Maximizing Strategic Year-End Tax Planning — As the year ends, taxpayers have an important chance to review their finances and make moves that can lower their 2025 tax bill. With the state and local tax (SALT) deduction limit increasing from $10,000 to $40,000, more people may benefit from prepaying state taxes before year-end—especially those who itemize deductions.
If your income has increased in 2025, confirm your estimated payments and withholdings match your expected liability. Adjusting year-end withholdings can help avoid penalties since these are treated as paid evenly throughout the year. It’s also a good time to maximize retirement contributions—401(k) and 403(b) limits are $23,500, plus catch-up options for those 50 and older. Taxpayers not covered by employer plans should review IRA or Roth IRA opportunities.
With the higher SALT limit, charitable gifts are more likely to provide a tax benefit. Consider a Qualified Charitable Distribution (QCD) from an IRA to give directly to charity while lowering taxable income. Those turning 73 in 2025 must take required minimum distributions to avoid penalties, and families can make tax-free gifts up to $19,000 per person ($38,000 per couple) before year-end.
Year-end planning isn’t just about closing out this year—it’s about setting up for success in the next. Reviewing your goals and acting strategically now can help maximize savings and position you for a strong start in 2026.
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Maximizing Strategic Year-End Tax Planning — As the year ends, taxpayers have an important chance to review their finances and make moves that can lower their 2025 tax bill. With the state and local tax (SALT) deduction limit increasing from $10,000 to $40,000, more people may benefit from prepaying state taxes before year-end—especially those who itemize deductions.
If your income has increased in 2025, confirm your estimated payments and withholdings match your expected liability. Adjusting year-end withholdings can help avoid penalties since these are treated as paid evenly throughout the year. It’s also a good time to maximize retirement contributions—401(k) and 403(b) limits are $23,500, plus catch-up options for those 50 and older. Taxpayers not covered by employer plans should review IRA or Roth IRA opportunities.
With the higher SALT limit, charitable gifts are more likely to provide a tax benefit. Consider a Qualified Charitable Distribution (QCD) from an IRA to give directly to charity while lowering taxable income. Those turning 73 in 2025 must take required minimum distributions to avoid penalties, and families can make tax-free gifts up to $19,000 per person ($38,000 per couple) before year-end.
Year-end planning isn’t just about closing out this year—it’s about setting up for success in the next. Reviewing your goals and acting strategically now can help maximize savings and position you for a strong start in 2026.
What are the Benefits of Gifting? Besides that warm, fuzzy feeling one can get from giving to another, gift exchanges are typically not subject to taxation, presenting an attractive way to support another person or organization. Recipients are also never subject to taxation as a result of accepting a gift. Currently, there are two main categories of gift giving that require zero reporting: gifts to an educational institution on behalf of a family member/friend and any gift that funds medical expenses, such as insurance premiums or doctor’s visits, as long as they are paid directly to the provider. These are particularly appealing as they have zero restrictions on the amount being given in a year when traditionally only gifts that fall below the current annual exclusion amount are exempt from any type of reporting. What Kinds of Gifts are Taxable? Gift tax returns are applicable when a gift’s monetary amount exceeds that year’s annual exclusion amount. Reporting a large gift to the IRS, however, doesn’t mean it will be taxed. Only those gifts that are higher in value than is typical are taxed. To ensure that gifts are reported properly, it is important to note that anything of value that is not cash must be appraised by a professional in order to be reported. This can include property, business ventures, and high-value objects. When it comes to gifting, proper reporting is essential. Since gift tax forms are complex and cumulative over your lifetime, we recommend working with a CPA to ensure accuracy and compliance. Keeping track of all gifts given is crucial, as these reports can significantly impact your estate tax. Gifting itself can range from the simple cash transfers discussed above to more complicated approaches that offer long-term financial benefits. Some families use loans as a strategic way to transfer wealth—parents may lend money to their children for a home or business, with the loan eventually being forgiven and treated as a gift. More advanced strategies include trusts, which allow for controlled asset distribution, and charitable gifts that provide benefits to both family members and philanthropic causes. These complex methods require careful planning and professional guidance to align with tax laws and broader financial goals. What is the Estate Tax? The Estate tax, or the “death tax” as some call it, is the total value of one’s assets when they die. Most taxpayers will not have to worry about such a tax, as the 2025 annual exclusion amount is around $14 million dollars. For those who do, however, it is imperative to know that the estate tax—currently 40% on assets above the threshold amount—will be imposed. Gifting can be utilized to circumvent this tax, as gifting reduces that $14 million amount. It pays to be generous!
It Depends
Maximizing Strategic Year-End Tax Planning — As the year ends, taxpayers have an important chance to review their finances and make moves that can lower their 2025 tax bill. With the state and local tax (SALT) deduction limit increasing from $10,000 to $40,000, more people may benefit from prepaying state taxes before year-end—especially those who itemize deductions.
If your income has increased in 2025, confirm your estimated payments and withholdings match your expected liability. Adjusting year-end withholdings can help avoid penalties since these are treated as paid evenly throughout the year. It’s also a good time to maximize retirement contributions—401(k) and 403(b) limits are $23,500, plus catch-up options for those 50 and older. Taxpayers not covered by employer plans should review IRA or Roth IRA opportunities.
With the higher SALT limit, charitable gifts are more likely to provide a tax benefit. Consider a Qualified Charitable Distribution (QCD) from an IRA to give directly to charity while lowering taxable income. Those turning 73 in 2025 must take required minimum distributions to avoid penalties, and families can make tax-free gifts up to $19,000 per person ($38,000 per couple) before year-end.
Year-end planning isn’t just about closing out this year—it’s about setting up for success in the next. Reviewing your goals and acting strategically now can help maximize savings and position you for a strong start in 2026.
