As the year draws to a close, it’s the perfect time to review your tax strategy and make proactive moves before the calendar resets.
End-of-year tax planning is about more than reporting taxes in April — it’s about using the entire year to strengthen your financial position and take advantage of available opportunities.
One of the most important distinctions in tax management is understanding the difference between planning and reporting. Reporting happens after the year is over when you file your return. Planning happens beforehand — while you still have time to make adjustments that impact what you’ll owe. The goal is to finish the year knowing you’ve optimized every opportunity to reduce your tax burden not just today, but also in the future.
Recent legislation, known as the One Big Beautiful Bill Act, kept current tax rates in place rather than letting them rise. That means most people will remain in the same tax bracket as last year unless their income has changed significantly. The bill also introduced a new senior deduction — $6,000 per person for individuals age 65 or older. Married couples filing jointly can claim $12,000 combined, although this begins to phase out at an adjusted gross income of $150,000.
Another change to note is the increased standard deduction. Midyear adjustments raised it from $30,000 to $31,500 for married couples filing jointly, giving households a little more breathing room when planning conversions and deductions.
Before the year ends, consider the following strategies that can help optimize your tax position:
- Roth Conversions: Moving money from a traditional IRA to a Roth IRA allows you to pay taxes now at your current rate instead of later at potentially higher rates.
- Qualified Charitable Distributions (QCDs): If you’re age 70½ or older, you can donate directly from your IRA to a qualified charity. The gift is excluded from your income and can also satisfy part or all of your required minimum distribution.
- Gifting Appreciated Assets: Donating appreciated stock from a trust or brokerage account can help you avoid capital gains tax while benefiting a cause you care about.
- Tax-Loss Harvesting: In a down market, selling investments that have declined in value can offset gains elsewhere, reducing your taxable income.
- Funding Accounts Before Year-End: Contributions to Health Savings Accounts (HSAs) and 529 college savings plans must be made before December 31 to qualify for current-year benefits. Indiana residents, for example, receive a 20% state tax credit on up to $7,500 in 529 contributions. If you are doing the math at home, that is up to a $1,500 credit!
Tax planning should be an ongoing process — not a last-minute task. Each year brings new rules, income changes, and opportunities to improve efficiency. Reviewing your strategy before December 31 can help ensure you’re taking full advantage of deductions, credits, and timing strategies available to you.
The end of the year is also a great reminder that good tax planning isn’t just about minimizing what you owe today — it’s about aligning your tax strategy with your broader financial goals for tomorrow.
Retirement should be a time of fulfillment, not financial stress. With the right strategy in place, you can stop worrying about what could go wrong and start focusing on what’s next.
Financial Enhancement Group is an SEC Registered Investment Advisor.
