9 Year-End Tax Moves for 2025

As 2025 draws to a close, tax planning becomes less about theory and more about execution. The One Big Beautiful Bill has extended several taxpayer-friendly provisions while sunsetting others at year-end.

Acting now can make a measurable difference, especially for high-income individuals, executives, and business owners. Below, we've detailed nine of the most impactful tax moves that you can make in the final months of the year to optimize your tax strategy and ensure you keep more of what you earn. 

1. Evaluate Withholding and Estimated Tax Coverage

Underpayment penalties apply if your total withholdings and estimated payments fall short of 90% of your current-year liability, or 110% of your prior year’s, if your AGI exceeded $150,000. For executives, partners, or investors who had early-year gains or liquidity events, this can happen easily.

Because W-2 withholdings are treated as if spread evenly across the year, increasing them in November or December can retroactively reduce or eliminate penalties. A year-end projection can help determine whether you meet the safe-harbor thresholds or need to adjust before December 31.

2. Bunch Itemized Deductions for Maximum Benefit

Each year, you can deduct either the standard deduction or your total itemized deductions—typically including mortgage interest, charitable gifts, medical expenses, and state and local taxes (SALT). For 2025, the standard deduction is $31,500 for joint filers, $15,750 for single or separate filers, and $23,625 for heads of household.

If your deductions are close to those thresholds, “bunching” them into alternating years can create measurable savings. By accelerating discretionary payments, such as a January mortgage payment or charitable donation, you can exceed the standard deduction this year, then take the standard deduction next year. Over time, alternating years of itemizing and standard deductions yields a higher cumulative benefit than missing the cutoff every year.

Example: A married couple with about $30,000 in annual deductions could prepay certain expenses to reach $32,000 in 2025, itemizing this year, then take the higher inflation-adjusted standard deduction in 2026.

Coordinating Mortgage, SALT, and Medical Deductions

You can increase 2025 deductions by paying some 2026 obligations early, though limits apply. Mortgage interest is deductible only on up to $375,000 ($750,000 joint) of acquisition debt, with more generous rules for mortgages originated before December 15, 2017.

The One Big Beautiful Bill (OB3) raised the SALT deduction cap to $40,000 ($20,000 if married filing separately), but the benefit phases down as modified AGI exceeds $500,000 ($250,000 MFS). If you’re already at or near that threshold, prepaying state estimates or property taxes may not change your result, and could hurt if you’re subject to the Alternative Minimum Tax (AMT), which disallows those deductions entirely.

Finally, medical expenses are deductible only to the extent they exceed 7.5% of AGI. If you expect higher medical or dental costs soon, scheduling them before December 31 could help you cross that threshold.

3. Managing Capital Gains and Losses Before Year-End

Capital gains recognized before December 31 are taxable this year. Long-term gains (on investments held over 12 months) are taxed at 15% or 20% for most high earners, plus the 3.8% Net Investment Income Tax at higher income levels. Short-term gains are taxed at ordinary rates up to 37%. Strategic management of gains and losses can materially affect your effective rate.

If you realized gains earlier in the year, harvesting losses in underperforming positions can offset them. Be mindful of the “wash sale” rule: if you repurchase the same or substantially identical security within 30 days, the loss is disallowed. 

If total capital losses for 2025 exceed your capital gains, you can use up to $3,000 ($1,500 if married filing separately) of the net loss to offset ordinary income such as wages, business earnings, or interest. Any remaining unused loss automatically carries forward to future years, where it can offset both short- and long-term gains.

Planning Tip: Tax-motivated sales shouldn’t override sound investment management. If you expect a depressed security to recover, it may be worth holding rather than realizing a loss now. If you do harvest losses or gains to manage 2025 taxes, ensure your overall asset allocation remains aligned with your long-term objectives. That includes coordinating taxable brokerage accounts with tax-advantaged accounts such as IRAs and 401(k)s when rebalancing.

4. Structuring Charitable Contributions for Tax Efficiency

Charitable giving remains one of the most flexible levers for year-end tax planning. For 2025, it may make sense to “bunch” multiple years of charitable contributions into this year, especially if your total deductions are close to the standard deduction threshold. Doing so lets you itemize in 2025, then take the standard deduction in 2026.

Beginning in 2026, standard deduction filers will be eligible for a new above-the-line charitable deduction of up to $1,000 for individuals ($2,000 for married couples filing jointly). This creates an opportunity to bunch larger charitable gifts into 2025 while still benefiting from modest deductions on smaller cash donations made next year.

Donor-Advised Funds for Greater Flexibility

If you’d like to make a sizable contribution this year but haven’t yet chosen specific charities, a donor-advised fund (DAF) offers flexibility. A DAF (typically administered by a public charity or community foundation) lets you make a single deductible contribution now, while recommending how the funds should be granted to qualified charities over time. You receive the full deduction in the year you contribute, but maintain advisory privileges for future distributions.

Using Appreciated Assets Instead of Cash

For investors, donating appreciated assets held for more than a year can deliver double tax benefits: a deduction for the fair market value of the asset and avoidance of capital gains tax on the appreciation. Contributions of appreciated property to public charities generally qualify for a deduction at fair market value. 

These rules make appreciated stock donations particularly efficient for those with concentrated positions or significant unrealized gains, allowing you to rebalance your portfolio while supporting charitable causes.

Qualified Charitable Distributions (QCDs) for Retirees

If you’re age 70½ or older, you can make Qualified Charitable Distributions (QCDs) directly from your IRA to a qualified charity. While QCDs don’t generate a charitable deduction, they do count toward your Required Minimum Distribution (RMD) and are excluded from your Adjusted Gross Income (AGI).

This can be especially beneficial for retirees who don’t itemize, since it’s effectively a way to make tax-free charitable gifts. Even if you do itemize, keeping your AGI lower through QCDs can help reduce the taxable portion of Social Security benefits and limit phaseouts tied to AGI.

Caution: If you’re still working and making deductible IRA contributions after age 70½, those contributions can limit your ability to exclude future QCDs from income.

Planning Tip: To ensure a QCD counts for 2025, initiate the transfer with your IRA custodian well before December 31. Processing times vary, and QCDs must be completed (not just requested—by year-end to qualify.

5. Roth IRA Conversions: A Hedge Against Future Rate Increases

Evaluating When a Conversion Adds Value

Converting a traditional IRA to a Roth IRA can make sense if you expect to be in the same or higher bracket later. With current rates scheduled to sunset after 2025, many high earners view conversions this year or next as an opportunity to prepay tax at known, historically low rates.

Managing the Tax Impact Across Years

A large conversion could push you into a higher bracket or affect Medicare premiums. Many households spread conversions over two or three years to manage exposure. Modeling the marginal effect by bracket—particularly for those earning between $400K and $1M—helps identify the sweet spot between immediate cost and long-term benefit.

6. Making the Most of Flexible Spending Accounts

Understanding the Rules and Exceptions

Medical and dependent-care FSAs are typically “use-it-or-lose-it.” Employers may allow a $660 carryover or a 2½-month grace period—but not both. While the financial impact is modest, unspent balances are forfeited and often overlooked.

Ensuring Funds Aren’t Forfeited

Review your plan before year-end and schedule eligible expenses now. Some plans also permit a “runout period” for submitting claims incurred before December 31. While not a high-impact strategy, this remains a simple housekeeping step worth addressing before year-end closes.

7. Utilizing the Annual Gift Tax Exclusion

Reducing Future Estate Tax Exposure

The annual gift exclusion allows you to give up to $19,000 per recipient in 2025 ($38,000 per couple) without using your lifetime exemption, which stands at $13.99 million per person ($27.98 million per couple). The unified exemption increases to $15 million per person in 2026, but scheduled sunset provisions could reverse that.

Structuring Gifts for Income and Basis Efficiency

Gifting income-producing assets can shift taxable income to lower-bracket family members, though Kiddie Tax rules may apply to dependents under 24. For assets with unrealized losses, it’s often better to sell and gift cash proceeds rather than transferring the loss basis. Families with significant net worth should also consider how larger transfers fit into long-term estate or trust planning.

8. Planning for the Introduction of “Trump Accounts”

A New Tax-Deferred Savings Vehicle for Minors

Beginning July 2026, parents can establish Trump Accounts, allowing up to $5,000 per year in after-tax contributions for each child under 18. For children born between 2025 and 2028, the federal government will add a one-time $1,000 contribution.

Preparing in Advance

Parents of 2025 newborns should obtain Social Security numbers promptly and plan to make elections once the program opens. Employer contributions up to $2,500 per child are also permitted, counting toward the annual $5,000 limit. While not yet available, early awareness can help families integrate these accounts into broader education or wealth-transfer planning.

9. Capturing Clean Energy Credits Before They Expire

What’s Ending After 2025

Several popular residential energy credits—covering solar panels, wind turbines, battery storage, and qualifying energy-efficient materials—expire at the end of 2025.

Coordinating Upgrades With Tax Credits

If you’ve been planning improvements, completing projects by December 31, 2025, ensures you capture the remaining credits. While the savings may not rival major deductions, they still represent a meaningful offset—particularly for homeowners already investing in sustainability initiatives.

Bringing It All Together

Year-end tax planning is about more than chasing deductions—it’s about managing timing, rates, and thresholds with precision. For most high earners, the biggest opportunities in 2025 lie in rate management (Roth conversions, income acceleration), deduction optimization (charitable planning, bunching), and long-term estate positioning before exemptions change in 2026.

The strategies above are intended as a framework for discussion with your tax and financial advisors. Every situation is unique, and coordinated planning across income, investments, and estate strategy is key to achieving meaningful results.

If you’d like to explore these strategies in depth before year-end, contact your Revonary advisor or reach out through our website to discuss a personalized planning session.

This guide is intended for informational purposes only and should not be interpreted as individualized tax advice. Tax strategies depend on your income, filing status, and overall financial situation. Consult your tax advisor before taking action.