Year-End Tax Planning: Hidden Opportunities Most People Miss
As the year winds down, it’s the perfect time to step back and take inventory of your tax picture. Your income, your retirement distributions, your charitable giving—all of these choices collide on December 31st. And the decisions you make today can unlock thousands of dollars in tax savings later.
Whether you’re already retired, approaching retirement, or still working, here are some of the most important year-end planning strategies to consider.
1. Don’t Miss Your Required Minimum Distributions (RMDs)
If you have a pre-tax retirement account—an IRA, 401(k), 403(b), etc.—you will eventually be required to start taking taxable distributions. The IRS wants their share, and for most people today that starts around age 73 (depending on birth year).
A few key points:
• First-year flexibility
In your first RMD year, you can delay your distribution until April 15 of the following year. You’ll then take two distributions in that next year. This can be helpful—or harmful—depending on your tax bracket. That’s why looking at your projected income for both years is essential.
• Timing matters
Many people take the RMD late in the year, especially when markets have gone up, because the required amount is calculated on the previous year-end balance. More growth = more left in the account after the withdrawal.
• Forget to take your RMD?
You have until your tax filing deadline (usually April 15th) to get that first missed distribution done. Most accountants catch this quickly when preparing returns.
• Qualified Charitable Distributions (QCDs)
If you’re over 70½, you can send up to $100,000 per person directly from your IRA to charity—and that counts toward your RMD.
You can’t send it to a donor-advised fund, but you can:
✔ Satisfy your RMD
✔ Avoid adding that amount to your taxable income
This is an incredibly powerful strategy for charitably-inclined retirees.
2. The “Golden Window” - Roth Conversions Before RMDs and Social Security
For many retirees, there’s a magical stretch of years: you’re no longer working, you haven’t started Social Security, and RMDs haven’t kicked in. Your taxable income is low—sometimes very low.
This creates a perfect opportunity for Roth conversions.
• The enhanced senior deduction
For the next several years, individuals over age 65 get an additional $6,000 deduction ($12,000 for couples). That means you could convert at least that much from an IRA to a Roth and effectively see no change from last year’s tax bill.
• Intentional tax planning
Instead of waiting until RMDs and Social Security push you back into higher brackets, you can “fill up” lower tax brackets today and pay taxes at much lower rates.
Why does this matter? Because once RMDs begin, your income may jump dramatically and you’ll lose the flexibility to move money strategically.
3. Tax Gain (and Tax Loss) Harvesting in Brokerage Accounts
This same “golden window” applies to your taxable investment accounts.
• Tax gain harvesting
If your taxable income is under roughly:
$50,000 (single), or
$100,000 (married filing jointly)
…your long-term capital gains rate is 0%.
That’s a hidden gem most investors don’t know about. Even if you don’t need the money, you can sell appreciated investments, pay zero tax on the gain, and buy something similar to reset your basis. That gives you far more flexibility later when income increases.
• Tax loss harvesting
If you’re having a higher-income year, flip the strategy:
Sell a losing position
Lock in the loss
Buy a similar investment (not “substantially identical”)
Use the losses to offset future gains—maybe even the sale of a home or business later
These losses carry forward indefinitely and can be incredibly valuable.
4. Charitable Giving: Standard vs. Itemized and the Power of Bunching
With recent changes in tax law, the majority of Americans now take the standard deduction. But if you’re charitably inclined, there are ways to make your giving more tax-efficient.
• Itemizers vs. standard deduction
If you itemize, your charitable gifts help reduce your taxes annually. If you use the standard deduction, those gifts generally don’t produce a tax benefit.
• Bunching strategy
Instead of giving $5,000 each year, someone might give $50,000 in one year and zero for the next ten years. That single large year pushes them above the standard deduction hurdle, unlocking tax savings.
You can donate to:
Charities directly
A donor-advised fund (DAF), where the money can be distributed over future years as you choose
• Donating appreciated stock
If you have low-basis investments, donating those shares directly is one of the smartest financial moves you can make. You avoid paying capital gains tax and still get credit for the full value of the donation.
• A new charitable “floor” starting in 2026
Beginning in 2026, you won’t get a deduction until charitable giving exceeds 0.5% of AGI. That means bunching—or using a DAF—becomes even more attractive before 2026.
5. Watching Your Income for Medicare and ACA Premiums
Your income today affects your Medicare premiums two years from now because of IRMAA rules (Income-Related Monthly Adjustment Amount). The brackets are strict—a single dollar over the line can cost hundreds per month.
Similarly, early retirees may be relying on ACA premium subsidies, which are also income driven. Planning Roth conversions, capital gains, or distributions without reviewing these thresholds can be an expensive mistake.
6. Maxing Retirement Contributions Before Year-End
Now is the time to pull out your pay stub and check where you stand.
For 2024 (example numbers):
401(k) deferral: $23,000
Catch-up (50+): $7,000
Enhanced catch-up (age 60–63): $11,500
If you run a small business:
Consider a SEP IRA (up to 20% of income)
A Solo 401(k) may allow even higher contributions
Important: a Solo 401(k) must be opened by December 31 to count for the year
Health Savings Accounts (HSAs)
If you’re HSA-eligible, maxing contributions can provide both a tax deduction and long-term tax-free growth.
7. Check Your Withholding and Safe Harbor Rules
Year-end is also your chance to evaluate how much tax has been withheld:
If you’re behind, you can increase withholding in the last few paychecks.
If bonuses or equity compensation are coming, plan for the tax impact now.
Most high earners need to meet the 110% prior-year tax safe harbor to avoid penalties.
Doing this in December is often the difference between “no surprises” and an unpleasant tax bill in April.
Final Thoughts: Take Time to Review Before the Calendar Turns
These strategies only work if you plan before year-end. Once January hits, many options disappear forever.
So as you prepare for the holidays:
Dust off your pay stubs
Review your 401(k) contributions
Check your withholding
Revisit your charitable giving strategy
Evaluate whether Roth conversions, tax gain harvesting, or other moves make sense
A few hours of planning now can create significant savings later.
