Five Year-End Tax Strategies

Most people don’t think about taxes until W-2s start showing up in the mail, but by then, it’s often too late to make meaningful changes. That’s why year-end tax strategies are so important—because the real tax savings happen before December 31, not in April.

Whether you’re a high-income individual or business owner, year-end tax strategies can make a significant impact. Here are five proven moves to consider before the year wraps up to help minimize your tax liability and strengthen your financial future.

• Max Out Your Retirement Contributions
• Contribute to a 529 Education Savings Plan
• Defer Income into Next Year
• Make Charitable Contributions or Prepay Deductible Expenses
• Realize Investment Losses to Offset Gains
• Bonus Tip: Check Your AMT Exposure
• The Bottom Line: Smart Planning = Lower Taxes

1. Max Out Your Retirement Contributions

Contributing to tax-advantaged retirement accounts is one of the most reliable year-end tax strategies to reduce your taxable income while also building long-term financial security. Whether you’re behind on this year’s contributions or just want to give your retirement fund a final push, there’s still time to act—and every dollar can make a difference.

For 2025, here’s what you’re allowed to contribute:

• Traditional IRA: Up to $7,000 (For those 50 and older, the cost-of-living adjustment remains at $1,000)
  
  
• 401(k), 403(b), or similar employer plan: Up to $23,500 (plus $7,500 in catch-up contributions if you’re 50+)
  
  
• Self-employed? Consider a SEP IRA or Solo 401(k), which come with even higher limits and flexible deadlines
  
  

Contributions to a Traditional IRA or 401(k) are tax-deductible, which means they reduce your taxable income for the year. Even if you can’t max out your contributions, adding more before December 31 can still offer meaningful savings—especially if you’re in a higher tax bracket.

As part of your year-end tax planning strategy, now’s the time to review where you stand. Most payroll systems allow you to increase your contribution percentage right up to your final paycheck of the year. And if you’re planning to make an IRA contribution, you have until April 15, 2026 to do so for the 2025 tax year, but making it now can help you wrap up the year proactively.

The window is closing fast, but taking a few minutes to top off your retirement contributions can mean more money saved on taxes now and more security for your future.

2. Contribute to a 529 Education Savings Plan

Education costs are rising, but so are the tax advantages of planning ahead. If you’re looking for a smart way to support a loved one’s education while reducing your tax burden, a 529 savings plan offers a unique opportunity to do both.

As part of your broader year-end tax strategies, funding a 529 plan allows you to take advantage of education-focused tax breaks before December 31, potentially lowering your state tax liability and growing your investment for future use.

Unlike traditional savings accounts, 529 plans are designed specifically for education expenses and come with generous tax benefits, including:

• Tax-free growth: Earnings grow free from federal income tax.
  
  
• Tax-free withdrawals: Funds used for qualified education expenses, including tuition, books, and room and board, aren’t taxed when withdrawn.
  
  
• State tax incentives: More than 30 states offer tax deductions or credits for contributions to a 529 plan.
  
  
• Expanded flexibility: 529 funds can now be used for K–12 tuition, registered apprenticeships, and under certain rules, converted into Roth IRAs for the beneficiary.
  
  

You don’t need to be a parent to open or contribute to a 529 plan. Whether you're a grandparent, guardian, or generous friend, anyone can contribute, and anyone can benefit from the potential tax perks.

3. Defer Income into Next Year

Expecting a lower tax bracket in 2026? Whether you're planning to retire, change jobs, or take time off, deferring income until next year could reduce your overall tax burden.

Since income is taxed in the year it’s received, not when it’s earned, a short delay could mean meaningful savings if your income drops in the new year.

Here are a few ways to defer income before year-end:

• Ask your employer to delay bonuses or commissions until January
  
  
• Postpone invoicing clients if you're self-employed or run a small business
  
  
• Hold off on selling investments or other assets that could trigger capital gains

This strategy works best when you know your taxable income will be significantly lower next year, putting you in a reduced tax bracket. It can also help you avoid pushing yourself into a higher bracket this year—which sometimes happens with unexpected bonuses or windfalls.

4. Make Charitable Contributions or Prepay Deductible Expenses

Charitable giving isn’t just a meaningful way to support causes you care about, it’s also one of the most flexible and rewarding year-end tax strategies available. If you itemize deductions, strategic year-end giving can lower your taxable income while maximizing your impact on the organizations that matter most to you.

Donations to qualified 501(c)(3) organizations are deductible on your federal return, and the IRS offers flexibility in how you give:

• You can donate cash, appreciated stock, or non-cash assets such as real estate or collectibles.
  
  
• In many cases, you can deduct the full fair market value of non-cash gifts—without paying capital gains tax on the appreciation.
  
  
• If you want to give but aren’t sure where yet, you can contribute to a donor-advised fund (DAF). This allows you to make a deductible contribution now and decide later how to distribute the funds to specific charities.

If your total deductions are close to the standard deduction threshold, you may benefit from “bunching” expenses—combining two years’ worth of charitable contributions and deductible payments into a single tax year. This strategy can push your deductions high enough to itemize and unlock a meaningful tax benefit.

Starting in 2026, several new rules will reduce the tax benefit of charitable deductions for many taxpayers:

• New “floor” for itemizers: For those who itemize, only the amount of total charitable contributions that exceeds 0.5% of AGI will be deductible beginning in 2026.
  
  
• Cap on tax benefit for top earners: For taxpayers in the highest 37% bracket, the tax benefit of itemized deductions, including charitable gifts, will be capped at 35%, effective in 2026.
  
  
• Corporate giving floor: Corporations will face a new 1% floor on charitable deductions, meaning contributions below this threshold will not be deductible starting in 2026.

Year-end giving can make a real difference—for your community and your tax return. Just be sure all contributions are made by December 31 and properly documented with receipts or acknowledgments.

Read More: Tax-Smart Philanthropy: Maximizing Charitable Donations Tax Deductions

5. Realize Investment Losses to Offset Gains

Nobody likes taking a loss, but when it comes to taxes, your losing investments might just come in handy. Through a strategy known as tax-loss harvesting, you can use underperforming assets to reduce your tax liability and make the most of an otherwise frustrating financial situation.

If you sold stocks, mutual funds, or other investments at a gain in 2025, selling some of your investments that suffered losses before year-end can help you offset those taxable profits. In fact, even if you didn’t realize any gains, harvesting losses can still work to your advantage.

Here’s how this year-end tax strategy plays out:

• You can use up to $3,000 in net capital losses to reduce your ordinary income on your tax return.
  
  
• If your total losses exceed $3,000, the remaining amount can be carried forward to future tax years, indefinitely, until the entire amount is used.
  
  
• Losses are applied first against gains of the same type (short-term with short-term, long-term with long-term), and then against other gains or income.
  
  
• To qualify for the deduction, make sure you avoid violating the IRS's wash sale rule, which disallows the deduction if you buy a “substantially identical” security within 30 days before or after the sale.
  
  

Tax-loss harvesting is one of the most overlooked year-end tax planning strategies, especially in volatile or down markets.  Even if your portfolio isn’t performing the way you’d hoped, you still have the opportunity to take control of the tax consequences.

Just be sure all transactions are completed by December 31 to count toward your 2025 tax return.

Bonus Tip: Check Your AMT Exposure

Many year-end tax strategies sound great—until the Alternative Minimum Tax (AMT) gets involved. Originally intended to ensure high-income taxpayers couldn’t avoid paying their fair share, the AMT now quietly affects more middle-income earners than you might expect.

Here’s the catch: The AMT is calculated separately from your regular tax liability, using a different set of rules. At the end of the process, you’re required to pay whichever tax amount is higher—your regular tax or the AMT.

This matters because some of the most common year-end deduction strategies simply don’t count under AMT rules, for example:

• State and local income taxes
  
  
• Property taxes
  
  
• Miscellaneous itemized deductions
  
  
• Certain business expenses

These might reduce your regular tax liability—but they’re not deductible under the AMT, which can leave you with a bigger tax bill than expected.

The Bottom Line: Smart Planning = Lower Taxes

A little proactive planning in Q4 can go a long way in Q1. These five year-end tax strategies—retirement contributions, 529 plans, income deferral, charitable giving, and investment management—can reduce your taxable income and help you start the new year on solid financial footing.

But everyone’s tax situation is different, and timing matters.

Need help reviewing your year-end tax options? Contact MB Group today to schedule a year-end planning session. Our team offers advanced tax strategies tailored to your personal and business goals—so you’re not just prepared for tax season, but positioned for long-term success.