Maximize Your Wealth: Top 5 Year-End Personal Financial Strategies in 2025
As the curtain draws on another year, it’s prime time to re-evaluate your personal finances. A closer look before December 31 can highlight opportunities for improved tax planning and fortify your financial future. The One Big Beautiful Bill Act presents key tax reductions and introduces new caps, opening a strategic window for individuals and families to reassess income, gifting, and estate tactics before the year ends. Implementing a proactive, comprehensive multi-year tax plan may allow you to leverage tax brackets, transaction timing, and so much more.
The Power of Smart Year-End Planning
Intelligent planning at the end of the year could help you optimize your financial strategy and potentially boost your portfolio’s post-tax returns. It’s not about beating the market with riskier investments but about securing more of what you earn. Even fairly basic year-end actions, when consistently applied over time, can culminate in significant long-term benefits. Delve into these five practical strategies that could aid you in preserving more of your wealth and enhance tax efficiency.
Five Effective Tax and Financial Planning Strategies to Employ Before December 31
Strategy 1: Implement Tax-Smart Moves
While everyone’s tax situation varies, employing some fundamental strategies consistently could have a significant impact. Tactics like Tax loss harvesting could help offset some current or future capital gains with realized losses within the portfolio, thereby impacting your tax liability. Remember to take into consideration tax loss harvesting rules, such as the wash sale rule, which forbids investors from realizing a loss and then purchasing the same or similar security within 30 days. Navigate these rules with the help of your tax advisor.
Enhancing deductions and credits under the One Big Beautiful Bill Act could be beneficial, especially for taxpayers with an adjusted gross income (AGI) under $500,000. For instance, expanded state and local tax deductions or new senior credits are worth exploring. Bear in mind that these benefits could be temporary and might expire after a few tax years. Start with year-end tax planning and consider multi-year tax reducing strategies.
Charitable giving strategies such as “bunching” charitable contributions could also be useful. If your regular donations go to public charities but the standard deduction is higher than your itemized deductions, you could consider putting multiple years of contributions into a donor advised fund (DAF). You would then receive a deduction the year you fund the DAF and would itemize deductions. In subsequent years, you would make charitable contributions from the DAF and use the standard deduction.
Strategy 2: Review Your Investments
Asset location strategy and portfolio rebalancing often yield beneficial results, especially when combined. Asset location leverages the different tax rates of various investment types, while rebalancing involves selling and buying assets to maintain a target asset allocation. Utilizing tax-advantaged accounts like IRAs, HSAs, and 529s can also be immensely beneficial.
Retirement strategies and required minimum distributions are key aspects to consider. Required minimum distributions (RMDs) are the minimum amounts you must withdraw from your retirement accounts each year starting at age 73. The qualified charitable distribution (QCD) strategy allows individuals aged 70 1/2 or older to donate up to $108,000, per taxpayer, per year, directly from a taxable IRA to charities, thus excluding RMD income from taxation.
Strategy 3: Enhance Your Estate and Gift Planning Strategies
Effective estate planning can help you efficiently transfer wealth, reduce income and estate taxes, and evade pricey, public probate. Your financial advisor can help you align your investments and estate plans with strategies like revisiting your estate plan, making annual gifts, and exploring non-taxable gifts.
Strategy 4: Capitalize on Investing in an Opportunity Zone
Opportunity zones present a valuable tax-planning tool and investment opportunity. Typically, you can contribute the amount of your current-year capital gains to a Qualified Opportunity Zone Fund (QOF).
Note: Starting in 2027, new Opportunity Zones will replace current ones under OBBBA, with updated rules including rolling 5-year deferrals, enhanced rural incentives, and stricter compliance — making early planning essential.
Strategy 5: Prepare for Business Transition and Wealth Planning
Year-end is a crucial time for future planning. For business owners, this might mean contemplating what’s next for your business.
Aligning your investments, estate plans, and business transactions within a comprehensive tax and wealth planning approach can yield significant returns. Take time to explore the various options available to you and learn how they can impact your personal and professional future.
Collaborate with CLA for Year-End Financial Strategies
The five personal tax planning strategies above could help you kickstart the new year on a strong note, but each has its own sets of pros and cons. Work with a team that understands your individual financial position and goals.
CLA’s tax and wealth advisory professionals will examine your current situation and discuss what the next few years might look like. Download our private client services (PCS) guide to learn how we can help connect the dots of your financial journey.
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