Time is ticking! If you're looking to make some savvy tax moves before the year ends, you need to act fast. While it might seem like you've missed the boat, there's still time to potentially boost your tax refund or reduce what you owe for 2025. But, you must be quick! Most year-end tax strategies need to be implemented by December 31st to count for this year.
However, don't worry, there are some exceptions! For instance, you can still contribute to pre-tax individual retirement accounts (IRAs) or health savings accounts (HSAs) up until the tax filing deadline in 2026.
Keep in mind that the holiday season could make things a bit tricky. With a shortened trading day on Christmas Eve and the major exchanges closed on Christmas Day, you'll need to be mindful of the holiday hours of some financial firms.
Many taxpayers could see bigger tax refunds in 2026 due to 2025 changes made via President Donald Trump's "big beautiful bill." The IRS did not update withholding tables for employers after the law was enacted, and many workers could see the benefit at tax time, experts say.
Here are a couple of last-minute tax strategies to consider, according to financial experts:
Tax Loss or Gain Harvesting
One popular strategy is tax-loss harvesting. This involves selling assets in your brokerage account that have lost value to offset any gains you've made elsewhere in your portfolio, potentially reducing your overall tax bill. If your losses exceed your gains, you can use the excess to reduce your regular income by up to $3,000 per year.
But here's where it gets controversial... With the S&P 500 up nearly 17% year-to-date as of December 22nd, many investors may not have losses to harvest.
Instead, investors in lower tax brackets may consider "tax-gain harvesting." This involves strategically selling profitable assets. If your taxable income falls within the 0% capital gains bracket, you could diversify your portfolio or take profits without triggering a tax bill.
As certified financial planner Michael DeMassa points out, "New Year's Eve is a full trading day for a reason... as long as the trade date is [Dec. 31], it's in the calendar year."
Year-End Roth Conversions
Another popular year-end strategy is Roth IRA conversions. This involves transferring funds from a pre-tax or non-deductible IRA into a Roth IRA. The big advantage? Any future earnings in your Roth IRA will grow tax-free.
However, this strategy requires careful planning, as you'll owe taxes upfront on the amount you convert. Many advisors wait until the end of the year to make these conversions when they have a clearer picture of their clients' income and tax situation.
According to CFP Judy Brown, the conversion process can be quick, especially if you already have a Roth IRA set up. "We pick the highest appreciated funds in there, and we do an in-kind conversion," she says.
And this is the part most people miss... The biggest hurdle might be getting a Roth IRA set up in the first place, so don't delay!
What do you think? Are you planning any last-minute tax moves this year? Do you agree with the strategies mentioned, or do you have a different approach? Share your thoughts in the comments!
