November 11, 2025
Smart Moves for Year-End Tax Planning
By Elliot Palabe, CFP®
Introduction
As the calendar year winds down, it’s an ideal time to take stock of your finances and ensure your tax strategy is working efficiently. Thoughtful year-end planning can help you keep more of what you’ve earned, position your portfolio for future success, and reduce potential surprises when tax season arrives.
The final months of the year offer unique opportunities to optimize deductions, manage investment gains and losses, and adapt to recent tax-law changes—including those made permanent under the One Big Beautiful Bill Act (OBBBA). Whether you’re still working, approaching retirement, or already retired, proactive tax planning helps align today’s actions with tomorrow’s goals.
Key Strategies to Consider
1. Maximize Retirement Contributions
Contributing to tax-advantaged accounts remains one of the most effective ways to reduce taxable income while saving for the future. For 2025, you may contribute up to $23,500 to an employer-sponsored 401(k) plan—or $30,500 if you’re age 50 or older¹. IRA contribution limits are $7,000, or $8,000 for those 50 and above.
If you’re self-employed, explore options such as a SEP IRA or Solo 401(k). These plans can allow higher contribution limits and flexibility for small-business owners or independent professionals. Every dollar contributed may reduce current taxable income while supporting long-term financial independence.
You may consider Roth contributions into your qualified accounts as well. Contributions will incur taxes now, however qualified withdrawals will be tax-free later.
2. Evaluate Roth Conversion Opportunities
A Roth IRA conversion allows you to move assets from a pre-tax account (like a traditional IRA) into an after-tax Roth IRA. While the conversion amount is taxable in the year completed, future qualified withdrawals are tax-free².
This strategy can be particularly effective in years of temporarily lower income, during early retirement, or before Required Minimum Distributions (RMDs) begin. However, since Roth conversions can impact current-year taxes, it’s critical to work with a financial and tax professional to model the long-term trade-offs before proceeding.
3. Harvest Tax Losses (and Gains)
Review your taxable investment accounts for opportunities to realize capital losses before year-end. Selling underperforming positions can offset realized gains elsewhere in your portfolio, potentially reducing overall tax liability³.
You can deduct up to $3,000 of net capital losses against ordinary income each year, with excess losses carried forward. Avoid “wash sales” by not repurchasing the same—or substantially identical—securities within 30 days before or after the sale³.
Conversely, if you’re in a lower tax bracket, harvesting capital gains before year-end can lock in long-term gains at favorable rates.
4. Manage Charitable Giving
Charitable contributions made before December 31 may qualify for this year’s deduction if you itemize⁴. Consider:
- Donor-Advised Funds (DAFs): Contribute appreciated securities for an immediate deduction and distribute gifts to charities over time.
- Qualified Charitable Distributions (QCDs): If you’re age 70½ or older, donating directly from an IRA can satisfy part or all of your RMD without increasing taxable income⁴.
These strategies allow you to support meaningful causes while optimizing your tax efficiency.
5. Review Withholdings and Estimated Payments
Ensure your withholdings or estimated payments reflect your true tax liability for 2025—particularly if your income fluctuated due to bonuses, capital gains, or self-employment earnings. Adjusting now can prevent penalties or underpayment surprises next spring⁵.
6. Prepare for New Tax-Law Permanencies via the OBBBA
The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025 as Public Law 119-21, significantly changes year-end planning. Rather than assuming key provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) will expire at the end of 2025, many have now been made permanent or extended under the new law⁶.
Key changes to note:
- The individual income-tax rates established under the TCJA are now permanent.⁶
- The higher standard deductions introduced under the TCJA are locked in and will continue.⁷
- The exemption for the federal estate and gift tax remains elevated under the OBBBA.⁸
- Certain business and pass-through deductions (such as the QBI deduction) have been extended or made permanent.⁶
Planning implications:
- The prior urgency to “use it or lose it” before 2026 has shifted; with many benefits now permanent, the focus turns to optimization instead of expiration.
- Estate, gifting, and Roth-conversion strategies remain valuable but should reflect the new long-term tax landscape.
- Some provisions—such as charitable-deduction thresholds and itemized-deduction limits—introduce new rules effective 2026, warranting review with a qualified advisor⁹.
- Continue to monitor legislation: future Congresses can still amend or sunset provisions.
What This Means for You
Year-end tax planning isn’t just about minimizing taxes—it’s about creating flexibility, resilience, and alignment between your financial strategy and your life goals. Strategic planning today can yield long-term benefits, including reduced lifetime tax exposure and smoother retirement income management.
At Palabe Wealth, we specialize in integrating tax-efficient strategies within a broader financial plan to help you make confident, informed decisions as the year closes.
Schedule a 15-minute introductory phone call by contacting us directly at (847) 249-6600.
References
- Internal Revenue Service – Retirement Topics: 401(k) and IRA Contribution Limits for 2025, updated October 2025.
- Morningstar – Roth Conversions: When They Make Sense, April 2025.
- Schwab Center for Financial Research – Tax-Loss Harvesting: What You Need to Know, July 2024.
- Fidelity Charitable – 2025 Year-End Charitable Giving Guide, September 2025.
- Kiplinger – Year-End Tax Planning Checklist for 2025, November 2025.
- Lavelle Law – Summary of the One Big Beautiful Bill Act and Its Tax Implications, July 2025.
- IRS – One Big Beautiful Bill Act Provisions, press release July 2025.
- Sikich LLP – The OBBBA Extends Federal Estate and Gift Lifetime Exclusion, August 2025.
- Kiplinger – Charitable Giving Changes Under the OBBBA, October 2025.
Disclosures
This material is for general informational purposes only and is not intended to provide specific tax, legal, or investment advice. Individuals should consult with their tax advisor, financial professional, or attorney regarding their unique circumstances. Past performance is no guarantee of future results. Investing involves risk, including possible loss of principal.
Securities and advisory services offered through LPL Financial, a registered investment advisor and member FINRA/SIPC. Palabe Wealth and LPL Financial are separate entities. (26-LPL)
Elliot Palabe, CFP®
Elliot Palabe is a Wealth Advisor at Palabe Wealth, where he plays a pivotal role in designing comprehensive retirement plans and working directly with clients to address their financial needs. Elliot's expertise lies in his ability to combine personalized Financial Planning with strategic Tax Planning, helping to ensure that each client's financial strategy is both optimized and aligned with their individual goals and circumstances.
Elliot has a solid educational foundation that underpins his professional acumen, as he holds a Bachelor’s degree in Finance from the Foster College of Business at Bradley University. His academic background has provided him with a deep understanding of financial markets, investment strategies, and economic principles.
Elliot is a CERTIFIED FINANCIAL PLANNER™ professional. He holds several critical financial industry licenses, including the Series 65, 63, 6, and SIE, held through LPL Financial. These qualifications enable him to offer comprehensive investment guidance and demonstrate his thorough knowledge of the financial services industry.
A specialist in the use of sophisticated financial planning and tax planning software, Elliot brings a technological edge to his approach. This expertise allows him to create detailed and highly personalized financial plans that can adapt to changing market conditions and tax environments. By leveraging cutting-edge technology, Elliot ensures that Palabe Wealth's clients receive the most accurate, up-to-date, and effective financial advice possible.
His work is instrumental in helping clients navigate the complexities of financial planning and retirement preparation, helping to ensure they are well-positioned to pursue their long-term financial objectives.
Outside of work, Elliot competes in pickleball. The game’s blend of strategy and precision reflects the same qualities he brings to financial advising - thoughtful planning, attention to detail, and focus.
