As year-end approaches, it’s a good time to ensure you’re positioned to maximize your financial benefits and tax opportunities. This frequently requires acting before December 31st. We’ve compiled a list of top financial moves to make and questions to consider before the close of 2025.
1. Maximize Contributions to Retirement Plans
Maximizing your savings and minimizing your taxes are likely important goals for pre-retirees. Review your retirement contributions to ensure that you have reached or will reach your goal before year-end. If you are aged 50 or older, don’t forget about catch-up contributions that allow you to save more. The catch-up contribution limits are higher for individuals turning 60, 61, 62 or 63 in the respective years.
401(k), 403(b) and TSP Maximum Contribution Limits 2025-26
| 2025 | 2026 | |
| Any Age Traditional Contribution | $23,500 | $24,500 |
| Additional Catch-Up Contributions (age 50+) | $ 7,500 | $8,000 |
| -or- | ||
| Additional Catch-Up Contributions for individuals turning 60, 61, 62 or 63 each year | $11,250 | $11,250 |
2. Maximize Health Savings Accounts
If you are working and have a high-deductible health insurance plan, health savings accounts (HSAs) are powerful. Your contributions are tax-deductible and allow you to pay current or future health care expenses on a tax-free basis. HSA account balances can accumulate and be used at any time.
HSA Contribution Limits 2025-26
| 2025 | 2026 | |
| Self-Only | $4,300 | $4,400 |
| Family | $8,550 | $8,750 |
| Additional Catch-Up Contributions (age 55+) | $1,000 | $1,000 |
Note: Individuals age 65 or older who have signed up for Medicare are ineligible to make contributions.
3. Utilize and Plan for Your Flexible Savings Account
Flexible Savings Accounts (FSA) also create a tax-advantaged way to pay for medical and other expenses with pretax dollars. If you have an FSA through an employer, make sure you are on track to spend your balance before year-end. Contributions cannot be rolled over to the next year, unless the plan allows an extension to March. Confirm the deadline and remember to submit your receipts for reimbursement.
4. Contribute to Education Accounts
Contributions to 529 college savings plans offer tax-deferred savings benefits for your college funding objectives. Many states also offer state income tax deductions. If your state offers tax deduction benefits, remember to make contributions before December 31st. A few items to keep in mind:
- Parents and grandparents can create accounts.
- You could increase your state deduction benefits if each parent/grandparent establishes an account for each child/grandchild. Deduction limits and laws vary by state.
- You can always contribute more than the state tax deduction limit relevant to your ultimate funding objectives. Contributions in excess of the deduction limit often qualify for carryforward deductions (allowing you to gain additional deductions in future years).
- Tax deduction limits might be higher for seniors making contributions, depending upon the state.
- Withdrawal rules were expanded in 2025 for pre-college expenses including certain tutoring and testing fees.
- Starting in 2026, the withdrawal limit for private school increases from $10,000 to $20,000.
5. Complete Charitable Gifts
Complete all of your intended charitable gifts before year-end, while being cognizant of the best method(s) to donate relevant to tax planning. Here are three gifting practices that are tax-advantaged compared to traditional cash gifts.
Gifts of Appreciated Securities:
Rather than gifting cash, you might wish to consider gifting shares of appreciated securities. This strategy can enhance your tax benefits by receiving a tax deduction and reducing future capital gain exposure.
Bunching Gifts:
Many taxpayers forfeit a portion or all of their charitable deduction potential now that standard deductions are higher. “Bunching” a few years of contributions into a Donor Advised Fund (DAF) can help to increase your tax deduction potential. It may make sense to “front-load” your 2026 gifting in 2025 as next year the charitable giving deduction will be reduced by 0.5% of AGI. DAF contributions should also be carefully considered in high income years.
Qualified Charitable Distributions:
If you are 70 ½ or older, you might gain the greatest tax benefit by making charitable distributions directly from your IRA account. These are known as Qualified Charitable Distributions (QCDs).
6. Review Your Itemized Deductions
The new tax law in 2025 increased the deduction for state and local income and property taxes, known as SALT. Those who previously could not itemize because of the $10,000 limit should review whether they are eligible for up to the new $40,000 limit. The higher limit begins to phase out if income is high. The ability to deduct these higher taxes gives a greater likelihood of gaining deduction benefits for charitable gifts and potentially medical expenses.
7. Review Your Capital Gains and Losses
Capital gains and losses from the sale of investment assets are part of your taxable income. If you have net realized capital gains, it’s important to identify any assets with unrealized capital losses that could be sold to mitigate your tax liability. SageVest actively reviews portfolio tax exposure on an ongoing basis, focusing on maximizing your net after-tax returns.
8. Take Your Required Minimum Distributions (RMDs)
If you are age 73 or older, don’t forget to take your Required Minimum Distribution (RMD) before December 31st. Failure to take your RMD can result in a tax penalty.
9. Inherited IRA Distributions
If you have an inherited IRA, determine if you have any RMDs before year-end. If you inherited an IRA post 2019, consider if additional elective distributions make sense relative to when you must deplete the account and your forward-looking taxable income.
10. Consider a Roth IRA Conversion
Roth IRA accounts are powerful savings vehicles given their extremely favorable tax treatment. Evaluating a Roth IRA conversion is a worthy exercise if you are in a low-income tax bracket this year and/or your assets could be subject to estate taxes upon your death.
11. Verify Your Tax Bracket
Evaluate if your income will be higher or lower this year. Variations can impact your tax bracket and possible tax planning considerations. For example, you might benefit from deferring or accelerating income if possible, modifying your charitable contributions, making an elective Roth IRA conversion, or other.
12. Evaluate Estimated Tax Payment Requirements
It’s important to ensure you’ve made necessary estimated tax payments, particularly if your income has increased compared to the prior year, or your withholdings have decreased.
13. Plan for Business Income
Tax planning is critical if you’re a business owner or sole proprietor. Make sure you have a sense of required and/or proactive actions before year-end. These could include properly allocating income and expenses, payment of estimated tax payments, pass-through entity tax benefits, maximization of retirement plan options, or other.
14. Give to Family
If your wealth exceeds your lifetime needs, consider making family gifts, as appropriate and relevant to your values. The 2025 maximum annual exclusion gift amount is $19,000, allowing you to make tax-free gifts to family members. This amount is per person; therefore, if each spouse completes separate gifts to a child, the combined gifts can total $38,000.
15. Ensure Your Planning Is Up to Date
While tax planning is important, so too is evaluating if you are on track to securing your future financial objectives. Frequent (ideally annual) reviews of your long-term retirement plans and other financial planning are always recommended to ensure you are informed and making smart decisions.
16. Confirm You Are Comfortable with Your Investment Allocation
Your investment portfolio requires and deserves ongoing consideration regarding appropriate allocations. These should align with your long-term objectives and risk tolerance. Frequent reviews with your financial advisor are always recommended.
SageVest understands that your finances are not static. They change year-by-year. This is why we actively review all aspects outlined above and others on your behalf as part of our proactive wealth management approach. Please contact us to discuss any updates to your finances or your broader financial goals in greater detail.
