2025 Year-End Tax Planning

With just a few weeks left in 2025, there’s still time to make smart year-end decisions that can shape your 2025 tax bill and your longer-term financial picture.

Recent tax law changes have adjusted deductions, credits, and retirement rules again for 2025, so this is a good time to review where you stand and decide whether any last-minute moves make sense for you.

This overview highlights key areas to discuss with your financial advisor and tax professional before year-end.

1. Maximize Tax-Advantaged Accounts

Employer retirement plans (401(k), 403(b), most 457 plans, TSP)

• In 2025, you can generally contribute up to $23,500 to these plans through salary deferrals.
• If you’re age 50 or older, you can add a $7,500 catch-up, for a total of $31,000 in employee contributions.
• If you are ages 60-63, you are eligible for a “super” catch-up of up to $11,250 (plan-dependent).

Increasing contributions for your final 2025 paychecks may boost both your long-term savings and your tax benefits.

IRAs (Traditional & Roth)

• For 2025, the IRA contribution limit is $7,000, or $8,000 if you’re 50 or older.
• You generally have until the 2025 tax-filing deadline in April 2026 to make 2025 IRA contributions, but planning now helps avoid a last-minute rush.

Health Savings Accounts (HSAs)
If you’re covered by an HSA-eligible high-deductible health plan:

• 2025 HSA limits are $4,300 for self-only coverage and $8,550 for family coverage, plus a $1,000 catch-up if you’re 55 or older.

HSAs carry a rare “triple” tax benefit: deductible contributions, tax-deferred growth, and tax-free withdrawals for qualified medical expenses.

2. Check RMDs and Consider Charitable Distributions (Age 70½+)

Required Minimum Distributions (RMDs)

• Most IRA and retirement plan owners now start RMDs at age 73 under current law.
• If you’re already subject to RMDs, most 2025 withdrawals must be taken by December 31 to avoid penalties.

Qualified Charitable Distributions (QCDs)

If you’re 70½ or older and have a traditional IRA, you may be able to give directly to charity using a QCD:

• A QCD can satisfy part or all of your RMD while keeping that amount out of your taxable income.
• For 2025, the QCD limit has increased to $108,000 per person, indexed for inflation.
• QCDs must be sent directly from the IRA to a qualified charity and do not qualify if given to a donor-advised fund or private foundation.

This can be a powerful way to support causes you care about while managing taxable income.

3. Put Investment Losses to Work

Year-end is a natural checkpoint for tax-loss harvesting in taxable investment accounts:

• Realizing losses on investments that are below your purchase price can offset realized capital gains.
• If losses exceed gains, up to $3,000 per year can typically offset ordinary income, with excess carried forward to future years.
• Watch the wash-sale rule: if you sell an investment at a loss and buy the same or a “substantially identical” security within 30 days before or after the sale, the loss is generally disallowed for current tax purposes.

This is also a good time to rebalance your portfolio back toward your target mix and review which investments are held in taxable vs. tax-advantaged accounts.

4. Charitable Giving Strategies Before Year-End

If you plan to give in 2025, you can be intentional about how you give:

• Donor-Advised Funds (DAFs): You can make a contribution in 2025 (potentially getting a deduction this year), then recommend grants to charities over time.
• Appreciated securities: Donating investments with large unrealized gains can allow you to avoid capital gains tax on the sale while potentially claiming a charitable deduction for the fair market value.
• QCDs from IRAs: As noted above, QCDs can be especially attractive for charitably inclined retirees who are already taking RMDs.

Because the standard deduction is higher now, some households alternate between years when they itemize and years when they take the standard deduction (“bunching” charitable gifts into selected years).

5. Year-End Gifting and Estate Planning

If you’re thinking about helping family members or reducing future estate taxes, 2025 offers several opportunities:

• The annual gift tax exclusion is $19,000 per recipient in 2025, meaning you can give up to that amount to as many individuals as you like without using your lifetime exemption.
• A married couple can effectively give $38,000 per recipient by combining their exclusions.
• 529 education savings plans allow funds to grow tax-deferred and may offer state tax benefits; they can be part of a broader education and gifting strategy.

If you’ve established trusts, late-year is a good time to confirm they are appropriately funded and consistent with your current wishes and family circumstances.

6. Evaluate Roth Conversions

Converting part of a traditional IRA or pre-tax 401(k) to a Roth can be a powerful long-term tool:

• Conversions increase taxable income this year, but qualified future withdrawals from Roth accounts can be tax-free, and Roth IRAs have no lifetime RMDs.
• Recent law changes and new deductions for older taxpayers can create windows where your effective tax rate on conversions may be especially attractive.

Because conversions can affect Medicare premiums, Social Security taxation, and other credits, it’s important to model the impact with your tax professional.

7. Review Deductions, Credits, and Withholding

Standard vs. itemized deductions

• For 2025, the standard deduction has increased again (for example, $15,750 for single filers and $31,500 for married couples filing jointly, before additional age-related amounts).
• Taxpayers 65 and older may qualify for additional standard deduction amounts, and a new temporary deduction for many seniors beginning in 2025 can further reduce taxable income, subject to income limits.

Your advisor and tax professional can help determine whether itemizing (for example, with significant mortgage interest, state and local taxes within the cap, medical expenses, or charitable gifts) beats the standard deduction in your case.

Don’t overlook valuable credits

Depending on your situation, consider whether you might qualify for credits such as:

• The Child Tax Credit
• Education credits for higher education expenses
• Energy-related credits for certain home improvements, electric vehicles, or clean-energy equipment

Finally, review your withholding and estimated tax payments to reduce the risk of underpayment penalties or an unwelcome surprise when you file.

8. Special Planning for Business Owners

If you own a business, year-end can be especially important:

• Recent legislation has extended or enhanced certain expensing and depreciation provisions (including Section 179 and bonus depreciation) and reinforced deductions for many pass-through business owners.
• You may have flexibility in timing income and expenses, such as accelerating necessary equipment purchases or deferring certain income, within the rules.
• Review estimated tax payments for both your business and personal returns to avoid underpayment penalties.

Because business tax rules are complex and frequently updated, coordinated planning with your CPA is essential.

9. Looking Beyond 2025

Tax rules are evolving, and federal tax legislation enacted in 2025 extended and modified several provisions that had been scheduled to change after this year, while also adding new deductions—especially for some older taxpayers.

That means multi-year planning is more important than ever:

• Thinking about your likely income, deductions, and bracket over the next several years
• Deciding when to realize gains, do Roth conversions, or accelerate/defer deductions
• Coordinating retirement withdrawals, charitable giving, and estate strategies over time

Final Thoughts

The strategies above—maximizing tax-advantaged savings, reviewing RMDs and QCDs, harvesting losses, planning gifts, and fine-tuning deductions and credits—are meant as a starting point for a conversation with your advisor and tax professional.

Important: This overview is for general information only and is based on federal tax rules in effect for 2025 as of December 11, 2025. Tax laws can change, and how they apply depends on your personal situation. Please consult your tax professional before making any decisions.

Ready to implement a tailored year‑end playbook? OnePoint BFG advisors can help.