As the holidays approach and the year winds down, the flurry of festivities and to-do lists can easily take center stage. But amid the seasonal rush, it is important to review key year-end financial planning opportunities. This year-end financial checklist highlights opportunities which can potentially yield tax savings, strengthen one’s financial preparedness and help ensure alignment with long-term goals.
Tax & Charitable Planning
● Manage Tax Bracket Variability
In higher-income years, individuals may wish to accelerate itemized deductions (most notably, charitable contributions) while deferring certain income items (such as the timing of a bonus payout, the sale of a business, the sale of certain investments or stock option exercises). Accelerating itemized deductions could be especially beneficial for those in the 37% bracket due to new limitations on deductions starting next year (see “New 35% Cap” below).
Charitably inclined taxpayers, especially those who are nearing retirement and expect a significant drop in taxable income post-retirement, may wish to use a donor-advised fund to recognize a larger current-year tax deduction while making charitable grants from the donor-advised fund at a future date and at the pace of their choosing.
● Donate Appreciated Securities, Not Cash
As numerous nonprofit organizations request year-end donations, many prefer the convenience of contributing by check or credit card. However, alternative giving methods may offer greater financial advantages.
Those with long-term appreciated securities held in a taxable account should consider gifting such securities to charity. This is beneficial because the charitable organization receives the same economic benefit as a cash donation, while the taxpayer receives a tax deduction for the full market value of the gift and avoids paying capital gains taxes on the gifted security (the charity doesn’t pay capital gains taxes either).
Gifting appreciated securities can also provide a tax-efficient means to rebalance a portfolio by reducing exposure to a given asset class or a concentrated stock position that has risen significantly, without incurring capital gains.
Keep in mind the tax deduction for gifts of long-term appreciated securities to qualified public charities (including donor-advised funds) is limited to 30% of adjusted gross income (AGI) while similar gifts to a private foundation are limited to 20% of AGI. Charitable gifts in excess of the AGI limits result in a charitable carryforward which can be used over the next five years.
● Donate Part of your Required Minimum Distribution (RMD) via Qualified Charitable Distributions (QCD)
With a QCD, taxpayers aged 70½ or older can donate up to $108,000 (in 2025) from an IRA directly to eligible 501(c)(3) charities while avoiding income tax on the amounts distributed. And, importantly, amounts donated via QCD “count” towards satisfying the required distribution amount, thereby reducing taxable income. Note: QCDs cannot be directed to donor-advised funds, private foundations and supporting organizations.
This strategy may be particularly beneficial for charitably inclined individuals who receive a greater tax benefit from the increased standard deduction rather than itemized deductions.
● Harvest Losses in Taxable Investment Accounts
Realized losses can offset realized gains (and potentially up to $3,000 of current-year ordinary income), with any unused/excess losses resulting in a carryforward to be applied against future gains.
Admittedly, with global equities having generated significant gains over the last several years, investors may be left with few (if any) loss harvesting opportunities in taxable accounts, yet we still encourage investors to evaluate their investment accounts for any potential losses.
Beware of the “wash sale rule,” which states that a loss cannot be realized for tax purposes if a substantially identical position was purchased within 30 days before or after the sale.
● Be Aware of Mutual Fund Year-End Capital Gain Distributions
Mutual funds are required to pass along realized capital gains to fund shareholders. Regardless of whether the fund shareholder actually benefited from the fund’s sale of underlying securities, the shareholder will receive the capital gain distribution if the mutual fund is held as of the dividend record date.
Mutual fund families typically provide estimates for year-end dividend distributions over the course of October and November, with such distributions most commonly paid in December. Investors should compare a fund’s year-end distribution estimate against its unrealized gain/loss to determine if selling the position before the dividend record date would produce a tax savings.
In addition, investors should be careful with late-year purchases of actively managed funds in taxable accounts, as investing in a fund just prior to its capital gain record date could result in additional taxes.
● Use Up Your Flexible Spending Account (FSA)
Unlike with a Health Savings Account (HSA), which can carryover from year-to-year, payroll deferrals into an FSA generally must be used by year-end. Your employer may allow a grace period of up to 2 ½ extra months to use the money in your FSA or for you to carryover up to $660 to use in the following year, but they’re not required to offer either of these options.
Estate Planning
● Consider Making Annual Exclusion Gifts
Individuals can make “annual exclusion gifts” of up to $19,000 per person without gift tax implications. While anyone can make these gifts, this can be a particularly beneficial strategy for high net worth individuals to reduce a potential taxable estate while also providing financial support to loved ones. It’s important to note that the $19,000 limit encompasses all gifts made during the year including birthday, holiday or anniversary presents or other transfers of financial value.
For those saving for future college expenses, special rules allow a donor to use up to five years of annual exclusion gifts for contributions to 529 college savings plans (a limit of up to $95,000 for a single taxpayer or up to $190,000 for joint taxpayers, as of 2025).
It is worth noting that medical payments made directly to a medical provider along with tuition payments made directly to an educational institution do not constitute taxable gifts. In this situation, tuition is narrowly defined as the cost for enrollment; it does not include books, supplies or room and board.
Investment & Retirement Planning
● Revisit Portfolio Allocations
Global equities have generated significant gains over the last several years:
Source: Morningstar, as of October 31, 2025
Following an extended market rally, investors can fall into a sense of complacency regarding portfolio risk. But if you haven’t been monitoring and rebalancing your investments along the way, your portfolio could have a much larger allocation to stocks and risk assets than a few years ago. While the market rally could continue for the foreseeable future, it won’t go on forever, so it’s important to regularly review your portfolio’s asset allocation and make sure it’s aligned with your risk tolerance, time horizon and longer-term financial goals.
● Maximize Retirement Contributions
Review year-to-date retirement contributions to make sure you’ll maximize 2025 contributions prior to year-end:
○ 401(k)/403(b)/457: $23,500
○ Catch-up 401(k)/403(b)/457 for employees age 50 or older: $7,500
○ Catch-up 401(k)/403(b)/457 for employees age 60-63 in 2025: $11,250
○ IRA contribution limit: $7,000
○ IRA catch-up contribution (age 50 and older): $1,000
As a reminder, beginning next year all catch-up contributions to employer-sponsored plans (IRAs excluded) must be made on an after-tax Roth basis for those with FICA wages of $150,000 or more in 2025. You may want to check with your tax preparer to see if any adjustments to withholdings may be needed in 2026 and beyond.
While every year presents a unique set of circumstances, the new tax law passed this year along with phased-in changes to retirement plans places extra emphasis on making sure you’ve reviewed opportunities to minimize taxes and maximize your long-term financial goals.
We wish you and your loved ones a joyous holiday season!
The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding investments, sectors or markets in general. The above statistics and/or commentary have been obtained from sources we believe are reliable, but we cannot guarantee their accuracy or completeness. Past performance is no guarantee of future results. This is not a complete analysis of every material fact regarding any company, industry, or economic condition. Due to shifting market conditions, all expressions of opinion are subject to change without notice.
The information contained in this document does not cover all tax strategies that may apply, is not a complete guide to tax planning, and does not constitute the rendering of legal, accounting, or other professional advice or opinions on specific facts or matters. Before implementing any ideas suggested here, consult with your tax advisor regarding your specific tax situation. Talk to your financial advisor before acting on information in this document.