Viewpoint: Year-End Tax and Financial-Planning Strategies

The end of the year is nearly here, but there’s still time to take a closer look at your financial picture and make the most of tax-planning opportunities before the calendar turns to 2026. Thoughtful year-end planning can reduce your current tax bill, position you for long-term growth, and help ensure your wealth is transferred efficiently to future generations.

Here are 10 practical tax and financial-planning strategies to consider before 2025 ends.

1. Consider a Roth IRA Conversion

A Roth IRA conversion allows you to move pre-tax retirement assets into a Roth IRA, where future growth and qualified withdrawals are tax-free. While the converted amount is taxable in the year of conversion, doing so during a year of lower income or when market values are down can be especially advantageous. Additionally, the next presidential administration could raise income-tax rates, so paying taxes now at potentially lower rates may be beneficial. Roth IRAs are not subject to required minimum distributions (RMDs), which can help reduce future taxable income and potential Medicare IRMAA (income-related monthly adjustment amount) surcharges. Partial conversions can also help you manage tax brackets. Tax-free Roth accounts can be particularly valuable to heirs who must withdraw inherited funds within 10 years. If you have a taxable estate, paying the income tax for them saves estate tax, yet isn’t a taxable gift.

2. Harvest Investment Losses

Tax-loss harvesting involves selling securities at a loss in taxable (non-retirement) accounts to offset capital gains elsewhere in your portfolio. If losses exceed gains, up to $3,000 can be deducted against ordinary income. Remaining losses carry forward to future years. This strategy can help improve tax efficiency.

3. Maximize Employer Retirement Plan Contributions

For those ages 60–63, 2025 offers enhanced catch-up contribution opportunities. The catch-up limit for 401(k), 403(b), and 457(b) plans increases to $11,250, while SIMPLE IRA catch-up contributions rise to $5,250. Taking full advantage of these limits can significantly boost retirement savings while reducing current taxable income.

4. Use Backdoor or Mega Roth Strategies

High-income earners who are ineligible to contribute directly to a Roth IRA may still benefit from a backdoor Roth strategy. This involves making a nondeductible IRA contribution and then converting it to a Roth IRA, a strategy that works best when you have no other pre-tax IRA-type account balances. If your employer plan allows after-tax contributions and in-plan Roth conversions, a Mega Roth strategy may allow you to move even larger amounts into Roth accounts.

5. Maximize Your FSA and HSA Benefits

If you participate in a flexible spending account (FSA), review whether your plan has a “use-it-or-lose-it” provision and spend remaining funds before year-end if necessary. For health savings accounts (HSAs), consider paying current medical expenses out of pocket and allowing your HSA to grow tax-free. Keep receipts for unreimbursed expenses, which can be reimbursed tax-free in the future.

6. Use a Donor-Advised Fund (DAF)

A donor-advised fund (DAF) allows you to make a charitable contribution and receive an immediate tax deduction while retaining flexibility over when and where grants are distributed in the future. Bunching multiple years of charitable giving into one year can help exceed the standard deduction, maximizing tax benefits. DAFs can also be a powerful way to involve family members in philanthropy by naming them as successor advisors.

7. Make Qualified Charitable Distributions (QCDs)

If you are age 70½ or older, you can donate up to $108,000 per person in 2025 directly from your IRA or inherited IRA to qualified charities. These qualified charitable distributions (QCDs) can count toward your RMD, but are excluded from taxable income. That can help reduce adjusted gross income and taxable income for the related tax impacts. Note that QCDs cannot be made to donor-advised funds or private foundations.

8. Be Strategic with Charitable Contributions

Consider accelerating charitable gifts planned for 2026 into 2025 to avoid the new 0.5 percent adjusted gross income (AGI) floor on deductions scheduled to take effect in 2026. Under the One Big Beautiful Bill Act (OBBBA), 2026 will also have an itemized deduction phase-out for those in the top 37 percent tax bracket, effectively bringing the tax savings on your itemized deductions down to 35 percent. Donating appreciated securities instead of cash gives you the double tax benefit of avoiding capital-gains tax while still receiving a full fair-market-value deduction. These gifts can be made directly to charities or to a DAF for added flexibility.

9. Make Annual Exclusion Gifts

In 2025, you can gift up to $19,000 per recipient ($38,000 for married couples electing gift splitting or gifting from a joint account) without using any lifetime estate-tax exemption. You can also make unlimited gifts by paying for medical or educational expenses directly to the institution for anyone you wish. Annual gifting can reduce your taxable estate while helping loved ones with education, housing, or health-care expenses. You may also consider funding IRAs, Roth IRAs, or HSAs for family members who are eligible for contributions.

10. Contribute to 529 College Savings Plans

New York residents can deduct up to $5,000 per taxpayer, $10,000 per couple, for contributions to New York State 529 plans, even if the funds are immediately withdrawn to pay qualified education expenses. Contributions must be made by year-end, and distributions must occur in the same year as the expense is incurred. For those looking to accelerate savings, a lump-sum contribution of up to $95,000 using the five-year averaging gift-tax election can jumpstart long-term growth.

Year-end planning isn’t just about minimizing taxes; it’s about making informed decisions that align with your broader goals. Thoughtful year-end planning can help you enter 2026 with confidence and possibly save you some money on taxes.

Cindi Turoski is a partner in The Bonadio Group’s Tax Service Line and a member of the firm’s Estate and Trust Team. With more than 30 years of deep tax and financial-planning experience, she provides consultative services to a wide variety of clients, further specializing in closely held business owners.