Navigating taxes doesn’t have to be stressful, especially when you have a game plan. For working professionals, year-end tax planning is an opportunity to take control of your finances, save money, and set yourself up for success in the long run. The best part? Taking proactive steps now can turn tax season from a burden into a breeze.

From maximizing retirement accounts to leveraging tax-saving strategies, this guide covers everything you need to know to make smart financial decisions before the calendar year ends.

Why Year-End Tax Planning Matters

The end of the year is more than just the holiday season, it’s crunch time for making strategic financial moves. Once December 31st passes, many tax-saving opportunities vanish until the next year. By planning ahead, you can reduce your taxable income, make the most of your employee benefits, and avoid that last-minute scramble in April.

Maximize Benefits from Employer-Sponsored Accounts

Tips for Maximizing Your 401(k) Contributions

If your employer offers a 401(k), now’s the time to ensure you’re contributing enough to hit the annual limit. For 2025, the limit is $23,500 (or $31,000 if you’re 50 or older). Even if you can’t max it out, try to contribute enough to take full advantage of any employer match, it’s essentially free money!

Nerd Note: For every dollar contributed to a 401(k) pre-tax, you reduce your taxable income today, while growing your retirement fund for tomorrow.

Exploring HSA Benefits Beyond Healthcare

Health Savings Accounts (HSAs) are often overlooked, but for those with a qualifying High Deductible Health Plan (HDHP) they’re a triple tax advantage powerhouse:

• Contributions are tax-deductible.
• Growth within the account is tax-free.
• Withdrawals for qualified medical expenses are also tax-free.

Consider using your HSA as a long-term investment vehicle. By letting the funds grow instead of spending them immediately, you can build a healthcare safety net for retirement. Maxing your HSA can be done through your paystub after establishing an election on the HSA website, or be "topped off" to maximize the amount by April 15th of the following year just like IRA's.

Nerd Note: You save on Social Security and Medicare tax on the amount contributed through payroll, so it is best practice to do that rather than in the new year if you are employed.

Benefits of Flexible Spending Accounts (FSAs)

Got a Flexible Spending Account? Don’t forget the “use it or lose it” rule. If you have funds left over, now’s the time to spend them on eligible expenses like medical supplies, eyeglasses, or even acupuncture treatments.  Check out this list for what expenses qualify.

Leverage Tax-Optimized Accounts for Financial Growth

Making the Most of a Backdoor Roth IRA

A Backdoor Roth IRA is a vital tool for high-income earners. It allows you to funnel funds into a Roth IRA for tax-free growth and withdrawals in retirement. Simply put, the "Backdoor" strategy involves moving funds from a non-retirement account or bank, to a retirement account where a deduction is not taken, and subsequently moved quickly to a Roth retirement account. Any growth within the retirement account before moving to Roth is taxed at ordinary income, so be sure to act swiftly.

Pro Tip: It's important to know that there will be more things to consider when filing taxes like ensuring you are properly filing Form 8606 and ensuring no other Traditional IRA assets are held at the end of the year to ensure you are not incurring unintended taxes.

Do Mega Backdoor Roth Contributions if Available

If your company offers "after-tax" and "in plan Roth conversions" within the Summary Plan Description document available on the 401(k) website, you have access to the Mega Backdoor Roth 401(k).  This is an advanced strategy, but it's a powerful way to build a robust retirement portfolio. Certain employers allow for an "automatic conversion", so that the step of moving funds into the Roth is done for you and highly preferred.

Nerd Note: Tax-free growth might not seem exciting now, but compound interest can turn today’s contributions into a comfortable retirement income.

Tax-Saving Strategies for Investment Accounts

The Advantages of Tax Gain and Loss Harvesting

Tax-loss harvesting involves selling underperforming investments to offset capital gains from other investments. This strategy can save you money on taxes and help reset your portfolio for the new year, if losses outsize gains for the year then up to $3,000 for most individuals can offset your ordinary earned income.

On the flip side, tax-gain harvesting involves selling investments with gains to take advantage of lower tax brackets and “reset” their cost basis. It’s a great way to strategically manage your taxable income over time.

Review Your Employee Stock Purchase Plan (ESPP)

If your employer offers an ESPP, consider purchasing company stock at a discount. Evaluate whether it makes sense to sell shares that become yours in December to lock in the discount and reinvest the proceeds elsewhere. In order to benefit from favorable tax treatment on any gains, it is important to hold the funds for 2 years past offer date and 1 year past purchase.

Roth Conversions for Long-Term Growth

Converting pre-tax IRA funds into a Roth IRA can lock in today’s tax rate while securing tax-free growth in the future. This strategy works best if you’re in a lower tax bracket but planning for higher income later.

Charitable Giving and Tax Deductions

Using Donor-Advised Funds to Bundle Charitable Contributions

Charitable giving isn’t just about generosity, it’s also a savvy tax strategy. By bundling several years of donations into a single tax year, you may exceed the standard deduction and maximize your tax savings.

Donate Highly Appreciated Securities

Instead of donating cash, consider giving appreciated securities like stocks or mutual funds. You’ll avoid paying capital gains tax and still receive a charitable deduction for the full market value.

Nerd Note: Donating securities instead of selling them might save you an additional 15-20% in capital gains taxes. That’s a smart move for your wallet and your favorite charity!

Real Estate and Property Tax Opportunities

How Prepaying Property Taxes Can Benefit You

If you haven’t hit this year’s $10,000 deduction cap for property and state taxes, consider prepaying next year’s property taxes. This strategy could help you maximize your deduction while reducing your taxable income.

Consider Cost Segregation Studies for Investment Properties

Own investment property? A cost segregation study can help you identify components of a property that can be depreciated separately, accelerating deductions and lowering taxable income.

Ensure a Smooth Financial Future

Review Your Paycheck and Tax Withholding

Nobody enjoys an unexpected tax bill in April. Review your paycheck withholding to ensure you're on track to meet your tax obligations. Adjust if necessary to avoid surprises.

Take Control of Your Finances Before Year-End

Smart year-end tax planning goes beyond saving money, it’s about setting yourself up for long-term financial success. By taking these steps now, you’re not just preparing for tax season; you’re building a healthier financial future.