The holiday season is full of traditions: travel, turkey and occasionally too much eggnog. But for advisors, there’s another (arguably less fun) annual ritual: year-end tax management.
Even with about a month left in the calendar year, financial advisors say there are plenty of ways clients can and should prepare for the end of 2025 and the start of 2026. From new guidelines and tax laws related to the One Big Beautiful Bill Act, which was signed into law in July, to standard tax-loss harvesting strategies, advisors say there is a lot to focus on during the final weeks of the year.
“There are some new limitations … going into effect in 2026, which should be considered carefully before yearend,” said Kathy Buchs, Senior Tax Advisor at MAI Capital Management.
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The One Big Beautiful Bill, which comprehensively reshaped tax legislation and government spending, “created some additional complexities surrounding itemized deductions for 2025 and 2026,” Buchs said. For example, the law reduced deductible charitable contributions by 0.5% of adjusted gross income and reduced the charitable deduction of high-income taxpayers to 35 cents of tax benefit per dollar donated from 37 cents.
“Because of these limitations, which go into effect in 2026, many clients are choosing to accelerate their charitable contributions into 2025 to fully benefit from their charitable giving,” Buchs said. “Many of them are also utilizing donor-advised funds to preserve flexibility for future grant-making.”
Donor-advised funds act like a personal tax-advantaged investment account dedicated to supporting qualified charities.
Patrick Sabol, Senior Lead Planner at Facet, describes charitable contributions as one of the most effective ways to reduce your tax liability. “You can do this by donating cash or appreciated securities directly to your charity of choice or potentially by using a Donor-Advised Fund,” he added.
Sabol said one area that can sometimes be overlooked when focusing on more sophisticated strategies is simply maxing out contributions to pre-tax 401(k) and Health Savings Account plans.
While charitable deductions will be capped starting next year at a 35% rate, taxpayers are getting some new relief in the area of state and local tax deductions, commonly referred to as SALT.
In 2024, the SALT deduction was capped at $10,000, but that has been increased to $40,000 for the tax years 2025 through 2029.
The full $40,000 deduction starts phasing out at modified adjusted gross incomes of $500,000 for joint filers, and the SALT deduction drops back to $10,000 when adjusted gross income reaches $600,000, according to John Patterson, Wealth Management Advisor at OnePoint BFG Wealth Partners.
“When it comes to year-end planning, there are several key dos and don’ts to keep in mind,” Patterson said. “Any charitable gifts should be finalized before December 31, and if your income has changed significantly this year, review your withholding or make estimated payments now to prevent penalties or surprises at tax time.”
Other tax deductions introduced in the One Big Beautiful Bill Act include up to $12,500 for qualified overtime pay, up to $6,000 for those 65 and older even if they are taking the standard deduction, and up to $10,000 for interest paid on auto loans for qualified vehicles purchased in 2025.
Gabriel Shahin, founder and chief executive of Falcon Wealth, said tax-loss harvesting is among the areas he never overlooks this time of year. “Those losses should be used to offset your ordinary income, not just your capital gains,” he said. “Selling gains to offset losses defeats the whole point of tax-loss harvesting.”
Shahin said one mistake he sometimes sees is investors ignoring their taxable brokerage accounts. “That’s where you’re getting hit with taxes on interest, dividends and capital gains,” he explained. “With strategic withdrawals and coordinated Roth contributions, you can shift money into tax-free growth instead of bleeding taxes every year for no reason.”
Lance Elrod, co-owner of Next Step Financial Transitions, said tax-loss harvesting should be a focus throughout the year, but always revisited at yearend. “In years like 2025, when there has been strong market performance, especially in certain sectors like tech and international stocks, it’s worth revisiting your overall allocation to make sure you haven’t drifted too far away from where you want your allocation to be,” he said.
Feeling Crypto. With a growing focus on cryptocurrency investing, Elrod said that can also be a good place to find tax management opportunities. “The crypto space has had a rough two-month stretch and if you purchased any cryptocurrencies recently, you are likely at a loss,” he said. “Since cryptocurrencies are seen as property in the US, you do not have to worry about the wash-sale rule like you would for other investments.”
In essence, Elrod explained, “if you feel strongly about your crypto position, you can sell today to capture the loss for tax purposes and repurchase the same position five minutes later and not have to worry about the sale being disallowed for tax purposes.”
Make It a Roth. Virtually across the board, advisors say consideration should be given to Roth conversions. “Failing to factor in potential tax-bracket shifts may also cause you to miss valuable opportunities for Roth conversions,” said Patterson of OnePoint BFG Wealth Partners. “Consider Roth conversions to lock in future tax-free growth, but carefully manage conversion amounts to avoid tax-bracket creep,” he added.
Sabol of Facet said a Roth conversion is not necessarily a tax minimization strategy in the short term, but it can be a major year-end opportunity that is often overlooked. “Towards the end of the year, we can better estimate what tax bracket we will end up in,” he added. “This is a great time to maximize the lower brackets and fill them up with a conversion if available.”
Shahin of Falcon Wealth described Roth conversions as one of the best tools for people in their 70s. “You’re essentially prepaying taxes at today’s lower rates to avoid massive required minimum distributions later when rates go up,” he said. “With tax brackets scheduled to increase in 2026 and SALT relief expiring, real tax planning becomes essential, because you want to shrink that pre-tax balance now, not when your RMDs force the issue.”
This post first appeared on The Daily Upside. To receive financial advisor news, market insights, and practice management essentials, subscribe to our free Advisor Upside newsletter.
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