As 2025 comes to a close, some year-end tax strategies may be too late to implement, but there are still a few that can be completed in the remaining days to increase your tax refund or decrease your tax liability for the year.
Experts suggest that most tax planning strategies need to be completed by December 31st to be counted in the 2025 tax year. However, there are exceptions such as contributions to traditional Individual Retirement Accounts (IRAs) or Health Savings Accounts (HSAs), which can be made up until the tax filing deadline for 2026.
It’s important to note that shortened trading days before Christmas, stock exchanges closed on Christmas Day, and limited holiday hours for some financial institutions may impact the timing of your actions.
Due to the tax changes brought by President Trump’s “One Big Beautiful Bill” in 2025, the Internal Revenue Service (IRS) may not have updated employers’ withholding tax tables in time, potentially leading to higher tax refunds for many employees when they file their taxes in 2026.
Financial experts advise on tax strategies to execute at the last minute before December 31st:
One common year-end strategy is tax-loss harvesting, which involves selling securities in your investment accounts at a loss to offset capital gains in your taxes. If your losses exceed gains, the remaining portion can be used to reduce ordinary income, up to a maximum of $3,000 per year.
However, as of December 22nd, the S&P 500 index has risen nearly 17% year-to-date, so many investors may not have incurred any securities losses this year. Alternatively, investors with lower tax brackets may consider “tax-gain harvesting,” strategically selling profitable assets. If your taxable income falls within the 0% capital gains tax rate, you can rebalance your portfolio or realize gains without paying taxes.
Whether it’s tax-loss or tax-gain harvesting, depending on your investment situation, there is still enough time to realize losses or gains before the year-end.
Michael DeMassa, founder of Forza Wealth Management in Sarasota, Florida, and a registered financial planner, says, “New Year’s Eve being a full trading day has its reasons. Whether it’s settlement day or not doesn’t matter, as long as it’s the trading day (December 31st), it belongs to this year.”
Another popular strategy is converting traditional Individual Retirement Accounts (IRAs) to Roth IRAs, moving pre-tax or non-deductible IRA funds into a Roth IRA account to enjoy tax-free growth in the future.
However, income projection is crucial for Roth conversions as taxes need to be pre-paid on the conversion amount. Many advisors choose to conduct Roth conversions at the year-end to have a more accurate estimate of other income.
Judy Brown, a registered financial planner at C&H Group in Washington, D.C. and Baltimore, emphasizes that the timing of Roth conversions depends on your strategy and can be “quite quick.” She says, “We would select the highest performing fund in the account and do an in-kind conversion, transferring assets directly without selling, usually completed by the next day.”
However, Brown notes that if you haven’t set up a Roth IRA to receive the funds, this process may take longer, as “establishing the account now could be the biggest obstacle.”
Experts remind that tax planning is individualized and recommend consulting a professional advisor if needed.