Last-Minute Tax Moves Before December 31st
We're in the home stretch. You have just a couple of weeks left to make moves that could significantly reduce your 2025 tax bill.
Some of these strategies take just minutes. Others require a bit more planning. But all of them stop working the moment the calendar flips to January 1st.
Here's what you should be thinking about right now.
Retirement Account Contributions
Max out your 401(k), 403(b), or 457: The 2025 limit is $23,500, or $31,000 if you're 50 or older. Check your year-to-date contributions now. If you're short, contact HR immediately to increase your final paycheck contributions.
Note: IRAs are different—you have until April 15, 2026 to contribute. So if you're deciding between maxing your 401(k) or IRA, prioritize the 401(k) before year-end.
Tax-Loss Harvesting
If you have investments sitting at a loss, selling them before December 31st lets you use those losses to offset capital gains. If your losses exceed your gains, you can offset up to $3,000 of ordinary income and carry forward the rest.
This is one of the most overlooked year-end strategies. Even in a good market year, most portfolios have at least a few positions in the red.
Required Minimum Distributions (RMDs)
If you're 73 or older, you must take your RMD by December 31st or face a 25% penalty on the amount you should have withdrawn.
Exception: If this is your very first RMD, you have until April 1, 2026. But delaying means you'll take two RMDs next year, which could push you into a higher tax bracket.
Pro tip: If you don't need the income and you're charitably inclined, consider a Qualified Charitable Distribution (QCD). Send up to $105,000 directly from your IRA to charity, satisfying your RMD without increasing your taxable income.
Charitable Giving
Donations must be completed by December 31st. That means cash or credit card donations processed by year-end, or checks postmarked by December 31st.
Better strategy: If you've held stocks or other investments for more than a year and they've appreciated, donate them directly instead of selling and donating cash. You avoid capital gains tax and still get the full deduction.
Donor-advised funds: Contribute before year-end, get the immediate tax deduction, and then distribute to specific charities over time.
Roth Conversions
If you had a lower-income year in 2025—maybe you retired, took time off, or had a business slowdown—this could be a good time to convert traditional IRA money to Roth.
You'll pay taxes now, but the money grows tax-free and comes out tax-free in retirement. The key is converting the right amount without pushing yourself into a higher bracket. Work with your financial advisor and tax professional to model this.
Health Savings Account (HSA)
If you have a high-deductible health plan, max out your HSA. The 2025 limits are $4,300 for individuals and $8,550 for families, with an extra $1,000 catch-up if you're 55 or older.
Most people can contribute through payroll or make a direct contribution before December 31st.
Flexible Spending Account (FSA)
FSAs are use-it-or-lose-it. Check your balance now and incur eligible expenses before December 31st. Stock up on contacts, glasses, prescriptions, or other qualified medical items.
Consider Bunching Deductions
If you're close to the itemized deduction threshold ($15,000 for single filers, $30,000 for married filing jointly), consider "bunching" deductions into this year.
For example, if you normally give $10,000 to charity annually, give $20,000 this year and skip next year. This might push you over the standard deduction threshold and save you money.
What Happens Next?
Once January 1st hits, most of these opportunities are gone for 2025. You'll still have until April 15th to make IRA and HSA contributions, but everything else closes at year-end.
If some of these strategies feel rushed or you're not sure what makes sense for your situation, that's exactly why it pays to think about taxes throughout the year. When you work with a financial advisor who coordinates with your tax professional, you're not scrambling in December—you're executing a plan you've been building all year.
Take Action Now
Review your 401(k) contributions and max them out if you can. Look for tax-loss harvesting opportunities. Confirm you've taken your RMD if required. Make your charitable donations. Consider whether a Roth conversion makes sense.
You've got two weeks. Make them count.
