7 Tax Planning Opportunities You Don’t Want to Miss

It’s that time of year again—holidays, celebrations, and yes, taxes. While it may not be the most exciting topic, year-end 2025 tax planning is especially important as several new legislative changes and inflation adjustments take effect that could impact your finances. Among them are higher retirement contribution limits, new charitable deduction opportunities, and even a unique way to contribute to a Roth 401(k) starting next year.

Taking a little time now to review your strategy before December 31 could potentially save you thousands and set you up for a stronger financial start to 2026. Here are seven strategies to consider.

1. Maximize Retirement Account Contributions

It’s never too late to give your retirement savings a boost, and help reduce your taxable income at the same time.

• 401(k) Plans: For 2025, you can contribute up to $23,500, with catch-up contributions of $7,500 if you’re 50 or older. Those ages 60–63 are eligible for a “super catch-up” of $11,250.
• IRA Accounts: You have until April 15, 2026, to make contributions for 2025—up to $7,000, plus a $1,000 catch-up if you’re 50+.
• Roth 401(k) Considerations: If you’re a high earner, keep in mind that starting in 2026, catch-up contributions for individuals earning over $145,000 must go into Roth 401(k) accounts, which could affect your tax strategy.

Even if you’ve already contributed, it’s worth reviewing your plan for the rest of the year. Small adjustments now could make a meaningful difference in both taxes and long-term savings.

2. Consider a Roth IRA Conversion

If you’ve been thinking about converting a traditional IRA or 401(k) to a Roth IRA, now is the time to act.

Here’s why it can make sense: when you convert, you pay taxes on the amount you move this year, but from then on, your money grows tax-free, and withdrawals in retirement won’t be taxed. Plus, Roth IRAs don’t have required minimum distributions, so your money can continue growing longer.

Before year-end, check:

• Your income level for 2025, since lower income years can make a conversion more tax-efficient.
• How much of your traditional IRA or 401(k) you want to convert. You don’t have to do it all at once—you can split it across multiple years to manage your tax bracket.

To count for 2025, conversions must be completed by December 31, 2025. Contact your wealth advisor to ensure the paperwork is processed in time.

3. Contribute to a Health Savings Account (HSA)

HSAs are still one of the best tax-efficient tools available. You get a triple tax benefit: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free.

• 2025 Limits: $4,300 for self-only coverage, $8,550 for family coverage, plus $1,000 catch-up if you’re 55 or older.

If you haven’t maxed out your HSA, consider doing so before December 31. You can contribute through your employer plan or directly through an HSA custodian by the end of the year.

4. Utilize Tax-Loss or Capital Gains Harvesting

Year-end is prime time to review your taxable investments. While tax-loss harvesting is a go-to strategy for offsetting gains, capital gains harvesting can also work in your favor, especially if your income is lower this year.

• Tax-Loss Harvesting: Sell investments at a loss to offset gains elsewhere and help reduce your taxable income.
• Capital Gains Harvesting: In lower tax brackets, you may be able to realize long-term gains with little to no tax due, effectively “resetting” your cost basis for future growth. In fact, for married couples with income under $96,700 (or $48,000 for single filers), the long-term capital gains rate is 0%. Even in higher income brackets, the rate can be as low as 4%, so careful income and investment planning over the next few years could potentially save you thousands in future taxes.

To claim losses on 2025 taxes, all sales must occur by December 31. Remember the wash-sale rule: don’t repurchase the same or substantially identical security within 30 days. A review of your portfolio could help uncover opportunities to lower your taxes.

5. Accelerate Charitable Contributions

If charitable giving is part of your year-end plans, there are strategies that can maximize both the impact of your gifts and your tax benefits:

• Donor-Advised Funds (DAFs): Make a contribution now, take an immediate deduction, and distribute funds to charities over time.
• Qualified Charitable Distributions (QCDs): If you’re 70½ or older, you can donate up to $105,000 directly from your IRA to qualified charities. This counts toward your RMD and is excluded from taxable income—a powerful tool for retirees.
• Bundling Contributions: Combine multiple years of donations into 2025 to maximize itemized deductions.
• Above-the-Line Deductions: Starting in 2026, non-itemizers can deduct up to $1,000 (single) or $2,000 (married filing jointly) in cash donations. This provision is permanent and not adjusted for inflation.

To claim a deduction for 2025, donations or DAF contributions must be completed by December 31.

6. Plan for Required Minimum Distributions (RMDs)

If you turned 73 in 2025, you’re now subject to RMDs from certain retirement accounts, including traditional IRAs, 401(k)s, and other tax-deferred accounts.

Key points to keep in mind:

• First RMD: Must be taken by April 1, 2026, for first-time RMDs.
• Subsequent RMDs: Due by December 31 each year.
• Multiple accounts: If you have multiple IRAs or inherited accounts, calculating RMDs can get complicated. Using a trusted RMD calculator or working with a wealth advisor is strongly recommended.
• Penalties: Missing an RMD can trigger a 50% excise tax on the amount you should have withdrawn.

Even if you’ve taken RMDs in the past, double-check that you’ve calculated them correctly and withdrawn the full required amount to avoid unnecessary penalties.

7. Plan for Major Life Changes

Big life changes—like retiring, changing jobs, starting Social Security, or selling a home—can have a huge impact on your tax picture. If you expect any of these in the next year, now is the time to plan:

• Adjust retirement contributions for changes in income.
• Consider the timing of Roth conversions or capital gains.
• Evaluate charitable contributions and deductions.

Proactive planning can help you reduce your tax liability and keep more money working for you.

Ready to Make the Most of Your 2025 Taxes?

There’s still time to take action before year-end. Whether it’s maximizing contributions, harvesting tax losses, converting to a Roth IRA, or planning your RMDs, smart planning can help save you money and simplify your finances.

If you’re anticipating life changes next year or want personalized guidance on tax-efficient strategies, reach out now to your Octavia wealth advisor. We’ll help you navigate the rules, meet deadlines, and make decisions that support your financial goals.