For many successful families, 2025 isn’t just another year on the calendar. It’s the final full year under the Tax Cuts and Jobs Act (TCJA) — the law that has kept income tax brackets, estate exemptions, and deduction limits unusually favorable. When those provisions expire after December 31, 2025, tax rates are set to increase, and several key benefits could shrink. 

Planning now can help turn this upcoming change into opportunity. From Roth conversions and charitable giving to family gifting and tax-loss harvesting, a few coordinated moves before year-end can help reduce your tax bill and strengthen your financial plan for 2026 and beyond.

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Key Insights

1. 2025 is a high-impact planning year: The TCJA’s lower brackets and higher estate exemptions end after December 31, 2025. Acting this year could help preserve thousands of dollars in lifetime savings.

2. Gift Tax Exclusion 2025: You can gift $19,000 per recipient ($38,000 for couples) tax-free before December 31. These gifts move appreciating assets out of your estate and help reduce potential future estate taxes.

3. Qualified Charitable Distributions (QCDs): If you’re 70½ or older, you can donate up to $105,000 directly from an IRA to a qualified charity. This counts toward your required annual withdrawal and may lower your taxable income. 

4. Roth Conversions Before the TCJA Sunset: Converting to a Roth IRA while tax rates are still lower can lock in tax-free growth and reduce future required withdrawals. 

5. Tax-Loss Harvesting and Direct Indexing: Using market dips to your advantage by selling investments at a loss to offset gains can help lower your overall tax bill. 

6. 529 Front-Loading and Legacy Planning: Contributing $95,000 per beneficiary (using a 5-year election) can help accelerate compounding and integrates education funding into your long-term legacy plan.

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Your 2025 Tax Decisions Could Shape Your Wealth Trajectory

Many high earners underestimate how much their 2025 planning affects future outcomes. Between rising 2026 tax rates, changes to retirement withdrawal rules, and new charitable giving limits, even well-structured portfolios could face a higher tax drag if left unattended.

The numbers tell the story:

• For example, a married couple filing jointly, earning $275,000 could see roughly $6,000 more in federal tax liability once brackets reset.
• The QCD limit rose to $105,000 in 2025, giving retirees greater flexibility to give and save on taxes.
• The annual gift exclusion increased to $19,000 per person, offering more room to transfer wealth efficiently.

Let’s explore how to make the most of each opportunity before December 31.

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1. Maximize Tax-Advantaged Accounts Before December 31

Make the most of your final low-rate year

Before the TCJA expires, review your retirement contributions and potential conversions.

Steps to complete before year-end:

• Max out 401(k), IRA, and Health Savings Account (HSA) contributions. If you’re over 50, use catch-up contributions to boost savings.
  
• Evaluate whether pre-tax or Roth contributions make more sense given higher projected 2026 tax rates.
  
• If you’re over 73, take your Required Minimum Distributions (RMDs) by December 31 to avoid penalties. RMDs are mandatory withdrawals from retirement accounts that begin at specific ages.
  
  

Why Roth conversions matter in 2025
Converting $100,000 at today’s 24% tax rate costs $24,000 in taxes. Waiting until the rate rises to 28% in 2026 could cost $28,000 — an increase of $4,000 for the same conversion. Strategic conversions spread over time can help smooth taxes and reduce future withdrawals.

‍Estate Planning Benefits: Roth IRAs have no required minimum distributions (RMDs) for the original owner and pass to heirs generally tax-free (though non-spouse beneficiaries must withdraw all funds within 10 years). This makes them an excellent vehicle for wealth transfer.

Action Step: Ask your advisor to run a Roth conversion analysis to see how much you can convert this year without jumping tax brackets.

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2. Tax-Loss Harvesting Can Turn Market Volatility into Savings

Tax-loss harvesting means selling investments that have gone down in value to offset profits from investments that have gone up. If losses exceed gains, you can offset up to $3,000 of ordinary income, and unused losses carry forward into future years.

This strategy can be automated through direct indexing, which tracks a stock index but lets you own the individual stocks directly. This provides flexibility to sell losing positions as they occur while maintaining your overall market exposure. 

Action Step: Review your investment performance before December 31 and work with your advisor to identify losses that could help reduce your taxable income.

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3. Tax-Gain Harvesting — Realize Gains at Lower Rates

If your income is lower this year — for example, after retirement or during a sabbatical — you may be able to sell appreciated assets while staying in a lower tax bracket. This allows you to lock in gains with little or no tax. For example:

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_{Assumes 2025 federal tax brackets for a married couple filing jointly with $95,000 of ordinary taxable income before capital gains. In this example, a portion of the gain falls in the 0% long-term capital gains bracket, with the remainder taxed at 15%. The calculation assumes no other deductions or credits. Illustration only, not tax advice.}

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4. Charitable Giving and Qualified Charitable Distributions (QCDs)

Give smarter while potentially saving on taxes

You can give to the causes you care about and reduce your tax burden at the same time.

Donor-Advised Funds (DAFs)
DAFs let you contribute cash or appreciated stock to a charitable account, take the deduction this year, and decide later which charities receive grants. This separates the timing of your deduction from your giving. Source: National Philanthropic Trust DAF Guide

Qualified Charitable Distributions (QCDs)
If you’re 70½ or older, you can transfer up to $105,000 directly from an IRA to a charity. This counts toward your RMD and keeps your income lower for tax and Medicare purposes. Source: IRS Publication 590-B

Action Step: Complete your charitable transfers and DAF contributions by mid-December to ensure they’re processed by year-end.

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5. Family Gifting and Legacy Planning

Pass wealth efficiently while current exemptions last

The annual gift tax exclusion for 2025 is $19,000 per recipient ($38,000 for couples). Each gift removes future growth from your estate and can be directed toward loved ones in lower tax brackets.

Education and 529 Plans
You can contribute up to $95,000 per beneficiary in one year by using a five-year election. This can help accelerate growth and support long-term education goals. 

Estate and Trust Strategies
The lifetime federal gift and estate tax exemption currently stands at $13.99 million for an individual (and $27.98 million for a married couple) in 2025, and under the One Big Beautiful Bill Act it will rise to $15.0 million per individual (and $30.0 million per married couple) beginning January 1, 2026. Creating or updating trusts now helps lock in current limits, preserve the spousal exemption, and transfer wealth more efficiently. 

Action Step: Schedule a meeting with your estate attorney or advisor before year-end to finalize gifts and trust updates.

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6. Strategic Tax Timing — Managing Income and Deductions

Use timing to control your tax outcome

Tax planning isn’t only about what you earn — it’s also about when you earn and deduct.

Ideas to consider for 2025:

• Defer bonuses or option exercises into 2026 if your 2025 income is already high.
  
• Accelerate charitable donations or property tax payments when income is elevated.
  
• Combine (“bunch”) deductions like SALT and medical expenses in one year to exceed the standard deduction.
  
• Coordinate with your advisor to pair these moves with investment and conversion decisions.
  
  

Action Step: Model your 2025–2026 income with your advisor to see how timing adjustments could reduce your tax exposure.

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7. Comprehensive Year-End Financial Checkup

Make sure every part of your financial life is working together

The end of the year is an ideal time to step back and review your entire financial picture. A structured checkup helps ensure your investments, taxes, and estate plans are coordinated and ready for the changes coming in 2026.

Working with a qualified financial advisor can make this process easier and more effective. Advisors can identify overlooked opportunities, help align tax and investment strategies, and provide guidance that turns one-time actions into long-term efficiency.

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Make 2025 Count 

Tax outcomes hinge on timing, not just what you do, but when you do it. 2025 offers a unique combination of lower brackets, expanded charitable options, and legacy opportunities that will change once the TCJA sunsets.

Taking time now to review contributions, conversions, and giving strategies can position your wealth for lasting efficiency and greater control in 2026 and beyond.