How time flies! It is hard to believe we are only a few weeks away from 2026.
As we approach the end of the calendar year, now is an excellent time to review strategies that may help you prepare for tax season and strengthen your financial plan. There are a handful of year-end deadlines and strategies that need to be completed before the end of the calendar year if you’re going to take full advantage of them. Here are some key items to consider as you review your 2025 year-end planning.
- Take advantage of retirement plans and HSAs. This is your annual reminder to be sure you’re maximizing your income tax deductions through your 401(K), IRAs, and other employer-sponsored plans. The 2025 limit for a 401(k) is $23,500, and you can contribute an additional $7,500 if you’re over 50 for a total tax deduction of $31,000. Maximizing contributions may provide meaningful tax benefits, depending on your income and filing status. An HSA is also a great place to save; the limit this year is $8,550 (for a family plan), and you can contribute an additional $1,000 if you’re over 55.
A side note on this: it may be too late to maximize the plan, if it is, put a reminder on your calendar to update your contributions through your employer in early January to maximize contributions for 2026.
- If you’d like to give, now is the time. Year-end planning is an ideal time to review your gifting strategy and the causes you support. Remember, you can only use gifts as a tax deduction if your itemized deductions are greater than the standard deduction ($30,000 in 2025). Due to this, bunching gifts can be a great way to ensure you can use your gift to benefit you on your taxes. Bunching is when you give multiple years of gifts in a single year to ensure it’s greater than the annual standard deduction.
Remember, if you’re giving cash and you have highly appreciated securities, we should walk through whether cash is the best way to give. Donating appreciated securities instead of cash can be a tax-efficient strategy. This approach may allow you to avoid capital gains taxes while providing the same benefit to the charity, but suitability depends on your personal circumstances.
- The end of the year is a great time to review Roth IRA conversions. Most people have significantly more money in their pre-tax accounts than Roth accounts. If you had a year where income was slightly lower or if you think your income will be higher in the next handful of years, converting IRA funds to a Roth IRA should be considered. We often work with clients to maximize a tax bracket and convert up to a certain amount in a specific bracket. Please reach out if you’d like to discuss this before the end of the year.
- The end of the year is also the time when Required Minimum Distributions (RMDs) need to be taken. If you’re age 73 or older, you must take an RMD from your 401(K) or Traditional IRA. Beneficiaries of inherited IRAs may also have required distributions. Missing an RMD can result in significant penalties, so it is important to ensure these are completed on time. Many clients choose to reinvest the proceeds in a taxable investment account, which keeps the funds invested while satisfying the IRS requirement.
- The final year-end planning to consider would be to take advantage of the gift tax exclusion. If you’d like to make a gift to a non-charity organization, you can give up to $19,000/year to someone and not be required to file a gift tax return. Giving before December 31 allows you to make an additional $19,000 gift after January 1, 2026 – potentially totalling $38,000 without having to file a gift tax. While giving more than the exclusion amount does not necessarily create a tax liability, it may require additional reporting and administrative steps.
If you have any questions about any of these five-year-end planning points, please don’t hesitate to contact your advisor at OmniStar Financial Group. We’re here to serve you, and we’d love to have a year-end review to be sure all the boxes are being checked.
