As 2025 winds down, let’s take a proactive step to enhance your financial well-being and set the stage for a thriving new year. Tax planning might not feel festive, but smart, strategic moves can absolutely lead to greater financial freedom and impact—and that’s something worth celebrating!
The goal of year-end tax planning is simple: reduce your adjusted gross income (AGI) to lower your overall tax liability. This is accomplished by accelerating deductions into the current year and, where possible, deferring income until the next.
Here are nine must-do actions before the year is out.
1. Clear the Deck by Harvesting Tax Losses
If you’ve sold investments for a profit this year, remember that the IRS allows you to offset those capital gains with any capital losses you may be holding. For busy professionals and those managing complex family finances, this is a smart tactic to lower your 2025 tax bill.
Even if your losses exceed your gains, you can deduct up to $3,000 against ordinary income, with the remainder carried over to future years—a true tool for future financial freedom. (Just remember the “wash-sale” rule if you plan to repurchase that asset later).
2. Give Back to Your Community With Purpose
Giving to charity can be one of the most fulfilling ways to use your money as a tool for positive impact.
If you itemize, you can lower your tax bill by contributing not just cash, but also gently used household items like clothes and furniture to a local 501(c)(3) thrift store. Remember to get a receipt for the item’s fair market value.
If your total itemized deductions are typically close to the standard deduction, you might consider bunching several years’ worth of charitable contributions into one tax year. This allows you to itemize in that year and potentially save on taxes over multiple years (see Donor-Advised Funds below).
For families or young professionals looking to make a big impact, donating appreciated stock is a double win: you get to deduct the stock’s full fair market value, and the charity avoids paying capital gains taxes.
3. Strategically Support Causes With a Donor-Advised Fund (DAF)
For families that are dedicated to giving, donor-advised funds are an incredible tool.
With the higher standard deduction now in place under the One Big Beautiful Bill Act (OBBBA), DAFs have become particularly appealing to many charitably inclined families. This is especially relevant to the sandwich generation who may be increasing their giving as their income grows.
A DAF works as a charitable giving savings account:
- You get the full tax deduction when you initially contribute the money to the fund.
- You can then grant the money to your favorite charities over many years, allowing you to separate the tax benefit from the charitable distribution.
4. Make Your RMD Impactful With a Qualified Charitable Distribution (QCD)
This is vital for our more seasoned professionals! You must take RMDs from your retirement accounts (excluding Roth IRAs) by April 1st of the year after you turn 73. After that first year, the distribution must be taken by December 31st each year.
Instead of taking that RMD as taxable income, you can direct it straight to a qualified charity as a qualified charitable deduction up to $108,000. This allows you to fulfill your RMD requirement while offsetting the taxable distribution. It’s a great way to maintain your financial freedom and give back.
5. Boost Your Retirement Savings
This strategy is key for everyone, especially the sandwich generation balancing multiple financial demands!
Deferring income into a retirement account is a powerful tool to lower your current tax bill.
- In 2025, you can contribute up to $23,500 to a 401(k) plan.
- The limit increases to $31,000 for those aged 50–59 or 64 and over (known as a catch-up contribution).
- Those aged 60–63 are eligible for a “super catch-up” contribution, making their total maximum $34,750.
- You can contribute up to $7,000 to any type of IRA, or $8,000 if you are over age 50.
6. Consider a Roth Conversion
Did 2025 happen to be a lower-income year for you? If so, this is a prime opportunity to convert some of your traditional IRA funds to a Roth IRA. You’ll pay the income taxes now, at a potentially lower 2025 rate, allowing all future withdrawals in retirement to be completely tax-free.
We often see individuals who took a family leave or had a temporary income dip use this strategy to pursue future tax-free growth—true long-term planning for financial freedom, especially since Roth IRAs are not subject to RMDs.
7. Unlock Triple-Tax Savings With an HSA
For any generation, the health savings account (HSA) is a remarkable financial tool. When paired with a high-deductible health plan, the HSA offers the unique triple-tax advantage: tax-deferred contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.
Since the balance rolls over, many professionals and families max out the 2025 contribution limits ($4,300 for individuals, $8,550 for families, plus a $1,000 catch-up for those over 55) and invest the money, essentially treating it as a tax-free retirement health fund.
8. Prepay Tuition and Claim Education Credits
This is a critical move for the sandwich generation or parents supporting college-age children.
By paying next term’s tuition before December 31st, you could qualify for the valuable American Opportunity Tax Credit. This credit can save you up to $2,500 per student on your tax bill, a tangible way to support your family’s future through wise tax management.
Also, remember that students or professionals who are continuing their own education may be eligible for the Lifelong Learning Credit.
9. Invest in a 529 Plan for Educational Freedom
Still saving for your children’s or grandchildren’s college education? A year-end contribution to a 529 plan is a fantastic way to invest in their future tax-free.
529 plans don’t offer a federal tax deduction, but it could lower your state taxes. Many states permit deductions for contributions to their state’s 529 plan, and some even allow deductions for contributions to other state plans.
Start Your Year-End Tax Strategies Now
Don’t wait until 2026 to think about your taxes. By taking deliberate, proactive steps in the final weeks of 2025, you complete your essential year-end tax strategies and confirm that you keep more of your hard-earned money.
Our team at AllGen Financial Advisors, Inc. has the skills and experience to help you tailor these tax strategies to your unique financial situation.
To schedule a complimentary meeting, call (407) 210-3888 or email advisors@allgenfinancial.com.
About Paul
Paul Roldan is CEO, Co-Founder, and Senior Partner at AllGen Financial Advisors, Inc., an independent fee-based Registered Investment Advisor (RIA) firm based in Orlando, Florida. AllGen is committed to helping individuals and businesses maximize their financial resources with financial planning and investment management services. Paul is passionate about helping individuals excel in their financial, personal, and professional endeavors through strategic financial planning. Paul strives to demystify personal finance, making complex concepts understandable and personal for each client. And as a lifelong academic, he encourages others to pursue their passions and connect with like-minded professionals.
Paul obtained a Bachelor of Arts in Music from Princeton University, a Master in Public Administration from Harvard University, and holds a CERTIFIED FINANCIAL PLANNER® designation. His 20-plus years of experience in the financial industry includes a role as a Financial Analyst with the Federal Reserve Bank of New York and as a co-founding partner at Heritage Financial Services, LLC. In the community, Paul served as Chairman of the Board of Directors for the Hispanic Chamber of Commerce of Metro Orlando (HCCMO) as well as serving on the boards of the Orlando Economic Partnership (OEP), the YMCA, and the Early Learning Coalition of Orange County. He was also part of the Task Advisory Committee for the Hispanic Business Initiative Fund (HBIF). Fluent in both English and Spanish, he is dedicated to making financial services accessible to people at all stages of life, helping them navigate financial challenges and realize their dreams.
Outside of work, New York-native Paul is an avid musician and enjoys deep sea fishing with his wife and three kids. He has also been actively involved in his community as a former coach for his two sons’ basketball, baseball, and flag football teams. His multifaceted interests and relatable personality make him a trusted and approachable advisor for clients from diverse backgrounds. To learn more about Paul, connect with him on LinkedIn.
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