Take Advantage of These Tax Strategies Before the Year Ends

As the holidays approach, it’s easy to get caught up in the season and overlook your finances. But this year deserves extra attention. While the One Big Beautiful Bill Act (OBBBA) made several beneficial provisions from the Tax Cuts and Jobs Act (TCJA) permanent, some new developments take effect in 2026. With year-end only a few weeks away, there’s still time to take full advantage of existing rules. Here are several effective tax strategies to strengthen your financial position before the end of December.

Annual Gift Tax Exemptions

The annual federal gift tax exclusion provides a valuable means of transferring wealth while reducing an individual’s taxable estate. For 2025, the annual gift exclusion is $19,000 per recipient, or $38,000 per married couple using gift-splitting without triggering federal gift tax.

Married couples who plan to use the gift-splitting election can do so for multiple recipients, for example, dividing the money among their children in the same year without incurring tax. However, they must adhere to the following gift-splitting requirements:

• Both spouses must consent to the gift, specify the reason on their tax return, and file IRS Form 709.
• The gift can come from a joint account or from each spouse individually, as long as each gift remains within the annual limit.

For larger transfers, gifting to the limit in December 2025, and then again in early 2026, can effectively double tax-free giving within a short time frame. Also worth noting: The lifetime estate and gift and tax exemption remains historically high—$13.99 million per individual ($27.98 million for married filers), indexed for inflation.

A financial advisor can explain other special considerations and tax implications of gifts, including those made to spouses, political organizations, tuition payments, and medical expenses.

Tax-Loss Harvesting

Tax-loss harvesting can turn investment losses into potential tax savings. By selling underperforming investments before December 31, an investor can realize capital losses to offset gains elsewhere in their portfolio.

If total losses exceed gains, individuals can deduct up to $3,000 of excess losses against ordinary income in 2025, with any remainder carried forward to future years.

The seller can reinvest the proceeds from the sale into other stocks, bonds, or other tradable securities. However, the “wash-sale” rule prevents the purchase of the same or “substantially similar” investments within 30 days before or after the sale to claim the loss. The rule prevents investors from exploiting capital losses at tax time. Reinvesting in similar, not identical, assets can help maintain a balanced and stable portfolio aligned with an individual’s financial goals.  

Maximized Retirement Contributions

One of the simplest ways individuals can reduce taxable income and strengthen their retirement plan is through maximum retirement account contributions. For 2025, the maximum contribution limits for employer-sponsored accounts, including 401(k)s, are:

•  $23,500 for all participants 
•  $7,500 catch-up contribution for employees aged 50 and over
• $11,250 “super catch-up” contribution for participants aged 60–63

The limit for traditional and Roth IRAs (individual retirement accounts) is $7,500, with an additional $1,000 catch-up for participants aged 50 and over.

Traditional IRA and 401(k) contributions can reduce taxable income today, while Roth contributions grow tax-free and allow for tax-exempt withdrawals in retirement.

Charitable Giving

Charitable giving rules will shift starting in 2026, introducing a “charitable deduction floor” of 0.5% of adjusted gross income (AGI) for itemized deductions. In other words, only donations exceeding that threshold will be deductible.

In addition, high-income taxpayers will face limits on the total value of itemized deductions, and a new, above-the-line charitable deduction—up to $1,000 for individuals or $2,000 for married couples—will be available to those who don’t itemize.

These upcoming changes make 2025 an opportune time to accelerate giving using strategies that include:

• “Bunching” several years of donations into 2025 to maximize deductions under current rules.
• Contributing to a donor-advised fund (DAF) to secure current-year deductions while distributing funds to charities over time.
• Using qualified charitable distributions (QCDs) from IRAs (individuals aged 70 ½ or older) to satisfy part or all of a required minimum distribution (RMD) without increasing taxable income.

Partner With a Financial Advisor

The transition from 2026 to 2026 brings a significant shift in the tax landscape. A comprehensive year-end review with a qualified advisor can help clients take advantage of today’s favorable provisions and prepare for the changes ahead.

At SHP Financial, we integrate tax, retirement, and estate planning into a cohesive strategy as part of our larger holistic Retirement Road Map. Give yourself the gift of confidence this season and beyond. Schedule your complimentary financial review with an SHP Financial advisor today.