$34,750 depending on age).

☐ Confirm employer match contributions will be made by year-end.

☐ Take RMDs if age 73 or older (avoid 25% penalty).

☐ Consider Roth IRA conversion to fill lower tax brackets.

☐ Maximize HSA contributions ($4,300 individual/$8,550 family).

Gifting strategies

☐ Make annual exclusion gifts ($19,000 per recipient, $38,000 for couples).

☐ Consider superfunding 529 plans ($95,000/$190,000 five-year election).

☐ Coordinate with estate planning attorney if near exemption limits.

Investment portfolio

☐ Harvest investment losses to offset capital gains.

☐ Verify no wash sale violations (30-day rule).

☐ Consider selling appreciated assets if in low-income year.

☐ Rebalance portfolio for optimal asset allocation and tax efficiency.

Business owners

☐ Purchase and place qualifying equipment in service (Section 179: $2.5M limit).

☐ Maximize bonus depreciation (100% for property acquired after January 19, 2025).

☐ Establish Solo 401(k) by December 31 (contributions can wait until filing).

☐ Defer income or accelerate expenses based on tax situation.

Income and deduction timing

☐ Pay deductible expenses by December 31 (state/local taxes, mortgage interest, medical expenses exceeding 7.5% AGI).

☐ Defer income to 2026 if expecting a lower tax bracket.

☐ Accelerate income to 2025 if expecting higher future earnings.

☐ Make fourth quarter estimated tax payment by January 15, 2026.

Final review

☐ Schedule year-end planning meeting with wealth manager and tax advisor.

☐ Review beneficiary designations on all accounts.

☐ Organize tax documents for efficient filing.

☐ Document all charitable contributions and maintain proper receipts.

How Creative Planning Can Help

Navigating the complexity of year-end tax strategies requires expertise across multiple disciplines — tax planning, investment management, estate planning and retirement planning. At Creative Planning, our team-based approach integrates all aspects of your financial life to develop comprehensive strategies tailored to your unique situation.

Creative Planning wealth management services

Our services include:

• Personalized tax planning – Identify opportunities to minimize your tax burden across federal, state and local jurisdictions.
• Investment portfolio optimization – Implement tax-loss harvesting, asset location strategies and capital gains management.
• Charitable giving strategies – Design impactful philanthropy through donor-advised funds, private foundations and planned giving.
• Retirement income planning – Optimize distribution strategies, Roth conversions and RMD management.
• Estate planning coordination – Work with your attorney to leverage the $15 million exemption and implement generational wealth transfer strategies.

With the 2026 tax law changes creating both challenges and opportunities, proactive planning before December 31, 2025 is essential. Don’t leave money on the table or miss critical deadlines that could cost you thousands in unnecessary taxes.

If you could use help implementing tax planning strategies to reduce your 2025 tax burden, Creative Planning is here for you. To get started, please schedule a call with a member of our wealth management team today.