2025 Year-End Tax Planning Checklist

With December 31 approaching, now is the time to review your tax position. Many opportunities to reduce 2025 taxes expire at year-end. This checklist helps you identify actions to take before the calendar closes.

Retirement Accounts

• Take Required Minimum Distributions (RMDs): Individuals age 73 or older must withdraw their 2025 RMDs by December 31 to avoid the 25 percent excise tax.

• Qualified Charitable Distributions (QCDs): IRA owners age 70½ or older can transfer up to $108,000 directly to a qualified charity by December 31 to count toward the RMD and exclude the amount from income.

• 401(k), 403(b), and 457(b) Deferrals: Salary deferrals and catch-up contributions (including the new “super catch-up” for ages 61–63) must be made through payroll before December 31.

• Roth Conversions: Conversions from traditional to Roth IRAs must be processed by December 31 to count for 2025.

Charitable Giving and Gifting

• Charitable Contributions: Cash, property, and appreciated stock gifts must be completed by December 31 to be deductible for 2025.

• Donor-Advised Fund Contributions: Gifts must be made by December 31 for a 2025 deduction.

• Annual Exclusion Gifts: The 2025 annual exclusion is $19,000 per recipient. Gifts must be made by December 31 to count for the year. Married couples can gift $38,000 per recipient using gift-splitting.

Investment and Income Management

• Tax-Loss Harvesting: Realize losses to offset capital gains; trades must settle by December 31. Be mindful of the wash-sale rule (IRC §1091).

• Offset Gains with Charitable Stock Donations: Transfer appreciated shares to charity before December 31.

• Review Mutual Fund Distributions: Check year-end payouts to avoid surprise capital gains.

• Net Unrealized Appreciation (NUA):
  If you hold company stock in your employer’s qualified retirement plan and plan to take a distribution, you may qualify for NUA treatment. This strategy allows the embedded gain on company stock to be taxed at long-term capital gains rates instead of ordinary income rates.
  To qualify, you must:

  1. Take a lump-sum distribution of the entire account in one tax year after a triggering event (such as retirement or reaching age 59½).

  2. Complete the distribution by December 31 of that year.

  3. Keep the company stock outside the plan to receive favorable capital gains treatment when sold.

Health and Benefits

• Medicare Open Enrollment: Ends December 7, 2025.

• Flexible Spending Accounts (FSA): “Use it or lose it” by December 31, unless your plan allows a grace period or carryover.

• Adoption Assistance: Employer programs must be funded or disbursed by December 31.

Education and Family

• 529 Plan Contributions: Make contributions by December 31 to qualify for 2025 state tax benefits (where applicable).

• Employer Educational Assistance: Tuition or student loan repayments (up to $5,250) must be paid by December 31 to remain tax-free.

State and Local Tax Strategies

• Prepay State Estimated Taxes: Where allowed, prepay by December 31.

• Property Taxes: If assessed, pay before December 31 to include in 2025 deductions (subject to the $40,000 SALT cap).

Estate and Legacy Planning

• Annual Exclusion Gifts: Must be completed by December 31.

• Charitable Trust Funding: Complete transfers to a charitable remainder trust or charitable lead trust by December 31 for deduction eligibility.

• Family Transfers: Finalize family limited partnership or trust funding before December 31 to shift income and growth.

Additional Items to Review

• Verify estimated tax payments are sufficient to avoid underpayment penalties.

• Evaluate withholding levels if your 2025 income changed.

• Review portfolio diversification and rebalance if needed.

• Confirm beneficiary designations on retirement and insurance accounts.

• Plan for 2026 tax law changes. Contact me for assistance

  Summary

  Completing these actions by year-end helps reduce taxable income, preserve deductions, and strengthen your financial position for 2026. Year-end planning can help minimize 2025 taxes and position you for next year’s success. Contact me for personalized year-end tax strategies tailored to your situation.

  Further Reading:

• Publication 590-B – Distributions from Individual Retirement Arrangements (IRAs) – Explains RMD and QCD rules.

• Publication 590-A – Contributions to Individual Retirement Arrangements (IRAs) – Covers contribution and conversion deadlines.

• Publication 526 – Charitable Contributions – Details on cash, stock, and property donation deductibility.

• Publication 550 – Investment Income and Expenses – Guidance on capital gains, losses, and wash-sale rules.

• Publication 505 – Tax Withholding and Estimated Tax – Explains how to avoid underpayment penalties.

• Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans – Covers HSA and FSA deadlines and contribution limits.

• Publication 970 – Tax Benefits for Education – Explains 529 plans, education credits, and employer assistance rules.

• Publication 559 – Survivors, Executors, and Administrators – Includes estate and beneficiary tax rules.

• Topic No. 409 – Capital Gains and Losses – Overview of how investment gains and losses affect taxable income.

• Topic No. 751 – Social Security and Medicare Withholding Rates – Useful when reviewing payroll deferrals before year-end.