End of Year Financial Planning 2025: Your Complete Guide to Smart Tax and Money Moves

img: unsplash

The final stretch of the year is your opportunity to make intentional moves that can lower your 2025 tax bill and set you up for a strong start to 2026.

Between new rules under the One Big Beautiful Bill Act (OBBBA), market volatility, and inflation pressures, there’s plenty you can’t control, but you can still make progress and take charge in the areas you can control.

Effective end-of-year financial planning in 2025 can help you lower taxes, stay ahead of deadlines, and enter 2026 with clarity and confidence.

1️⃣ End of Year Financial Planning 2025: Max Out Retirement and Tax-Advantaged Savings

Before December 31, review your savings accounts and make any final contributions to reduce taxes and boost long-term flexibility.

401(k), 403(b), or 457 plans

The contribution limit for 2025 is $23,500, plus a $7,500 catch-up if you’re age 50 or older. Contributions made through payroll before year-end reduce taxable income, dollar for dollar.

Beginning in 2025, people between the ages of 60 and 63 will be eligible to contribute up to $11,250 of catch-up contributions, if your plans allow.

Planner Tip: For high-income individuals, 2025 is the last year you can make a pre-tax catch-up contribution to a 401(k)/403(b). Starting in 2026, the SECURE Act 2.0 requires all catch-up contributions for high earners (earning more than $145,000 in FICA wages) to be Roth contributions.

For Business Owners: Contribute to your business retirement accounts

If you’re self-employed or run a small business, you have extra flexibility and extra deadlines when it comes to year-end retirement planning.

SEP IRAs

A SEP IRA can be opened and funded up to your tax filing deadline, including extensions. That means you may still contribute for 2025 all the way until October 15, 2026, if you file with an extension.

Planner Tip: If you had a high-profit year and want flexibility, a SEP IRA can be a useful last-minute option, but it’s not compatible with the Backdoor Roth strategy due to the pro-rata rule.

Solo 401(k)s

A Solo 401(k) is one of the most powerful retirement plans for business owners, but the deadlines are stricter.

Here’s how timing works:

• The plan must be established by 12/31/2025 to make any contributions for the 2025 tax year.

• Employee deferrals must be elected by 12/31.

• Employer contributions (profit sharing) can be made up to your tax filing deadline, including extensions.

  
  

2025 Contribution limits mirror regular employer plans:

• Employee deferral: Up to $23,500 (plus $7,500 catch-up at age 50+).

• Employer contribution: Combined with employee deferral of up to the overall $70,000 limit (or $77,500 with catch-up), or 100% of your compensation, whichever is lower.

Planner Tip: Wondering if a SEP IRA or a Solo 401(k) is more suitable for your business? Check out Savor's guide for business owners to decide between these two accounts.

Even if you can’t max out these accounts, increasing contributions before your last paycheck can lower taxable income and keep your plan on track.

IRAs and Roth IRAs

You can contribute up to $7,000 for 2025 ($8,000 if age 50+) to a pre-tax traditional IRA (for an immediate deduction) or a Roth IRA (for tax-free growth), if you meet the income requirements. Higher-income earners can still consider a Backdoor Roth IRA strategy.

Planner Tip: Make sure your IRA contributions are invested after you deposit. If you’re considering a Backdoor Roth IRA strategy, make sure you understand how the pro-rata rule applies.

Health Savings Accounts (HSAs)

HSAs remain one of the most tax-efficient tools available. In 2025, you can contribute up to $4,300 for self-only coverage or $8,550 for family coverage, plus an extra $1,000 if age 55 or older.

HSA contributions are deductible, their growth is tax-free, and withdrawals for qualified medical expenses are also tax-free.

Planner Tip: An HSA can be a tremendously valuable long-term account when utilized correctly. Here’s how to make the most of it.

529 Education Savings Plans

529 contributions may qualify for state tax deductions or credits, depending on where you live.

The OBBBA expanded 529 flexibility, allowing up to $20,000 per beneficiary for K–12 tuition or career-certification programs (such as CFP® coursework) starting from 2026. Although this is not something you can immediately use for 2025, it's worth planning for, if it suits your situation.

Planner Tip: One of the biggest cons of 529s is their limited usage - only applicable for higher education when it first came out. However, with the tax law changes, it's getting more and more flexible. For estate planning, it has the very interesting and unique feature of being a completed gift while the owner still retains control over. It can be a powerful planning tool when utilized correctly. Learn more about 529 plans here.

2️⃣ End of Year Financial Planning 2025: Manage Your Taxes Strategically

Not all tax planning happens inside retirement accounts. Some of the best year-end strategies involve how you manage income, investments, and giving.

Roth Conversions

If your 2025 income is lower than usual, or if you expect higher tax rates in retirement, consider a Roth conversion. Converting pre-tax funds now locks in today’s lower rates, allowing you to potentially save on tax over your lifetime.

Planner Tip: Work with your advisor to size the conversion carefully so you don’t push into a higher bracket or lose access to deductions such as the age 65+ or overtime credits.

Harvest Investment Gains or Losses

In high-income years, realize losses to offset capital gains and reduce taxable income.

In lower-income years, realize long-term gains at the 0% capital gains rate (up to $96,700 for joint filers in 2025) to reset cost basis tax-free.

Planner Tip: Be mindful of the wash-sale rule, which disallows losses if you repurchase the same or a substantially identical investment within 30 days.

Charitable Giving

2025 is the last full year before new charitable deduction limits take effect in 2026, including a 0.5% of AGI floor and a 35% deduction cap for top earners.

Consider front-loading multiple years of donations into 2025 to maximize your deduction or using a Donor-Advised Fund (DAF) to lock in the benefit now while distributing gifts over time.

If you’re age 70½ or older, a Qualified Charitable Distribution (QCD) from your IRA allows you to donate up to $108,000 directly to qualified charities, satisfying all or part of your RMD while keeping the amount out of taxable income.

Strategic tax moves aren’t just about reducing this year’s bill, they’re about positioning your income and giving for the long run.

3️⃣ End of Year Financial Planning 2025: Complete Tasks Due by December 31

Staying on top of these deadlines is a critical part of end-of-year financial planning in 2025, especially for retirees and families balancing multiple accounts.

Required Minimum Distributions (RMDs)

If you’re age 73 or older, you must take your 2025 RMD by December 31 to avoid a 25% penalty on the amount not withdrawn.

For inherited IRAs, rules vary depending on when the account was inherited and under which SECURE Act provisions. Check with your custodian or advisor to confirm.

If you don’t need the income, a QCD (see above) can satisfy the requirement while supporting causes you care about.

Flexible Spending Accounts (FSAs)

FSAs are generally “use it or lose it.” Check your employer’s deadlines for spending and claims. Some plans offer a grace period into early 2026 or a small rollover (typically up to $640), but many do not. Schedule appointments or stock up on eligible expenses before time runs out.

Planner Tip: There’s a wide range of FSA-eligible products you can purchase. See the full list here: https://www.fsafeds.gov/explore/lex-hcfsa/expenses

Tax Withholding Review

Most of the time, the “tax pain” comes from underwithholding, not the actual tax amount. Ask your tax professional, or use the IRS Tax Withholding Estimator (IRS Estimator link), to confirm that you’ve paid enough for 2025.

If you anticipate large bonuses, RSU vesting, or multiple income sources in 2026, adjusting your W-4 before your last paycheck in 2025 can help avoid underpayment for 2026 as well.

💬 Bonus: Talk Finances With Family

The end-of-year holidays bring families together and create a natural time for conversations that build alignment across generations.

If you’re gathering with family, take a few minutes to talk about estate plans (yours or your parents’) to ensure everyone is on the same page.

These discussions might not feel urgent, but they can prevent confusion later and ensure everyone’s financial intentions are understood.

Closing Thought

Year-end financial planning doesn’t mean doing everything at once; it means focusing on what moves the needle most before the clock resets.

A few hours spent reviewing your accounts, managing taxes, and completing key tasks can lower your tax bill, reduce stress, and give you a stronger foundation for 2026.

If you’re unsure which steps apply to your situation, your financial planner and tax professional can help you prioritize where each dollar and decision will have the biggest impact.