5 Tax Moves to Make Before 2026 Hits
The final weeks of the year are the most critical for maximizing tax savings for the current tax year (2025). Most opportunities—especially those related to investment sales and employer benefit plans—must be completed by **December 31, 2025**. Don't wait until the last minute!
Your Year-End Tax Optimization Checklist
Focus on these five high-impact moves to reduce your 2025 tax bill and optimize your retirement accounts.
1. Execute Tax-Loss Harvesting
The Move: Sell investments (stocks, mutual funds, ETFs) that have lost value to offset capital gains you realized earlier in the year.
- The Benefit: You can use investment losses to offset any investment gains dollar-for-dollar. If your losses exceed your gains, you can use up to $\text{\$3,000}$ ($\text{\$1,500}$ if Married Filing Separately) of the remaining loss to offset ordinary income (like wages).
- Action: Review your brokerage accounts. Be mindful of the **Wash Sale Rule**, which prevents you from repurchasing the "substantially identical" security within 30 days before or after the sale.
2. Maximize 401(k) and HSA Contributions
The Move: Increase your final paychecks' 401(k) or 403(b) deferral amounts to hit the maximum limit before December 31.
- **401(k) Limit:** The maximum employee contribution for 2025 is $\text{\$23,000}$ (plus a $\text{\$7,500}$ catch-up contribution for those 50 and older).
- **HSA Limit:** Maximize your Health Savings Account. Contributions are tax-deductible, grow tax-free, and withdrawals for qualified medical expenses are tax-free. The 2025 limits were $\text{\$4,150}$ (self-only) or $\text{\$8,300}$ (family).
- Key Deadline: 401(k) contributions must be made by the last payroll of the year. HSA contributions can be made up until the April 2026 tax deadline.
3. Strategize for Roth Conversions
The Move: Convert a portion of your Traditional IRA or 401(k) balance into a Roth IRA.
- The Benefit: You pay income tax on the converted amount in 2025, but all future growth and qualified withdrawals will be tax-free. This is ideal if you expect to be in a **higher tax bracket** in retirement or anticipate low taxable income this year.
- Action: The conversion must be completed by **December 31, 2025,** to count toward the 2025 tax year.
4. Use or Lose Your Flexible Spending Account (FSA)
The Move: Spend down the remaining balance in your Flexible Spending Account (FSA).
- **The Danger:** FSAs are typically "use it or lose it" by December 31st. Funds remaining after this date are forfeited.
- **Action:** Check your plan's rules. Some plans offer a small grace period (until March 15, 2026) or allow a small rollover (typically up to $\text{\$640}$ for 2025), but most funds must be spent on qualified medical items before the year ends.
5. Prepay State and Local Taxes (SALT)
The Move: Pay your estimated state income taxes or property taxes due early (in January 2026) before December 31, 2025.
- The Benefit: This allows you to claim the deduction for those taxes in the 2025 tax year. This is only beneficial if you itemize deductions and have not yet hit the $\text{\$10,000}$ maximum cap (the SALT limit) for state and local taxes.
- Action: Confirm your projected total SALT payments (property, income, and sales tax) to see if accelerating the payment makes sense.
Access our expert year-end tax calculator designed to minimize your 2025 capital gains tax.
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