Year-End Tax Planning: Maximize Savings and Prepare for 2025

As 2024 draws to a close, it’s the perfect time to review your financial situation and optimize your 2025 tax strategy. Proactive planning can help you minimize your tax bill and set the stage for a financially secure new year. Here are key steps to take before December 31 to ensure you’re prepared for the upcoming tax season.

If you’ve realized gains from selling investments this past year, consider offsetting them by selling your underperforming assets. Known as tax-loss harvesting, this strategy can reduce the amount of taxable gains and potentially help you save more. Be sure to remember the wash-sale rule, which will prevent you from repurchasing the same asset within 30 days.

Take full advantage of tax-deferred retirement accounts like 401(k)s and IRAs. For 2025, the contribution limits are:

• 401(k): $23,500 (with a $7,500 catch-up contribution if you’re age 50+).
• Traditional and Roth IRAs: $7,000 (or $8,000 for those 50+).

Contributions to a traditional IRA may be tax-deductible, depending on your income and whether you’re covered by an employer-sponsored plan. Read more about 2025 Retirement Contributions here.

If you have an FSA through your employer, check the balance, as any unused amount may be forfeited. Some plans may offer a grace period or allow a limited carryover, but it’s better to spend the funds on eligible expenses before the deadline.

Donating to qualified charities supports causes you are passionate about and provides a potential tax deduction. Contributions must be made by December 31, and you’ll need proper documentation for any gifts over $250. If you are itemizing for a cash contribution, up to 60% of adjusted gross income (AGI) can be deducted. Consider donating appreciated assets like stocks to deduct the fair market value and avoid capital gains taxes while still claiming a deduction of up to 30% of your adjusted gross income. Read more about charitable gifting strategies here.

If you’re 73 or older, you must take required minimum distributions from your retirement accounts. Missing the deadline can result in a hefty penalty—up to 25% of the amount not withdrawn. For retirees who don’t need the income, an IRA Qualified Charitable Distribution (QCD) made by account holders aged 70 ½ or older can satisfy an RMD up to $105,000. Read more about RMDs here.

The annual gift tax exclusion for 2025 is $19,000 per recipient. Gifting can help reduce your taxable estate while providing financial support to loved ones.

Some states may offer deductions for contributions to state-sponsored 529 college savings plans, renewable energy initiatives, or health savings accounts. Be sure to research any opportunities that may apply in your state.

If you’ve made energy-efficient upgrades to your home, such as installing solar panels or upgrading insulation, you may qualify for federal tax credits. These incentives could save you thousands, so be sure to check the specifics under the Inflation Reduction Act of 2022.

Every financial situation is unique, and year-end tax planning can be complex. An Oppenheimer Financial Professional can help identify strategies tailored to your needs and ensure compliance with current regulations. Click here to find one in your area.

The final months of the year are critical for optimizing your tax position. By following these steps, you’ll not only reduce your 2025 tax bill and set yourself up for financial success for years to come. Don’t wait until the last minute—start planning now to make the most of this year’s tax-saving opportunities.