Don't Overlook These Ten 2025 Year-End Tax Planning Strategies

John Robinson |
Categories
Tax Rules
Tax Planning
IRAs and Qualified Retirement Plans
Roth IRA Conversions

By John H. Robinson, Financial Planner (December 2025)

  • If you have an inherited Roth IRA or Traditional IRA, have you taken your 2025 required minimum distributions (RMDs)?

 

  • If you are age 73+, have you taken your RMD from your traditional IRA and/or former employer qualified retirement plans? [NOTE:  IRA RMDs may be aggregated to come from a single IRA, but qualified plan RMDs must be taken from each individual plan account.]

 

  • If you are age 70+, should you make qualified charitable distributions (QCDs) from a pre-tax IRA?

 

  • Would you benefit from making year-end charitable contributions?  [NOTE: In recent years, charitable contributions were less valuable to most taxpayers because of tax law changes that made it difficult to exceed the standard deduction.  Tax law changes enacted earlier this year are expected to make itemizing of deductions beneficial to a much larger group of American taxpayers in 2025 and beyond.]

 

  • Does it make sense to either take additional taxable distribution or process partial Roth Conversions from pre-tax retirement accounts to fill up the 22% or 24% marginal tax brackets?  [NOTE: Taxpayers who are considering such distributions should be mindful of the impact pact they might have on their Medicare premiums and of the triggering of the Net Investment Income Tax that may kick in for single taxpayers with AGI above $125,000 and married couples with income above $250,000.]

 

  • Conversely, if you are 65 or older, does it make sense to take year-end steps to reduce 2026 taxable income in order to qualify for some or all of the new $6,000 per person senior deductions.  This new perk, which is part of the One Big Beautiful Bill Act (OBBBA) phases out for single taxpayers with income from $75,000 to $175,000.  For for married couples filing jointly the deduction phases out for AGI between $150,000 and $200,000.

 

  • Are there any portfolio management opportunities to realize tax losses to offset realized capital gains?

 

  • Do you have any tax losses carried forward that may be used to offset capital gains?

 

  • Are you eligible for the Energy-efficient home improvement credit? Homeowners who have made or will make energy audits or energy-saving improvements through year-end—including exterior doors and windows, central air conditioning, furnaces, heat pumps, insulation and solar panels—can apply for this nonrefundable credit that’s expiring on Dec. 31. 

 

The credit is up to 30% of qualifying expenses on an existing home in the U.S., and in most cases your primary residence. If you use the home solely for business purposes you can’t claim the credit. Keep in mind, most purchases must be made through a qualified manufacturer registered with the IRS.

 

The maximum credit you can claim is $3,200. But the amount you receive depends on the specific type of improvement you make. For example, you can receive a credit of $150 for a home energy audit and up to $600 for exterior windows and skylights and water heaters.  Be sure to keep receipts for your records that include the manufacturer’s Qualified Manufacturer Identification Number. Use Form 5695 to apply for credits and attach it to your tax return.

              Source: Lower Your Taxes With These Five Often-Missed Credits (WSJ)

  • Are there opportunities to get reimbursement from your  529 College Savings Plan(s) as a result of rule changes delivered under the OBBBA?  The new law increased the annual limit for tuition and related K-12 expenses from $10,000 to $20,000.  The law also expanded the list of qualifying distributions to include expenses for testing and continuing education and professional licensing exams prep and exam fees.

 

Related Reading 

The New Tax Law Helps Retirees Slash Their Tax Bills (Barron’s)

2025 End-of-Year Tax Planning Under the OBBA (Kitces.com)

 

John H. Robinson is the founder of Financial Planning Hawaii and Fee-Only Planning Hawaii and a co-founder of retirement simulation software-maker, Nest Egg Guru.

 

Although representatives of Financial Planning Hawaii may review client tax and legal documents, deliver tax-reporting documents, and raise awareness of potential tax and/or estate planning related mistakes or opportunities, none of this information should be construed as constituting specific tax or legal advice.  All clients are encouraged to consult with their respective CPAs and/or attorneys for such guidance.