Finish Strong in 2025: 11 Smart Year-End Financial Moves to Set You Up for Success
As the holiday season approaches and the year winds down, it’s the perfect time to take stock of your finances. A little planning before the end of the year can help reduce your tax burden, strengthen your savings, and set a strong foundation for the year ahead.
These tips aren’t one-size-fits-all; your personal goals and situation always come first. Before making any changes, consult with your financial advisor or tax professional to ensure your strategy aligns with your overall financial plan.
Here are some key financial moves to consider before year-end:
- Review Required Minimum Distributions (RMDs)
If you’re of RMD age or a non-spousal IRA beneficiary, double-check your required withdrawal amount and deadlines to avoid unnecessary penalties. A little planning here can make a big difference.
- Consider a Roth Conversion
If your income is lower this year or you expect higher tax rates in the future, converting part of a traditional IRA to a Roth IRA could make sense. You’ll pay taxes now, but you’ll enjoy tax-free withdrawals later.
- Explore Tax-Loss Harvesting
Markets go up and down, and those downturns can offer opportunity. Selling investments at a loss to offset gains can help reduce your taxable income. Just remember to follow the IRS’s “wash sale” rules.
- Give with Purpose
Charitable giving is a win-win. Beyond cash donations, consider donating appreciated securities, setting up a donor-advised fund, or making Qualified Charitable Distributions (QCDs) from your IRA if you’re over 70½. These can satisfy RMDs while lowering taxable income.
- Check Your Expense Timing
If you itemize deductions, you might benefit from prepaying certain deductible expenses, like January’s mortgage payment or property taxes before the end of the year.
- Use Up Flexible Spending Account (FSA) Funds
Don’t let your hard-earned money go to waste. Check your FSA balance and use any remaining funds before the deadline—or verify if your plan allows a grace period or carryover.
- Maximize Your Health Savings Account (HSA)
If you’re enrolled in a high-deductible health plan, don’t forget about your HSA. Contributions to an HSA are tax-deductible, grow tax-free, and can be withdrawn tax-free for qualified medical expenses, making it one of the most tax-efficient accounts available.
For 2025, consider maxing out your contributions and, if possible, investing a portion of your balance for long-term healthcare needs. This simple step can boost your retirement readiness while reducing your taxable income this year.
- Review Your IRA and 401(k) Contributions
Even though the contribution deadline extends to Tax Day, reviewing your retirement savings now gives you time to plan. If you’re 50 or older, don’t forget to take advantage of catch-up contributions.
- Optimize College Savings
Review your 529 plan contributions to take advantage of potential state tax deductions. Year-end is also a great time for grandparents or family members to make educational gifts.
- Leverage Annual Gifting Strategies
You can give up to $18,000 per person in 2025 without triggering gift taxes. It’s a great way to support loved ones and reduce the size of your taxable estate.
- Meet with Your Financial Professional
Before year-end, schedule a review of your overall financial plan. A brief check-in can help you assess progress, identify missed opportunities, and get clear on your goals for 2026.
End the Year with Confidence
Taking these steps now can help you finish 2025 strongly and start 2026 with confidence. If you’d like help reviewing your plan or exploring which of these strategies fit your goals, we’d be happy to guide you through the process.