As we approach the last quarter of 2025, it’s important to ensure your personal finance and tax strategies are aligned before December 31. With several tax law changes taking effect this year because of the One Big Beautiful Bill Act, and more on the horizon in 2026, the right moves now can minimize your liability and maximize your long-term financial health.
Let’s examine a few key areas. First, maximize charitable giving. Year-end is a great time to review your giving. Your options include:
Donor-Advised Funds (DAFs): Contribute before December 31 to secure a deduction this year, while retaining flexibility on when funds are granted to charities.
Qualified Charitable Distributions (QCDs): If you are age 70½ or older, you can give up to $108,000 [(2025 indexed limit, aggregated across all IRAs)] directly from your IRA to a qualified charity. This counts toward your required minimum distribution (RMD) and avoids taxable income.
Bunching Donations: Consider grouping multiple years’ gifts into one year to exceed the standard deduction. In 2025, non-itemizers may also claim an additional deduction—up to $1,000 for single filers or $2,000 for married couples filing jointly.
Second, review any Required Minimum Distributions (RMDs). If you are 73 or older, be sure to take your RMD by December 31 to avoid penalties (up to 25% of the missed amount). If you don’t need the funds, using a Qualified Charitable Distribution (QCD) is a tax-smart option. Also note that inherited IRAs have special rules in 2025 that may affect timing and withdrawal amounts.
Third, evaluate how to harvest gains and losses. Now is the time to look at your investment portfolio. Selling securities at a loss can offset taxable gains and reduce your 2025 tax bill. Conversely, if you expect higher tax rates in 2026, realizing long-term gains this year may be beneficial. Be cautious of the wash-sale rule if you plan to repurchase investments. (Also keep in mind year-end capital gain distributions from mutual funds, which can create unexpected taxable income.)
Fourth, consider a Roth conversion. With today’s tax rates set to expire after 2025, converting traditional IRA funds into a Roth IRA this year may make sense. This move locks in today’s lower tax rates, creates more flexibility for withdrawals in retirement, and eliminates RMDs from the converted funds. (However, a conversion increases your 2025 taxable income, which can impact Medicare premiums and phaseouts for certain deductions/credits. Running a tax projection before converting is strongly recommended.)
Finally, check state-specific credits. For example, Georgia taxpayers may benefit from unique programs such as education tax credits, which allow you to redirect state tax dollars to scholarship organizations. These credits often fill up quickly, so it’s worth acting early.
With OBBBA changes already in effect and larger shifts expected in 2026, year-end tax planning is more important than ever. Acting before December 31 can save you money and avoid unpleasant surprises next spring.
If you have questions about how these strategies could affect your tax situation or would like to discuss year-end planning, contact us at help@sbsaccountants.com or 706-632-7850.