Strategic Year-End Tax Planning Tips for Individuals

With the holiday season approaching, it's the perfect time to strategize your year-end tax planning to enhance your 2025 tax return. Let's dive into some essential last-minute tax strategies that could work wonders for you.

Maximize Tax-Free Income Opportunities - If your financial situation in 2025 exempts you from filing, explore avenues to generate additional tax-free income. Consider selling appreciated stock or initiating a tax-free IRA distribution if you meet the age criteria or qualify for penalty exceptions. Remember, by filing, you might qualify for substantial refundable tax credits even if it's not mandatory.

Image 2

Is Your 2025 Income Considerably Low? Convert some of your traditional IRA to a Roth IRA to take advantage of a potentially lower tax rate. This action might also be advantageous if stocks in your retirement account have depreciated significantly.

Education Credits and Prepaid Tuition - If you’re eligible for the American Opportunity or Lifetime Learning credits, review your 2025 tuition payments. If they don’t hit the credit-maximum, consider prepaying for 2026 academic periods commencing in early 2026 to elevate your 2025 credits, especially for new college attendees.

Home Sale Gain Exclusion - Sold your primary residence this year? Qualify for a gain exclusion if you meet the ownership and occupancy tests. A partial exclusion might apply for sales due to employment changes or health issues, even if you don’t meet the full criteria.

Optimize Your Health Accounts - If you have a Health FSA, adjust your contributions as needed to maximize carry-over benefits into 2026. Similarly, if you became eligible for HSA contributions late this year, remember you can still make a full year’s contribution and enjoy tax deductions, tax-deferred earnings, and tax-free distributions for qualified expenses.

Image 1

Retirement Contributions - Ensure full utilization of your retirement contribution limits. Don’t miss out on your employer’s matching contributions, and consider this as a strategic move to lower your tax liability with deductions for traditional IRA contributions or pre-tax income contributions.

Spousal Contribution Strategies - A non-working spouse can base IRA contributions on the working spouse’s income, a crucial flexibility that shouldn’t be overlooked upon retirement of one spouse.

Ready to leap?
Our team is standing by to help!
Reach out now

Catching Up on Retirement Savings - If aged 60-64, capitalize on the forthcoming increased catch-up contribution limits, starting in 2025, to aggressively boost your retirement savings.

Bonus and RMD Timing - Plan to defer potential end-year bonuses if that complements your 2026 income expectations. Additionally, manage your Required Minimum Distributions (RMD) proactively to avoid an extra taxable distribution in one year.

Portfolio Adjustments - Analyze your stock portfolio to sell off underperforming stocks, potentially offsetting other taxable gains. The same principle applies to low-income years and capitalizing on the zero-rate for long-term gains.

SALT Deduction Strategy - Utilize the increased SALT deduction cap by prepaying eligible state and property taxes, enhancing your itemized deductions for 2025.

Image 3

Charitable Contributions - Optimize your deductions by advancing your 2026 charitable contributions into 2025, anticipating the installation of a 0.5% AGI-related floor on charitable deductions from 2026 onwards.

Medical Expense Planning - Evaluate paying and accelerating qualified medical expenses to exceed the 7.5% AGI floor on deductions, optimizing your tax savings strategy.

Gift Tax Considerations - Leverage the increased annual gift tax exclusion of $19,000 per recipient in 2025, ensuring these gifts don’t require a return or incur tax.

Tackle Under-Reporting Penalties - Given higher liability expectation, utilize safe harbor prepayments and adjust your withholdings to avoid underpayment penalties.

Emergency Deduction Actions - For 2025 disaster-related losses, determine the optimal year for declaration. Likewise, consider scam or theft loss claims for non-reimbursed investments.

Energy and Environmental Credits - Time your purchases to benefit from energy-efficient modification credits up to $1,200 or engage in solar installations for eligibility under the extended provisions applicable through 2025.

For tailored guidance aligning with your financial landscape and goals, don’t hesitate to reach out for an expert consultation.

Have further questions on these points? Contact us today for personalized advice.

Ready to leap?
Our team is standing by to help!
Reach out now
Share this article...

Sign up for our newsletter.

Each month, we will send you a roundup of our latest blog content covering the tax and accounting tips & insights you need to know.

I confirm this is a service inquiry and not an advertising message or solicitation. By clicking “Submit”, I acknowledge and agree to the creation of an account and to the and .