Year-End Tax Moves to Make Before December 31: A Strategic Checklist

As the calendar winds down, so does the window for making impactful financial decisions. Whether you're a retiree, mid-career professional, or business owner, the final weeks of the year offer a unique opportunity to reduce your tax liability and align your financial strategy with long-term goals.

This checklist is designed to help you take action—not just reflect—before December 31.

1. Maximize Retirement Contributions

Contributing to retirement accounts before year-end can reduce taxable income and boost long-term savings.

·        401(k), 403(b), and 457 plans: The 2025 contribution limit is $23,500, with an additional $7,500 catch-up for those age 50+.

·        Traditional IRA: Contributions may be deductible depending on income and participation in employer plans.

·        SEP IRA or Solo 401(k): Business owners can contribute up to $70,000, depending on income and plan structure.

Review your year-to-date contributions and consider topping off accounts if you’re below the limit.

2. Consider Roth Conversions

A Roth conversion allows you to move funds from a traditional IRA to a Roth IRA, paying taxes now to enjoy tax-free growth later.

·        Can be deal in years with lower income, such as early retirement or post-business sale.

·        Can reduce future Required Minimum Distributions (RMDs) and diversify tax exposure.

Run a tax projection to determine how much you can convert without pushing into a higher tax bracket.

3. Harvest Tax Losses

Selling investments at a loss can offset gains elsewhere in your portfolio, reducing your taxable income.

·        Be mindful of the wash-sale rule, which disallows the deduction if you repurchase the same or “substantially identical” security within 30 days.

Review your portfolio for underperforming assets and consider strategic sales to offset gains.

4. Make Charitable Contributions

Charitable giving can be both meaningful and tax-efficient.

·        Donating appreciated assets (like stocks) avoids capital gains and provides a deduction.

·        Donor-Advised Funds (DAFs) allow you to make a contribution now and decide later where to give.

·        Qualified Charitable Distributions (QCDs) from IRAs (for those age 73+) can satisfy RMDs and reduce taxable income.

Confirm donation deadlines and ensure proper documentation for deductions.

5. Use Flexible Spending Accounts (FSAs)

FSA funds typically expire at year-end or have a short grace period.

·        Use remaining balances for eligible medical, dental, or vision expenses.

·        Schedule appointments or purchase qualified items before the deadline.

Check your FSA balance and plan spending to avoid forfeiting unused funds.

6. Review Estimated Tax Payments

If you’re self-employed or have significant non-W-2 income, ensure you’ve paid enough to avoid penalties.

·        The IRS requires payments through withholding or quarterly estimates.

·        Underpayment can trigger penalties even if you file on time.

Use IRS Form 1040-ES or an online estimator to check your payment status.

7. Evaluate Business Expenses

Business owners can reduce taxable income by accelerating deductible expenses.

·        Consider purchasing equipment, software, or making marketing investments before year-end.

·        Deferring income (if cash flow allows) may also reduce current-year tax liability.

Review your profit/loss statement and consult your accountant about timing strategies.

8. Check Your Withholding

Even W-2 employees can face surprises if withholding doesn’t match actual tax liability.

·        Use the IRS Tax Withholding Estimator to assess whether adjustments are needed.

·        This is especially important if you’ve had a job change, bonus, or other income shift.

Adjust your W-4 with your employer if needed to avoid a large tax bill or refund.

Final Thought

Year-end planning isn’t just about saving money—it’s about making intentional moves that support your broader financial goals. Whether you're optimizing retirement savings, managing business cash flow, or aligning charitable giving with your values, the key is acting before December 31.

Use this checklist to take control, reduce surprises, and enter the new year with clarity.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.