The 2017 Tax Cuts and Jobs Act provisions were extended earlier this year, which means the tax landscape you know remains intact—for now. Here's your year-end checklist to minimize your 2025 tax bill before December 31st.
Max Out Retirement Contributions
The 2025 limits:
- 401(k): $23,500 ($31,000 if 50+)
- IRA: $7,000 ($8,000 if 50+)
- HSA: $4,300 individual / $8,550 family
401(k) contributions must be made through payroll by December 31st. Check your year-to-date contributions and calculate how much to add to your final paychecks. If you can't hit the max, at least contribute enough to get your full employer match—that's free money.
Try the Retirement Calculator →
Harvest Tax Losses
If you have investments trading at a loss in taxable accounts, consider selling before year-end to realize the loss. You can use losses to offset gains dollar-for-dollar, plus deduct up to $3,000 against ordinary income. Excess losses carry forward to future years.
The catch: the wash sale rule prevents you from buying a "substantially identical" investment within 30 days. But you can immediately buy something similar—sell one S&P 500 index fund, buy a total market fund.
Charitable Giving Strategies
The 2025 standard deduction is $15,000 for singles and $30,000 for married couples. If you're close to itemizing, consider "bunching" two years of charitable gifts into one year to exceed the standard deduction threshold.
Even better: donate appreciated stock instead of cash. You get the deduction for the full market value AND avoid paying capital gains tax on the appreciation. It's the most tax-efficient way to give.
Use Your FSA
Flexible Spending Account funds typically expire December 31st (some plans offer a grace period or $640 rollover). Check your balance and spend it down on eligible expenses: glasses, contacts, prescription sunglasses, first aid supplies, even sunscreen.
Required Minimum Distributions
If you're 73 or older, you must take your RMD from traditional IRAs and 401(k)s by December 31st (or April 1st if this is your first RMD year—but then you'll have to take two next year). Missing the deadline triggers a brutal 25% penalty on the amount not withdrawn.
Consider a Qualified Charitable Distribution (QCD) if you're 70½+. You can donate up to $105,000 directly from your IRA to charity, satisfying your RMD without the funds counting as taxable income.
Roth Conversion Opportunity
If your income is lower than usual this year—job change, sabbatical, early retirement—consider converting some traditional IRA funds to Roth. You'll pay tax on the conversion at your current (lower) rate, then enjoy tax-free growth and withdrawals forever.
Run the numbers carefully. You want to convert enough to "fill up" your current tax bracket without pushing into a higher one.
Try the Budget Split Calculator →
The Bottom Line
December 31st is a hard deadline for most tax moves. Don't wait until Christmas week to scramble. Make a list now, check your numbers, and execute before the holiday chaos hits. The tax code rewards those who plan ahead.
— Tyler Brooks