6 Tax Moves and Planning Tips Before December 31

As the final weeks of 2025 tick by, many of us are already thinking about holiday celebrations, family gatherings, and New Year’s resolutions. But for those who want to take control of their finances, and for those high-earning professionals looking to optimize wealth in 2026, this is also a critical window for year-end tax planning. Every decision you make before December 31 can affect your tax bill, your retirement savings, and your long-term financial goals. Let’s explore six potential tax moves and planning tips to consider before December 31.

1. Max Out Retirement Contributions

One of the simplest and most effective ways to reduce taxable income is by maxing out retirement accounts. For 2025:

401(k) Contributions

• Standard limit: $23,500
• Catch-up contributions:
  • Age 50 and over: $7,500
  • Ages 60–63: $11,250 (per SECURE 2.0 Act)

This means individuals aged 60–63 can contribute up to $34,750 to their 401(k) plans in 2025.

IRA

• Traditional and Roth IRAs:
  • Under age 50: $7,000
  • Age 50 and over: $8,000

These limits apply to the total combined contributions to both traditional and Roth IRAs in 2025.

Health Savings Account (HSA) Contributions

• Self-only coverage: $4,300
• Family coverage: $8,550
• Catch-up contribution (age 55 and over): $1,000

2. Charitable Giving Strategies

Charitable gifts not only support the causes you care about but can also lower your taxable income. Consider:

• Cash donations to qualified charities
• Stock gifts to donate appreciated securities and avoid capital gains tax
• Qualified Charitable Distributions from an IRA if over age 70½
• Donor-Advised Funds (DAFs) for flexible timing and long-term charitable planning

Strategic charitable giving can help reduce your taxable income while supporting the organizations important to you.

3. Tax-Loss Harvesting

If you have investments with losses, tax-loss harvesting can offset gains in your portfolio. Selling underperforming assets may reduce your capital gains taxes and even allow up to $3,000 of excess losses to offset ordinary income.

Coordinating tax-loss harvesting with other year-end moves can maximize your tax efficiency.

4. Flexible Spending Account (FSA) Reminders

FSAs often come with a “use-it-or-lose-it” rule. Before December 31, make sure to:

• Schedule medical appointments
• Purchase eligible healthcare items
• Avoid forfeiting unused dollars
• Contribution limit: $3,300 (This limit applies to the amount an employee can contribute to a health FSA through payroll deductions.)

5. Roth IRA Conversions

For some taxpayers, a Roth IRA conversion can be a strategic year-end move. By converting a portion of a traditional IRA to a Roth, you pay taxes at your current 2025 tax bracket rather than potentially higher future rates.

• Helps manage long-term tax liability
• Provides tax-free growth in retirement
• Should be coordinated with other retirement and charitable strategies

6. Check Withholding, Estimated Taxes, and Estate/Gift Planning

Year-end is the perfect time to review:

• Withholding and estimated taxes: Adjust payroll withholding or make an estimated tax payment to avoid surprises in April
• Estate and gift planning: Use the 2025 annual gift exclusion ($19,000 per recipient for 2025) to transfer wealth efficiently without triggering gift taxes

These steps ensure both compliance and efficiency, minimizing potential penalties while aligning with your long-term planning goals.

The Bottom Line: Take Action Before December 31, 2025

The end of the year is a critical opportunity to act strategically. By implementing these six tax moves — maxing out retirement contributions, leveraging charitable giving, harvesting tax losses, managing FSAs, exploring Roth IRA conversions, and reviewing estate and gift strategies — you can reduce your 2025 tax liability and strengthen your overall financial plan.

At Tenet Wealth Partners, we help clients navigate these year-end opportunities with a fiduciary approach to retirement planning to ensure each move aligns with their long-term goals.

 

 

Disclosure: Registered Representative of Sanctuary Securities Inc. and Investment Advisor Representative of Sanctuary Advisors, LLC. Securities offered through Sanctuary Securities, Inc., Member FINRA, SIPC. Advisory services offered through Sanctuary Advisors, LLC., a SEC Registered Investment Advisor. Tenet Wealth Partners is a DBA of Sanctuary Securities, Inc. and Sanctuary Advisors, LLC. The information provided in this communication was sourced by Tenet Wealth Partners through public information and public channels and is in no way proprietary to Tenet Wealth Partners, nor is the information provided Tenet Wealth Partner’s position, recommendation or investment advice. This material is provided for informational/educational purposes only. This material is not intended to constitute legal, tax, investment or financial advice. Investments are subject to risk, including but not limited to market and interest rate fluctuations.