Year-End Tax Planning: Smart Moves to Consider Before December 31
As we approach year-end, it’s a great time to review your finances and look for ways to make the most of available tax-saving opportunities. A few simple steps before December 31 can make a meaningful difference when tax time rolls around.
Here are some areas to review:
Take Your Required Minimum Distributions (RMDs)
If you’re age 73 or older, you may need to take required minimum distributions (RMDs) from your retirement accounts before year-end. Missing an RMD can lead to steep IRS penalties. If you have questions about calculating or planning for your RMDs, please reach out.
Maximize Retirement Plan Contributions
If you have a 401(k), 403(b), or similar plan at work, contributing as much as possible can help reduce your taxable income while boosting long-term savings.
The 2025 contribution limit is $23,500.
If you’re age 50 or older, you can make an additional $7,500 “catch-up” contribution.
If your employer offers a Roth 401(k), you may want to consider how a mix of pre-tax and after-tax contributions fits into your overall plan. Not sure which approach makes sense? Let’s talk through it.
Evaluate a Roth Conversion
For some people, converting a portion of a traditional IRA to a Roth IRA can make sense—especially in lower-income years. This move creates taxable income now but allows for potential tax-free withdrawals later in retirement. Because everyone’s tax situation is different, it’s best to review this with your tax professional before making a decision.
Review Charitable Giving Options
If charitable giving is part of your plan, making donations before year-end can help you support the causes you care about while potentially reducing your tax bill.
If you’re age 70½ or older, you may also be able to make a Qualified Charitable Distribution (QCD) directly from your IRA, which can count toward your RMD and reduce taxable income. If you’d like to explore whether a QCD could make sense, feel free to reach out.
Review Your Investment Portfolio for Tax Efficiency
Now’s a good time to look at your investments and see if there are opportunities to rebalance or harvest tax losses in non-retirement accounts. Tax-loss harvesting involves realizing investment losses to offset gains, which can help manage your tax liability. It’s worth reviewing your holdings before year-end to see if this strategy applies to you.
Consider Gifting
For 2025, you can gift up to $19,000 per person ($38,000 for married couples) to family members or others without triggering gift taxes. This can be a great way to reduce the size of your taxable estate while supporting loved ones during your lifetime.
Don’t Forget Other Tax-Advantaged Accounts
If you have a Health Savings Account (HSA) or an IRA, you generally have until the tax filing deadline (April 15, 2026) to make contributions for 2025. These accounts offer valuable tax benefits and can help you save more efficiently for retirement and health expenses.
Wrapping Up
Year-end is a good time to take stock of your financial picture and make sure everything is aligned with your goals. If you have questions about any of these strategies—or would like to review how they might fit into your plan—feel free to reach out before December 31.
Disclosures: All investments and strategies have the potential for profit or loss. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor's portfolio. There are no assurances that a portfolio will match or exceed any particular benchmark. Advisory services are offered through Aegis Wealth Management, Inc.. The firm is registered as an investment advisor with the SEC and only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the advisor has achieved a specific level of skill or ability. The content of this article has been created with the assistance of artificial intelligence. Content should not be regarded as a complete analysis of the subjects discussed and should not be viewed as an offer to buy or sell the securities discussed. It should not be viewed as personalized investment advice. You should consult with a professional advisor before implementing any strategies discussed. Tax information provided is general in nature and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. Tax rules are subject to change at any time.