Why Read Another Year-End Tax Planning Blog? A Practical 2025 Checklist

 2. Max Out Retirement Contributions

Are your retirement plans maxed out?

If you’re working and have access to an employer-sponsored retirement plan, you get to contribute $23,500 of your own funds for the 2025 tax year. “Older” (I prefer the word “experienced”) workers can take advantage of additional catch-up contributions:

• Ages 50-59: Catch-up contribution of $7,500 (total $31,000)
• NEW FOR 2025! Ages 60-63: “Super” catch-up contribution of $11,250 (total $34,750)

Those who own a traditional or Roth IRA can contribute $7,000, with a $1,000 catch-up contribution limit for people aged 50 and over.

3. Contribute to Your Donor-Advised Fund (DAF)

How much could you add to your Donor Advised Fund (DAF) to reduce your taxable income?

Think of a DAF as a charitable savings account with tax superpowers. You get the deduction now, but you don’t have to figure out where to donate until later. It’s perfect for those “I know I want to give and I’d love to take the tax deduction now, but let me research the best organizations” moments.

The beauty here is timing flexibility. Make a big contribution into your DAF before Dec. 31, claim the deduction on your 2025 taxes, then take your sweet time deciding where to send the money. You can even invest the funds while they sit there, potentially growing your future giving power. 

The move is to front load the DAF during your working years, when you may need the deductions the most. You can always distribute the money later. Just remember: Once money goes in, it doesn’t come back out for you to spend. No take-backs, even if you suddenly decide you need it for something else.

4. Complete Your RMDs & Consider QCDs

Are your RMDs complete and can you utilize QCDs to help cover charitable giving while reducing taxable income?

If you’re 73 or older, Uncle Sam will require you to start paying taxes on your pre-tax retirement accounts. This happens through required minimum distributions (RMDs). You are required to withdraw a specific minimum amount from your pre-tax account, and this amount will be treated as regular income. But here’s a strategy that can make a big difference: You can send that RMD money straight to charity and pretend it never happened for tax purposes. You don’t even have to wait for RMDs to begin.  If you are over 70.5, qualified charitable distributions can be a strategy for you.

Qualified charitable distributions (QCDs) let you send money from your retirement account without getting taxed on it. A QCD can also satisfy your RMD requirement.. One catch: The tax break applies to donations up to $108,000. You can still donate the RMDs to a charity of your choosing, but it will count toward your taxable income.

It’s important to know the money has to go directly from your IRA custodian to the charity, with no pit stops in your checking account along the way. One detour and the IRS treats it, and taxes it, like regular income.

5. Evaluate a Roth Conversion

Does a Roth conversion make sense this year?

Remember back to step 1, how you already calculated your marginal tax bracket for this year? We’re going to use that information to decide if you might want to tackle a Roth conversion before Dec. 31.

If you’re sitting in a lower tax bracket than usual – maybe you took a sabbatical, had a down business year, or retired mid-year (congrats!) A Roth conversion might be in your immediate future. With this, you’re basically paying taxes now at today’s rate to avoid paying them at potentially higher rates later. 

The sweet spot is to convert just enough to fill up your current tax bracket without bumping yourself into the next one. One caveat? It’s not super beneficial to go all-in on a conversion if you’re already maxed out in a high bracket. There’s no point in paying 37% now if you think you’ll be in the 24% bracket in retirement.

6. Bundle Itemizable Expenses

Are there any expenses you could bundle to take advantage of itemized deductions?

The standard deduction is like the financial equivalent of ordering off the kids’ menu: simple, predictable, and works for most people. But sometimes you can do better going à la carte with itemized deductions.

The trick is bunching expenses into alternative years to help beat the standard deduction threshold. A couple of good places to look are medical expenses and property taxes, both of which can add up quickly to push you into itemization territory.

The goal is creating a “high deduction year” followed by a “standard deduction year.” Just make sure you’re going to blow past the standard deduction ($15,750 single, $23,625 head of household, $31,500 married filing jointly). Otherwise, you may be complicating things for no reason.

7. Review SALT Deduction Limits

How will the new SALT cap affect you?

The good news? You can deduct up to $40,000 paid for State and Local Taxes (SALT) from your federal tax bill, as long as your modified adjusted gross income (MAGI) is under $500,000 and you’re single or married filing jointly (the limit is $250,000 for married filing separately). If your MAGI is over those limits, then the deduction is reduced by 30% until it hits the floor of $10,000.

This can really bite you, especially if you’re taking advantage of the other strategies I’ve mentioned here. That Roth conversion might seem like a good idea until it pushes your AGI over the cliff and cuts your SALT deduction. Sometimes the best tax strategy is knowing when to stop optimizing and take the wins you’ve already got.

8. Use Annual Gift Exclusions

Have you utilized the annual gift exemptions to help reduce your future estate?

The annual gift exclusion is basically the IRS saying, “Here’s your free pass to move money around without us caring.” For 2025, that’s $19,000 per recipient. You and your spouse can jointly gift $38,000 to each kid, grandkid, or anyone else you feel like throwing some money at.

Annual gifting is like a slow-motion magic trick. Every dollar you gift disappears from your taxable estate forever, along with the future growth of that money. Don’t overthink it; you don’t need some elaborate trust structure to make the gift. Write a check or send the Venmo, then document it and move on to the next thing on the list.

9. Thinking About Buying a Car?

Are you considering buying a car?

Auto loan interest is actually tax deductible again, but only for a hot minute (through 2028). Thanks to some creative tax legislation, you can deduct interest on auto loans for 2025 – something that disappeared back in the ‘80s and nobody expected to see again.

If you’ve been on the fence about replacing that car that makes weird noises, this might be your moment. The deduction applies to interest on loans for new and used vehicles, so even financing a reliable Honda Civic counts.

10. Maximize 529 Plan Contributions 

Have you maximized your 529 contributions?

If you live in a state that gives you a tax break for contributions to 529 college savings plans, December is prime time to stuff money into those accounts. It’s like getting a discount on future tuition bills.

Most states cap the deduction, but a handful will let you deduct the full contribution amount. The key is making sure you’re using your own state’s plan if you want the tax break.

Should your child or grandchild decide to become an influencer instead of going to college, you’ve got the option to transfer the funds to another family member or you may even be able to roll it into a Roth IRA.

11. Confirm HSA Eligibility

Is your insurance plan HSA eligible?

If you’re enrolled in a high-deductible health plan, you’ve unlocked access to one of the most effective tools in tax management. Health Savings Accounts (HSAs) offer a triple-tax advantage: deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses. After age 65, you can even use HSA money for non-medical stuff and just pay regular income tax, making it a “stealth IRA” that’s friendlier for your taxes.

To take advantage of the benefits for the 2025 tax year, you have until the tax filing deadline in April, 2026. Future-you will be very grateful when you’re paying for prescriptions and other medical expenses with pre-tax dollars.

12. Spend Down Your FSA

Did you use your FSA balance?

December is the month many people realize they have $500 sitting in a flexible spending account (FSA) and only a few weeks to use it up. Time to start using it up!

Hit up your local pharmacy and stock up on everything remotely medical: bandages, pain relievers, sunscreen, contact solution, etc. And don’t forget the other stuff that counts, things like chiropractic visits, reading glasses, over-the-counter medication, you name it. It’s better to own a lifetime supply of first-aid necessities than hand the IRS free money because you didn’t use up all your funds.

13. Look for Tax-Loss Harvesting Opportunities

Are there any opportunities for tax-loss harvesting?

Even when the market’s been on a tear, like it has in 2025, some sectors and individual stocks inevitably stumble, giving pockets for potential tax-loss harvesting.

The strategy is simple: Sell your losers to offset the winners you have already sold, potentially reducing your overall tax bill. And if you haven’t sold your “winners,” you can sell the losers but not get out of the market, and instead, buy with the proceeds. But watch out for the wash-sale rule, which says you can’t buy back the same security (or something “substantially identical”) within 30 days, or the IRS will disallow the loss.  

14. If You’re Retiring…Consider Waiting

Can you hold out on retirement for one more month?

If you’ve been planning to ride off into the retirement sunset on December 31, 2025, consider hanging on for a second. Retiring in January instead of December might be the difference between a hefty tax bill and a much more manageable one, especially if you’re sitting on a pile of unused vacation days and PTO.

Combine your accumulated time off (which gets paid out as regular income in the year you retire) with a full year’s salary, possible bonuses, and maybe some severance, and you might find yourself in a tax bracket you never intended to visit. Waiting until January pushes that payout into the following year when your income will presumably be much lower.

Wrapping Up Your 2025 Tax-Saving Strategies

Look, I get it, this list might feel overwhelming when you’re already juggling holiday shopping and year-end deadlines. But you don’t need to tackle every single item on this checklist to help make a meaningful difference in your tax situation.

Pick the two or three strategies that make the most sense for your circumstances, and try to execute them before December 31st, and call it a win. Even small moves can help increase your savings.

Want to make this even easier? Here’s a free checklist with all the key steps. It highlights every strategy in a simple, ready-to-use format. Download it to get started today!

Partner With a Financial Advisor for Help with Year-End Planning

Year-end tax planning doesn’t have to feel overwhelming or overly technical, especially when you have a professional in your corner who can help you sort through the noise and focus on the strategies that truly benefit your situation. 

An Abacus financial advisor can run the projections, analyze your tax brackets, coordinate with your CPA, and help you decide which moves are worth making this year versus next. More importantly, they help you avoid costly mistakes and identify opportunities you may not have known existed. 

If you’d like support with navigating your 2025 tax strategy with clarity and confidence, schedule a call with an Abacus financial advisor to learn how an advisor can help assess whether you’re taking full advantage of what’s available before year-end.