The end of the year is more than just a time for reflection — it’s your last opportunity to make financial adjustments that could reduce your tax bill and strengthen your overall plan. While everyone’s situation is different, here are ten tax-smart ideas to review before December 31.
- Double-check your retirement contributions
If you participate in a 401(k) or similar plan, confirm you’ve contributed as much as your cash flow allows for the year. For 2025, you can contribute up to $23,500, plus an additional $7,500 if you’re age 50 or older. - Review charitable giving opportunities
Charitable donations made by December 31 may qualify for a deduction if you itemize. If you plan to give, consider completing your gifts early to allow time for processing and receipts. - Make year-end business purchases
For small business owners, this may be the right time to upgrade equipment, invest in software, or prepay certain expenses. These purchases may qualify for deductions under Section 179 or bonus depreciation rules — always verify with your tax advisor first. - Check your withholding and estimated taxes
If you’ve had major income changes this year — from a raise, sale of a business, or investment gains — make sure you’ve paid enough in taxes to avoid underpayment penalties. - Harvest investment losses
Selling investments that have declined in value can help offset realized gains elsewhere in your portfolio. This can be a useful strategy in volatile markets, but it’s important to be mindful of wash-sale rules. - Use your Flexible Spending Account (FSA)
If your employer offers an FSA, check your balance and plan to use remaining funds before they expire. Many plans have a small carryover provision or grace period, but not all. - Consider family gifting
The annual gift tax exclusion allows you to give up to $19,000 per recipient in 2025 without triggering gift tax. Gifts to children or grandchildren can also be made through 529 college savings plan contributions. - Review required minimum distributions (RMDs)
If you’re age 73 or older, make sure you’ve taken your RMD from retirement accounts before December 31 to avoid a penalty. If you don’t need the income, you may be able to direct it to a qualified charity. - Use this year’s health savings account (HSA) limits
If you have an HSA, you can still make contributions for 2025 until the tax-filing deadline next April, but reviewing contributions now helps ensure you’re maximizing tax advantages. HSAs offer a rare triple benefit — tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified expenses. - Schedule a check-in with your advisor
A conversation now can help identify last-minute opportunities and set you up for a strong start to 2026. It’s also a good time to review cash flow, insurance, estate planning documents, and business succession strategies.
Plan Now, Benefit Later
These final weeks of the year can make a meaningful difference in your tax outcome and financial readiness for 2026. Not every strategy will apply to everyone — but small steps taken now can add up to significant benefits over time.
If you’d like guidance before the year ends, the Davie Kaplan team can help you review your options and coordinate tax-efficient planning that fits your goals.