New tax rules are already in effect — here’s how they change what actually works.
For most people, tax planning feels like something that happens between March and April. In reality, the most important decisions happen before December 31, especially now that new federal tax rules are in effect for 2025. [see recent post One Big Beautiful Bill Act, 2025-2026 Tax Breaks for Individuals]
Many familiar strategies still exist. What’s changed is how effective they are, how they interact with your income, and how easy it is to accidentally lose tax benefits without realizing it. This list is not about doing everything. It’s about knowing what to check before the year closes, so you don’t lock in avoidable surprises.
How to Use This List
You don’t need to understand every item. You do want to notice which ones apply to your life; for example, income changes, job changes, family changes, investing activity, or retirement planning. Everyone’s tax situation is different. The ideas below cover common scenarios, but they don’t capture every rule, exception, or edge case. Before acting on any of these ideas, it’s wise to consult your CPA or financial advisor to understand how they apply to you.
15 Smart Tax Moves to Consider Before the Year Ends
1. Max Out Your company 401(k) (if you can, and don’t miss out on free money)
For 2025, you can contribute to your 401(k) up to:
- $23,500 if you’re under 50
- $31,000 if you’re age 50–59 or 64+
- $34,750 if you’re age 60–63 (assuming your plan allows it)
Contributing to your company’s 401(k) reduces your taxable income and helps build long-term savings. (NOTE: You must make your final contributions to most workplace retirement plans, such as 401(k) or 403(b), by December 31, 2025.)
Important:
1. COMPANY MATCH: If your employer offers a company match, make sure you contribute at least enough to get the full match. That match is essentially free money, and leaving it on the table is one of the most common and costly mistakes people make.
2. ROTH 401(K) Some employers now offer a Roth 401(k) option. While Roth contributions are made with after-tax dollars, qualified withdrawals in retirement can be tax-free. For some people, especially those early in their careers or expecting higher future tax rates, shifting contributions from a traditional 401(k) to a Roth 401(k) can provide valuable tax flexibility later on. Ask your Human Resources contact whether your company offers a Roth 401(k).
2. Review IRA Contributions (Traditional, Roth, or Both)
You can contribute up to $7,000 per person to IRAs each year ($8,000 if you’re age 50 or older).
- Some people can deduct Traditional IRA contributions
- Others may need to use a Roth IRA or a “backdoor” Roth
- Even when no deduction is available, contributing may still make sense
- NOTE: You have until the tax deadline of April 15, 2026, to contribute to an IRA for tax year 2025
This guidance depends heavily on your income and whether you or your spouse have a retirement plan at work.
3. Consider a Roth Conversion (carefully)
Converting some pre-tax retirement money to a Roth IRA can make sense if your income is lower than usual, but doing too much at once can backfire since you will pay taxes on part or all of the conversion amount. This is one of those areas where partial moves may be better than all-or-nothing decisions. As with all of these suggestions, consult your financial planner or CPA for an assessment of your financial situation, what options are available to you and the potential impact of any of these moves.
4. Evaluate your Health Savings Account (HSA), or Start One Up if You’re Eligible
If you’re covered by a qualifying high-deductible health plan, a Health Savings Account (HSA) can be one of the most tax-efficient tools available, and it’s often misunderstood.
Here’s what makes HSAs unique:
- Contributions can reduce your taxable income
- The money grows tax-free
- Withdrawals for qualified medical expenses are tax-free
- Unused balances roll over year after year — there is no “use it or lose it” rule. Flexible Spending Accounts (FSAs) often do have “use it or lose it” rules — HSAs do not.
For late-year planning:
If you already have an HSA, the key question isn’t whether to spend it before year-end. Instead, it’s whether you’re contributing the right amount, investing the balance appropriately, and keeping good records so you can use the account strategically in the future, even years or decades from now.
Looking ahead to 2026:
If you don’t currently have an HSA, year-end is a good time to:
- Confirm whether your health plan makes you eligible
- Check whether your employer offers HSA contributions or matching
- Decide whether an HSA should be part of your benefits and tax planning going forward
Bottom line:
An HSA isn’t about year-end spending. It’s about long-term flexibility. If you’re eligible and not using one, it’s worth understanding before you lock in next year’s health plan.
5. Look for Tax Losses in Your Investment Accounts (without letting taxes “drive the bus”)
If you sold investments at a gain this year, selling other investments at a loss can help reduce the tax bill. (i.e., tax-loss harvesting)
Here’s how it generally works:
- Capital losses first offset capital gains
- Losses are matched by type:
- Short-term losses offset short-term gains
- Long-term losses offset long-term gains
- If losses exceed gains, you can use up to $3,000 per year to offset ordinary income (i.e., as married filing jointly)
- Any remaining losses carry forward to future years until used
This can be helpful, but it shouldn’t override good investing.
Important qualifiers:
- Don’t sell an investment you want to keep just for a tax break
- Investment decisions should be based on long-term goals, risk tolerance, and diversification, taxes come second
Watch out for the wash-sale rule:
If you sell an investment at a loss and buy the same (or a substantially identical) investment within 30 days before or after the sale, the loss may be disallowed for tax purposes. This is a common mistake, especially when rebalancing portfolios.
Bottom line:
Tax-loss harvesting can reduce taxes over time, but it works best as a supporting tactic, not a primary investment strategy.
6. Donate Appreciated Investments Instead of Cash (if it makes sense for your financial strategy)
If you regularly give to charity and own investments that have gone up in value, donating those investments directly, instead of selling them and donating cash, can be more tax-efficient.
In general:
- You may avoid paying capital gains tax on the appreciation
- You may still be able to deduct the full fair market value of the investment, if you itemize deductions
This is often more effective than selling the investment, paying tax on the gain, and then donating the remaining cash.
Important qualifiers to be aware of:
- Holding period matters: To get the full fair market value deduction, you generally must have owned the investment for more than one year. If you donate an asset held one year or less, the deduction is typically limited to your cost basis.
- Itemizing is required: If you take the standard deduction, this strategy usually provides no additional tax benefit.
- Deduction limits apply: Deductions for appreciated property are generally capped at 30% of adjusted gross income for gifts to public charities, with unused amounts typically carried forward for up to five years.
- Eligible charities only: The charity must be a qualified 501(c)(3) organization. Not all organizations qualify.
- Extra paperwork may be required:
- Non-cash donations over $500 require Form 8283
- Donations over $5,000 typically require a qualified appraisal
One more practical consideration:
This strategy should complement your investment plan, not disrupt it. Don’t donate an asset you still need for diversification or cash-flow reasons just to save on taxes.
Bottom line:
Donating appreciated investments can be a powerful tax move, but only when the holding period, deduction limits, and your overall financial picture align.
7. Use a Donor-Advised Fund (DAF) to Simplify and Time Charitable Giving
A Donor-Advised Fund (DAF) is essentially a charitable giving account. You contribute money or investments to the account, receive a potential tax deduction now, and then recommend grants to your favorite charities over time. Think of it as separating the tax decision from the giving decision. Well-known firms that offer DAFs include Fidelity, Schwab and Vanguard to name a few.
Why a DAF can make sense
A DAF allows you to:
- Take a tax deduction in the year you contribute
- Spread charitable gifts to nonprofits over future years
- Simplify paperwork by consolidating donations in one place
You can also contribute several years’ worth of planned giving at once, then distribute grants gradually, which can be especially helpful when income is unusually high in a given year.
Why this matters before 2026
Under new tax rules taking effect in 2026, some charitable deductions will be harder to benefit from due to new limitations. A DAF can help by:
- Potentially helping taxpayers navigate the upcoming 0.5% charitable deduction floor by allowing contributions to be timed before the new rules take effect.
- Locking in deductions while rules are more favorable
- Allowing tax-free growth inside the DAF before grants are made
Pros to consider
- Immediate tax deduction potential (for itemizers, subject to IRS limits)
- Flexibility in when charities receive funds
- Tax-free growth inside the account
- Simplified record-keeping
- No minimum annual payout requirements
Cons to understand
- Contributions are irrevocable — once funds go into a DAF, they can’t be taken back
- Fees apply (administrative and investment-related)
- Grants are limited to qualified 501(c)(3) public charities
- No tax benefit in 2025 if you don’t itemize deductions
Bottom line
A donor-advised fund isn’t for everyone, but for consistent givers, especially those with fluctuating income, it can be a smart way to manage timing, taxes, and simplicity, particularly ahead of 2026 changes.
8. If You’re 70½ or Older, Consider Giving Directly From an IRA
Once you reach age 70½, you may be able to make Qualified Charitable Distributions (QCDs) directly from your IRA to a qualified charity.
With a QCD:
- The donation is sent directly from your IRA to the charity
- The amount does not count as taxable income on your tax return
- If you’re required to take Required Minimum Distributions (RMDs), QCDs made first can satisfy part or all of that requirement.
Why this can help, even before RMDs start:
Although RMDs don’t begin until later, QCD eligibility starts earlier. [REMINDER: Make sure you’re taking your Required Minimum Distributions for 2025. See the IRS site for more details.] That means you may be able to reduce taxable income now, rather than waiting for RMDs to increase your income in future years. Keeping income lower may also help limit taxes on Social Security benefits, reduce Medicare premium surcharges (i.e., Medicare IRMAA surcharges) and Phaseouts (credits, deductions, SALT interactions, etc.).
Important notes to keep in mind:
- QCDs are available only from traditional IRAs (not 401(k)s)
- The donation must go to a qualified 501(c)(3) charity
- You can’t also claim a charitable deduction for the same gift
- Proper reporting matters to ensure the income is excluded
Bottom line:
For charitably inclined retirees, QCDs are often one of the most tax-efficient ways to give, especially compared to taking IRA withdrawals and donating cash.
9. Time Roth Conversions or Withdrawals Based on Your Income
If your income dipped this year — because of retirement, a job change, or a business slowdown — it may be a good time to recognize income at lower tax rates by converting some pre-tax retirement money to a Roth account or taking controlled withdrawals.
Done well, this can reduce taxes over your lifetime and create more flexibility later.
Where this can make sense:
- A temporary low-income year
- Early retirement before Social Security or RMDs begin
- A one-time income gap between careers
- A year with unusually high deductions
Important watch-outs and limitations:
- Converting too much at once can push you into a higher tax bracket
- Additional income may reduce credits or deductions you didn’t expect
- Higher income can increase taxes on Social Security benefits or trigger higher Medicare premiums in future years
- You’ll need cash outside the IRA to pay the tax bill — using the IRA itself usually reduces the benefit
One key point:
Roth conversions and withdrawals don’t have to be all-or-nothing. In many cases, spreading smaller moves over several years leads to better results than making a large conversion in a single year.
Bottom line:
Timing matters more than the idea itself. When coordinated with your income and future plans, Roth conversions or strategic withdrawals can be powerful — but poorly timed moves can create unnecessary taxes.
10. Check Your Tax Withholding or Estimated Payments
New tax rules and job changes can throw withholding off.
A quick check now can:
- Prevent underpayment penalties
- Avoid surprise tax bills
- Improve cash flow
11. Make Sure Your Investments Are in the Right Accounts
Some investments are better held in retirement accounts, others in taxable accounts.
This doesn’t change your returns — but it can quietly reduce the taxes you pay every year.
12. Use the Annual Gift Exclusion if You’re Helping Family
In 2025, you can give up to $19,000 per person without triggering gift tax reporting or using any of your lifetime gift and estate tax exemption.
This can be a simple way to:
- Help children or other family members financially
- Support education or major life expenses
- Gradually reduce the size of your taxable estate
A few important points:
- The limit applies per recipient, and married couples can often give more by coordinating gifts
- Gifts under the annual exclusion generally don’t require a gift tax return
- The recipient does not pay income tax on the gift
How this fits into bigger-picture planning:
For 2025, the lifetime gift and estate tax exemption remains historically high ($13.99M per individual) under current law, as modified by OBBBA. While many families won’t come close to this limit, future changes are always possible. Using annual exclusion gifts can be a practical way to transfer wealth gradually without relying entirely on the lifetime exemption.
NOTE: Starting January 1, 2026, the federal estate and gift tax exemption is permanently set to $15 million per individual, up from today’s $13.99M, and will be adjusted annually for inflation starting in 2027. The annual gift exclusion remains separate (e.g., the $19,000 in 2025), and portability still allows a surviving spouse to use a deceased spouse’s unused exemption.
Bottom line:
If you’re already helping family financially, using the annual gift exclusion can make that support more tax-efficient without adding complexity.
13. If You Own Rental Property, Review Depreciation and Losses
Rental income often looks worse on paper than it does in real life — largely because of depreciation, a non-cash expense that can reduce taxable income even when a property generates positive cash flow.
This can be beneficial, but the rules around rental losses are nuanced:
- Some losses may be limited or deferred depending on your income and level of involvement
- Passive loss rules can restrict how and when losses are used
- Depreciation decisions can affect taxes later, including when a property is sold
Because of these interactions, rental property tax planning often works best when reviewed before year-end, not after the return is filed.Bottom line:
Rental property taxes offer real planning opportunities, but this is an area where shortcuts or generic advice can create problems down the road. A quick review with your financial planner and CPA can help ensure you’re using the benefits correctly and not creating future tax surprises.
14. Pay Attention to State and Local Taxes
Federal and state tax rules don’t always line up, and state differences can materially affect your final tax bill.
Where you live can influence:
- Whether certain deductions are allowed at all
- How retirement income, capital gains, or rental income are taxed
- Whether federal tax strategies actually deliver the expected benefit at the state level
Because state rules vary widely and don’t always change when federal rules do, it’s important to view year-end planning through both lenses, not just the federal one.
Bottom line:
A strategy that works federally doesn’t always work locally. Location matters more than many people expect.
15. Step Back and Forecast the Whole Year
The most important step is often the simplest:
- What did you earn this year?
- What changed?
- What will likely change next year?
Once you know that, everything else becomes clearer.
A Few Final Watch-Outs Before the Year Ends
Before December 31, it’s also worth double-checking a few common areas that are easy to overlook:
- Use-it-or-lose-it accounts (FSAs): Make sure you understand what must be spent before year-end and what, if anything, carries over.
- Education planning: Review 529 plans and other education-related options to ensure contributions and timing still make sense.
- Estate documents: Life changes may require updates to wills, healthcare directives, or beneficiary designations
- Record-keeping: Keep clear documentation for charitable donations, investment activity, and retirement contributions. It makes filing smoother and helps identify planning opportunities.
Final Thought and a Practical Next Step
The biggest tax mistakes rarely come from doing something wrong. They usually come from doing things out of habit after the rules have changed.
You don’t need complicated strategies or last-minute scrambling. You need timely decisions, coordinated planning, and a second set of eyes before the year closes.
As we head into 2026, this is also the right moment to make sure you have a CPA in place to handle your 2025 tax return. Someone who understands your situation, the new rules, and how to apply them thoughtfully.
At Gerard CPAs, we help individuals, business owners, and high-income filers navigate these changes with proactive strategies to reduce taxes, stay compliant, and position for the future. Whether you need help preparing your 2025 return, planning under the new 2025 rules, or ensuring your business entity is structured for maximum benefit, we can help.
Now booking for the 2025 tax season. Schedule a consultation or secure your tax prep slot today to get ahead of the curve. Click Here.
Disclaimer: The information contained in this post represents a general summary of current federal tax provisions as of the date of publication and may not reflect subsequent changes in law or guidance. It is not intended as, and should not be construed to be, tax or legal advice. Reading or relying on this content does not create a CPA-client relationship. You should consult your own tax advisor regarding your specific facts and circumstances.