Year-End Planning Guide

Income Tax

Review year to date realized gains and losses. Equity markets have generally increased this year, so it is important to understand any related tax implications.

Review your tax withholdings. A major life change such as a job change, marriage, divorce, or the birth of a child may affect your income tax. Confirm that your withholdings align with your situation. Withholdings that are too low can lead to underpayment penalties, while withholdings that are too high limit access to funds until a refund is issued.

Estimate your adjusted gross income (AGI) in consultation with your tax advisor. AGI can influence tax brackets and inform investment, charitable, and retirement planning.

Giving

Charitable giving is not solely about tax savings, but it is helpful to understand any potential implications. If you are over age 70.5, you may be eligible to make Qualified Charitable Distributions (QCDs) from an IRA directly to a charity. QCDs can satisfy required minimum distributions and may reduce taxable income, up to applicable IRS limits. For 2025, the QCD limit is $108,000 across all QCDs.

If you had higher income this year, you may consider making multiple years of charitable contributions at once through a Donor Advised Fund. Cash gifts are generally subject to a deduction limit of 60 percent of AGI.

Beginning in 2026, several charitable giving rules change. Taxpayers who take the standard deduction may deduct up to $1,000 for single filers or $2,000 for married filing jointly for qualifying cash donations. For itemizers, a floor of 0.5 percent of AGI applies, and taxpayers in the top tax bracket will have charitable deductions capped at 35 percent of the donated amount.

You may also reduce your taxable estate through gifts to individuals. In 2025, you may give up to $19,000 per recipient, or $38,000 for married couples splitting gifts, without triggering gift tax. Gifts that are paid directly to educational institutions for tuition or directly to providers for qualifying medical expenses are not subject to gift tax.

Investments

Most equity markets have performed positively in 2025, which may have increased your portfolio’s exposure to equities. Rebalancing can help ensure your portfolio reflects your current risk tolerance. We proactively review portfolios for potential rebalancing opportunities while considering tax implications.

If you have a tax loss carryforward, inform your advisor. Carryforwards may provide flexibility when rebalancing or realizing gains. Ensure we have a current copy of your tax return showing any carryforward amounts.

Retirement Accounts

If you have not reached your contribution limits for IRAs or employer retirement plans, you may consider making additional contributions before year end. You may also choose to increase monthly contributions for next year. IRA contribution deadlines are typically April 15 of the following year, though plan rules vary. Employee salary deferral deadlines for 401(k)s usually fall at year end, while business owners may be able to make contributions later to plans like SEP IRAs or individual 401(k)s.

If you are age 73 or older, Required Minimum Distributions apply in 2025. Begin planning now for how your RMDs will be taken and how they fit into your cash needs for future years.

You may also consider whether converting a traditional IRA to a Roth IRA makes sense. A lower income year or expected future income increases may make a conversion more attractive, since taxes are paid at current rates. Consult your tax advisor regarding potential implications.

Family Funding

If you have a flexible spending account (FSA), the government permits only a $660 annual rollover. Unused funds above that amount are forfeited. If you have excess FSA funds, consider scheduling necessary medical or dental services before year end.

If you have a health savings account (HSA), funds do not expire. Confirm whether you have maximized contributions. The 2025 limits are $4,300 for individuals and $8,550 for families for those covered by eligible high deductible health plans.

Consider funding a 529 plan for a child’s education. Growth in these accounts is tax free if used for qualified education expenses. Up to $10,000 per beneficiary can be used for private school tuition, increasing to $20,000 in 2026. Some states offer state income tax deductions for contributions. Requirements vary by state.

Review your estate plan. Consider whether any life events in 2025 require updates. Confirm beneficiary designations, asset flows, and that your financial and healthcare powers of attorney are accurate and current.

Insurance

Higher spending may signal a need to revisit life insurance coverage. A needs analysis often incorporates household spending. If your spending rose significantly, review whether your coverage still aligns with your responsibilities and goals.

Review your home and auto insurance. Policies should be evaluated every few years, including coverage limits. Construction and replacement costs remain elevated in many areas, which may require higher coverage. Some insurers offer reduced premiums for higher deductibles, which may be appropriate only if supported by a strong cash reserve. Your advisor can refer you to an insurance specialist.

Consider whether you need personal liability umbrella coverage. Typical home and auto policies include liability coverage of $300,000 or $500,000. If your net worth exceeds those limits, an umbrella policy may help protect against potential liability. These policies are often relatively low cost compared to the coverage they provide.