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We\u2019re in early December, which means you have a few weeks left to make meaningful adjustments to your 2025 tax situation. This is the perfect time to estimate your taxable income for the year and see where you land in the tax brackets. A little planning now can save you thousands in April.<\/p>\n
If you\u2019re not weaving tax planning into your overall retirement and investment strategy, you\u2019re most likely leaving money on the table. And I\u2019m not talking about the returns that show up on your 401(k) statement. Having a 401(k) or IRA doesn\u2019t mean you have a retirement plan. A proper financial plan is multifaceted\u2014it incorporates investment strategy, tax optimization, estate planning, and risk management. If you think financial planning is just about choosing between a handful of stocks or an index fund, you\u2019re missing the bigger picture.<\/p>\n
With that in mind, here are five year-end tax planning areas to focus on. These are the low-hanging fruit\u2014the opportunities that show up in my client base year after year. This isn\u2019t an exhaustive list, and not everything will apply to your situation, but chances are at least a few of these will be worth exploring. As always, consult your tax planning professionals before implementing any of these strategies. This outline is for educational purposes only.<\/p>\n
1. Tax-Loss Harvesting<\/p>\n
Tax-loss harvesting involves selling investments at a loss within your brokerage account to offset realized gains elsewhere in your portfolio. This can minimize your overall capital gains tax bill. Nobody invests hoping for losses, but they\u2019re inevitable. Historical analysis shows us that markets rise about 70% of the time, but the average intra-year drop is around 14% according to JP Morgan\u2019s Guide to the Markets research. Taking advantage of these dips can create tax benefits.<\/p>\n
But just because you sell, it doesn\u2019t mean you\u2019re trying to sit out of the market. You sell the losing position and immediately buy something similar but substantially different to maintain your market exposure. Just watch out for the wash sale rule:<\/a> in summary, if you buy the same or a substantially identical security within 30 days before or after the sale, the IRS won\u2019t allow you to claim the loss.<\/p>\n Any losses you don\u2019t use this year can be carried forward indefinitely, and you can deduct up to $3,000 annually against ordinary income.<\/p>\n 2. Tax-Gain Harvesting<\/p>\n Tax-loss harvesting gets all the attention, but tax-gain harvesting deserves more. Sometimes it makes sense to intentionally realize gains or pull income into the current year. Why would anyone want to increase their taxable income? Let me show you with an example:<\/p>\n For long-term capital gains, a couple filing jointly in 2025 can have up to $96,700 in taxable income and pay 0% in capital gains tax. Remember, taxable income is what\u2019s left after deductions. For a couple both age 65 in 2025, the deduction math looks like this:<\/p>\n Standard deduction: $31,500<\/p>\n Age 65+ additional deduction: $3,200 ($1,600 per)<\/p>\n New senior bonus deduction: $12,000 ($6,000 per, subject to income limitations)<\/p>\n Total deductions: $46,700<\/p>\n This means a couple could have adjusted gross income of $143,400 and still be in the 0% capital gains bracket. That\u2019s over $10,000 per month in spending\u2014pretty reasonable for many couples in retirement.<\/p>\n Let\u2019s say you add up all your income and you\u2019re only at $110,000. Does it make sense to realize some capital gains? It\u2019s at least something to explore. You\u2019ll increase taxable income, but if done correctly, you won\u2019t pay a dime in additional capital gains tax. This strategy works particularly well in the early years of retirement if you\u2019re delaying Social Security or IRA distributions and spending from after-tax brokerage accounts.<\/p>\n And just like tax-loss harvesting, the goal is not to sell your positions and sit out of the market. Remember the wash sale rule mentioned above only applies to losses. If you like an investment that\u2019s appreciated, you can sell it, realize the gain tax-free, and immediately buy it back without missing out on future growth.<\/p>\n 3. Income and Expense Timing<\/p>\n You can\u2019t always control when income arrives or expenses hit, but when you can, timing matters.<\/p>\n For example, the One Big Beautiful Bill passed earlier in 2025 increased the state and local tax (SALT) deduction limit to <\/a>$40,000 (up from $10,000) for 2025, subject to income limits<\/a>. <\/a>If you\u2019re in a high-tax state and you haven\u2019t maximized this benefit for the current year, you might consider prepaying your 2026 first-quarter taxes if your jurisdiction allows it. This lowers your 2025 taxable income and lets you maximize the deduction again in 2026. This benefit only runs through 2028, so use it while you can. You\u2019ll need to itemize to claim this, but with the OBBB changes, it\u2019s worth running the numbers even if you typically take the standard deduction.<\/p>\n On the income side, that new senior bonus deduction<\/a> might make it worthwhile to pull some income into 2025 to take full advantage of your available deductions. Or consider a Roth conversion to fill up lower tax brackets in low-income years. A Roth conversion<\/a> involves moving money from a traditional IRA to a Roth IRA, paying taxes now at today\u2019s rates, and enjoying tax-free growth and withdrawals later.<\/p>\n 4. Charitable Giving Strategies<\/p>\n If you\u2019re charitably inclined, Qualified Charitable Distributions (QCDs) are powerful. Once you\u2019re 70\u00bd, you can donate directly from your IRA to charity. The distribution doesn\u2019t count as taxable income, and it satisfies your required minimum distribution if you\u2019re over 73.<\/p>\n Another charitable giving strategy involves donating appreciated investments from your brokerage account directly to a Donor Advised Fund<\/a>. The charity gets the full value, you avoid capital gains tax on the appreciation, and you increase the cost basis in your brokerage account. Two birds, one stone.<\/p>\n One more item to know\u2014starting in 2026, there\u2019s a new 0.5% AGI floor and a 35% cap for top-bracket donors. For example, if you have $400,000 in income, you\u2019d only be able to deduct amounts given over $2,000. And if you\u2019re in the highest tax bracket, your deduction is capped at 35 cents per dollar donated. Cash-gift deductions continue to be capped at 60% of AGI; that limit has not changed.<\/p>\n \u00a0This creates an opportunity to accelerate giving in 2025 before these restrictions kick in.<\/p>\n 5. Retirement Plan Contributions<\/p>\n The basics still matter. Maximize your 401(k) employee deferrals before December 31st. Health Savings Accounts<\/a> and 529 education funds are also great year-end moves. While 529 contributions don\u2019t provide a federal tax deduction, most states offer a state income tax benefit\u2014check your specific state rules.<\/p>\n One exception to the December 31st deadline: if you have an Individual 401(k) and it\u2019s the plan\u2019s first year, you have until the tax filing deadline to establish and fund it for the prior year. This can be useful if you find yourself with extra cash after the new year.<\/p>\n Planning ahead makes all the difference. These strategies won\u2019t all apply to everyone, but most lawyers approaching or in retirement will benefit from at least a few of them. If you found this helpful and want more retirement and tax planning insights, follow along with Money Meets Law<\/a>, my weekly newsletter where I dig into these topics in more detail. I\u2019ll be highlighting several of them over the next few weeks.<\/p>\n DISCLOSURE: The information in this article is not intended as tax, accounting, retirement or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision or your decision to retire. In any examples or case studies used, all client names have been changed.<\/p>\n David Hunter, CFP\u00ae is a CERTIFIED FINANCIAL PLANNER\u2122 and owner of\u00a0First Light Wealth, LLC<\/a>, a financial planning & wealth management firm with a unique focus on serving attorneys nationwide. David has over a decade of experience helping clients build financial plans and has been featured in publications such as Attorney at Work, ThinkAdvisor, MarketWatch, Financial Planning, and InvestmentNews. David also writes weekly to attorneys in his popular\u00a0Money Meets Law<\/a>\u00a0newsletter. For more about David, visit\u00a0firstlightwealth.com\/lawyers<\/a>\u00a0or connect with him on\u00a0LinkedIn<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"We\u2019re in early December, which means you have a few weeks left to make meaningful adjustments to your…\n","protected":false},"author":2,"featured_media":176790,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,246,111,139,69,244,245],"class_list":{"0":"post-176789","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-new-zealand","11":"tag-newzealand","12":"tag-nz","13":"tag-personal-finance","14":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/176789","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=176789"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/176789\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/176790"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=176789"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=176789"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=176789"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2025\/12\/David-Hunter-Headshot.png\")
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