As the year winds down, it’s a good time to pause, review where you stand, and think through a few tax opportunities before December 31st. Our goal at Harbor Oak is simple: help you make informed, thoughtful decisions that support your long-term plan, not last-minute scrambling or guesswork.
Here are ten things worth considering as you look ahead to tax season.
1. Set aside time to look at the big picture
Year-end planning starts with understanding your current tax situation and any changes coming next year such as income, deductions, family changes, retirement contributions, and more. A short review now can help prevent surprises later and make sure you’re taking advantage of what’s available while the window is still open.
2. Consider whether it makes sense to defer income
If you expect to be in a lower tax bracket next year, it may be worth exploring ways to push income into 2026. This could mean deferring a year-end bonus or delaying certain business receipts. Not every employer or business structure allows it, but it’s a conversation worth having if your income will meaningfully change.
3. Look for opportunities to accelerate deductions
On the other hand, if you expect your taxable income to be higher this year, accelerating deductible expenses into 2025 may help. This can include things like qualifying medical expenses, charitable gifts, or state/local tax payments, but keep the $10,000 SALT cap in mind when planning.
4. Be mindful of the Alternative Minimum Tax (AMT)
If you’re close to the AMT threshold, traditional strategies like prepaying taxes may actually backfire. Because AMT disallows several deductions, especially state and local taxes, it’s important to understand whether accelerating expenses helps or hurts your overall picture. A quick check can save you from unintended consequences.
5. Review your withholding if you’re expecting to owe
If it looks like you’ll owe taxes, or may face an underpayment penalty, increasing your withholding before year-end can help. The IRS treats withholding as if it happened evenly throughout the year, even if you adjust it in December. This can be an effective way to catch up on missed estimated payments.
6. Max out retirement contributions when possible
Contributing to a traditional IRA or increasing your pre-tax contributions to a 401(k) can lower your taxable income for 2025. If you’re not at your plan’s annual limit, this is one of the simplest, most effective tax strategies available. Small adjustments now can have a long-term impact.
7. Take required minimum distributions on time
If you’re required to take RMDs, currently starting at age 73 for most individuals, make sure those withdrawals are completed before December 31. Missing the deadline can result in a significant penalty. If you don’t need the income, you may want to explore strategies like Qualified Charitable Distributions (QCDs), which can satisfy RMD requirements while benefiting a charity.
8. Review potential investment gains and losses
While taxes shouldn’t drive your investment strategy, it’s worth looking at your realized gains for the year. Tax-loss harvesting, selling investments at a loss to offset capital gains, may reduce your tax bill. This should always be done thoughtfully and within the context of your long-term plan.
9. Keep the Net Investment Income Tax in mind
If your modified adjusted gross income exceeds certain thresholds ($200,000 for individuals, $250,000 for married couples filing jointly), the 3.8% Net Investment Income Tax may apply. This can impact decisions around capital gains, dividends, and year-end income timing.
10. Ask for help if you need it
Tax planning can get complicated quickly, especially when multiple life events or income sources are involved. A tax professional can help you evaluate your options and avoid costly mistakes. And if you’d like to talk through how year-end tax strategies fit into your broader financial plan, our team is here to walk you through it.
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