Your 2025 Year-End Tax and Financial Planning Checklist

  • Tillman Hartley

Key Points:

  • The One Big Beautiful Bill Act (OBBBA) ushers in sweeping tax changes in 2026, making this a pivotal year for high earners and business owners to take advantage of 2025 year-end planning opportunities.
  • Strategies include accelerating charitable giving, contributing to donor-advised funds, and bunching deductions like state and local taxes (SALT) to benefit from the increased SALT cap in 2025.
  • Business owners can also take advantage of reinstated 100% bonus depreciation and higher Section 179 limits to fully deduct qualifying assets placed in service before year-end.

As 2025 draws to a close, high earners, business owners, and charitably inclined individuals have a unique window of opportunity. The One Big Beautiful Bill Act (OBBBA) brings sweeping tax law changes beginning in 2026, some of which will sharply reduce the value of deductions and other tax-saving strategies that remain fully available through the end of 2025.

With that in mind, now’s the perfect time to talk with your advisor about these eight strategic year-end planning opportunities.

2025 Year-End Planning Opportunities

#1: Accelerate Charitable Giving and Itemized Deductions

The tax landscape for charitable deductions is about to change. Beginning in 2026, the One Big Beautiful Bill Act (OBBBA) will impose new limits on itemized charitable deductions.

Individuals who itemize will only be able to deduct contributions that exceed 0.5% of their adjusted gross income (AGI). In other words, if your AGI is $1 million, the first $5,000 of charitable gifts won’t be deductible.

In addition, high earners in the top tax bracket (currently 37%) will see the value of their charitable deductions capped at an effective benefit of 35%, reducing the overall tax savings these gifts can provide.

If you typically make substantial charitable donations, consider accelerating your giving into 2025 to take advantage of the current, more favorable rules. Strategies like bunching several years’ worth of donations or contributing to a donor-advised fund (DAF) allow you to capture the full deduction this year while maintaining flexibility to distribute funds to charities in future years.

#2: Use Donor-Advised Funds (DAFs) or Private Foundations

A donor-advised fund (DAF) or private foundation can be an effective way to combine strategic tax planning with long-term philanthropy. By contributing cash or appreciated assets such as stocks or business interests to one of these charitable vehicles in 2025, you can claim the deduction this year while retaining the flexibility to decide when and how to distribute grants in the future.

This approach is especially valuable ahead of the 2026 rule changes, which will limit charitable deduction benefits. Front-loading contributions in 2025 lets high earners take advantage of today’s more favorable tax environment and secure a higher effective deduction rate before the new limits take effect.

Additionally, donating appreciated assets directly to a DAF or foundation can amplify the tax benefits by allowing you to avoid capital gains tax on the appreciation while still receiving a charitable deduction for the full fair market value. This makes it one of the most efficient ways to support the causes you care about while optimizing your tax strategy.

#3: Maximize the Expanded State and Local Tax (SALT) Deduction

In 2025, the One Big Beautiful Bill Act (OBBBA) temporarily raises the state and local tax (SALT) deduction cap to $40,000, up from the long-standing $10,000 limit set by the Tax Cuts and Jobs Act.

This higher cap is short-lived: beginning in 2026, both the $40,000 cap and the $500,000 income threshold will increase by just 1% per year through 2029, before reverting to $10,000 in 2030. For taxpayers in high-tax states, this creates a limited window to meaningfully reduce federal taxable income.

If you anticipate significant property or state income tax payments, consider prepaying future liabilities or bunching multiple years of payments into 2025 to take full advantage of the expanded cap. However, keep in mind this strategy only applies if you itemize deductions and remain below the phaseout thresholds.

For business owners, it’s also worth working with your CPA to determine whether you qualify for state-level pass-through entity (PTE) tax workarounds, which may offer an additional way to maximize the benefit.

#4: Leverage the Increased Gift Tax Exclusion

The annual federal gift tax exclusion is $19,000 per recipient in 2025 (or $38,000 per couple). This allows you to transfer wealth to as many individuals as you choose—children, grandchildren, or others—without triggering gift tax or reducing your lifetime exemption.

Gifting before year-end can be an effective way to reduce the size of your taxable estate while supporting loved ones now. You might also consider making gifts of appreciated securities rather than cash, which can help your recipients benefit from a potential step-up in basis and avoid capital gains.

#5: Conduct Strategic Tax-Loss Harvesting

Tax-loss harvesting remains a classic yet powerful year-end tax planning strategy, especially in a year of market volatility. If you hold investments in taxable accounts that have declined in value, selling them before December 31 can allow you to offset realized capital gains from other sales (and up to $3,000 of ordinary income annually). Any additional losses can carry forward indefinitely.

This strategy can help reduce your 2025 tax bill, particularly if you’ve realized gains from stock options, RSU vesting, or other liquidity events this year. Just be mindful of the wash-sale rule, which prevents you from repurchasing a “substantially identical” investment within 30 days of the sale if you want the loss to count.

In most cases, your financial planner or investment advisor will monitor this for you and coordinate trades to ensure they align with your overall investment strategy and tax objectives.

#6: Revisit and Max Out Retirement Contributions

Contributing to retirement accounts remains one of the most reliable ways to reduce taxable income while building long-term wealth. Before the year ends, make sure you’ve maxed out your 401(k), 403(b), or IRA contributions.

For 2025, individuals under age 50 can contribute up to $23,500 to employer-sponsored plans and $7,000 to IRAs, while those 50 and older can take advantage of additional catch-up contributions to boost their savings even further.

High earners may also benefit from Roth conversions in 2025. Converting pre-tax dollars into a Roth IRA now locks in today’s rates and allows for future tax-free growth and withdrawals, offering flexibility in retirement and potential protection against higher future tax brackets.

For self-employed individuals or business owners, explore opportunities to increase contributions through SEP IRAs, solo 401(k)s, or defined benefit plans. These plans can significantly reduce taxable income while accelerating retirement savings.

#7: Make Qualified Charitable Distributions (QCDs) from IRAs

If you’re age 70½ or older, Qualified Charitable Distributions (QCDs) can be one of the most tax-efficient ways to give. In 2025, you can direct up to $108,000 per spouse from your IRA to a qualified charity, satisfying part or all of your required minimum distribution (RMD) while excluding the amount from taxable income.

Since QCDs reduce adjusted gross income directly, they can also help minimize Medicare premium surcharges and taxation of Social Security benefits. Be sure to coordinate with your financial advisor and/or IRA custodian well before December 31 to ensure your QCD is processed in time and confirm that your chosen charity qualifies under IRS rules.

#8: Invest in Business Assets with Bonus Depreciation

For business owners, 2025 presents a unique opportunity to reduce taxable income. The OBBBA reinstates 100% bonus depreciation for qualified business property acquired and placed in service after January 19, 2025. In addition, the Section 179 expensing limit increases to $2.5 million, with a phaseout beginning at $4 million.

This means you can fully deduct the cost of new or used equipment, vehicles, software, or qualified improvements placed in service before year-end, creating substantial tax savings and improving cash flow.

If you’re planning significant capital investments, start coordinating now with your CPA to ensure assets meet the “placed in service” requirements for 2025. You may also want to consider a cost-segregation study for real estate improvements to identify assets eligible for accelerated depreciation.

Maximizing 2025 Year-End Planning Opportunities

For high earners and wealthy families, thoughtful 2025 year-end planning can unlock significant tax savings and long-term financial advantages. These strategies work best when they’re coordinated across your entire financial picture—investments, taxes, retirement, and estate planning—so nothing operates in isolation.

As the year draws to a close, now is the time to act while today’s favorable rules are still in effect. If you’d like professional guidance on how to make the most of these opportunities, we invite you to connect with us for a year-end review. Together, we’ll ensure your plan is optimized for the current landscape and well positioned for what lies ahead.

 

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