Year-End Matters for Personal Tax and Wealth Planning: CLA

Smart year-end planning can help you make the most of available strategies and potentially boost your portfolio’s after-tax returns. It’s not about beating the market through riskier investments — it’s about keeping more of what you earn.

Even simple year-end actions repeated over time can add up to meaningful long-term benefits. Explore five practical strategies that could help you preserve more of your wealth and improve tax efficiency.

Top 5 tax and financial planning strategies to implement before December 31

1. Make tax-smart moves

Everyone’s tax situation is different, but some basic strategies — when applied consistently — could have a significant impact.

Tax loss harvesting

Tax loss harvesting could help you offset some of your current or future capital gains by realizing losses within the portfolio, which can impact your tax liability. Excess losses beyond total capital gains can offset ordinary income up to $3,000. The remainder would be carried forward to the next tax year.

Tax loss harvesting can be used for general investments but not on tax-deferred accounts, such as individual retirement accounts (IRAs) and 401(k)s.

While tax loss harvesting might be top of mind during year-end, consider implementing this strategy throughout the year.

Be aware of tax loss harvesting rules, including the wash sale rule, which disallows investors from triggering a loss and then buying the same or similar security within 30 days. Work with your tax advisor to help navigate these rules.

Enhancing deductions and credits

Traditional tax planning often focuses on deferring income and accelerating deductions — but that’s not always the most beneficial approach. Depending on your situation, it may make sense to do the opposite. Start with year-end tax planning and consider strategies reducing taxes over multiple years.

With the new provisions under the One Big Beautiful Bill Act (OBBBA), some taxpayers may benefit from enhanced deductions and credits — especially those with adjusted gross income (AGI) under $500,000. These could include expanded state and local tax deductions or new senior credits. If your AGI falls between $500,000 and $600,000, it’s worth connecting with your advisor to explore ways to reduce or defer income and increase deductions to potentially qualify.

Keep in mind, some of these benefits are temporary and may expire after a few tax years.

Charitable giving strategies

If you regularly give to charity, consider options to take advantage of charitable deductions.

Consider “bunching” charitable contributions. If you regularly give to public charities but the standard deduction is greater than your itemized deductions, you could put multiple years of charitable contributions into a donor advised fund (DAF). Then you would receive a deduction the year you fund the DAF and would itemize deductions. In subsequent years, you would make charitable contributions from the DAF and use the standard deduction.

This bunching technique becomes more powerful under OBBBA — starting in 2026 there is a .5% of AGI floor on charitable deductions, so your tax benefit for charitable contributions may be reduced. In addition, starting in 2026 there is an additional phase out of itemized deductions for taxpayers in the 37% bracket that would also reduce the tax benefits from charitable giving.

Donating appreciated securities can eliminate capital gains taxes that would be otherwise due. Generally, if held longer than one year, you’ll receive a deduction for the fair market value of the stock and avoid paying capital gains on the increase.

If the stock value has decreased since it was purchased and you need those proceeds to fund charitable contributions, sell the stock first then donate the cash. You receive the benefit of the capital loss.

You could also establish a plan to fund charitable giving directly from your IRA to meet your required minimum deduction and therefore reduce your taxable income in future years.

2. Revisit your investments

Asset location and portfolio rebalancing tips

Asset location is a strategy that takes advantage of the different tax rates of different investment types. Some of the differences include:

• Interest income and short-term capital gains are taxed at ordinary income tax rates
• Qualified dividends receive a lower or preferential tax rate
• Non-qualified dividends — or ordinary dividends — are taxed at ordinary income tax rates
• Long-term capital gains are also taxed at preferential rates for most taxpayers, while those in the highest tax brackets pay 20%

Asset location strategy also considers taxable accounts (checking, savings, money market, and brokerage accounts) as well as tax-deferred accounts (traditional and Roth IRAs and employer-sponsored retirement plans (401(k), 403(b), etc.).

It can be especially beneficial to combine asset location and rebalancing strategies. Rebalancing involves selling and buying assets to maintain a target asset allocation. It typically involves selling well-performing assets and buying underperforming assets.

Some investors are finding they are heavily invested in stocks, such as the “Magnificent 7” and others, due to several years of strong returns. Year-end is a good time to contemplate if your portfolio aligns with long-term goals and personal tolerance for risk.

Using tax-advantaged accounts such as IRAs, HSAs, and 529s

If you have an employer retirement plan or access to a health savings account (HSA), review your investment and savings choices. A retirement plan can be a major driver of wealth creation. HSAs are highly tax-advantaged plans: pre-tax contributions, tax-free growth, and tax-free withdrawals for qualifying reasons.

Consider your options and take advantage of long-term financial strategies.

Strategy	Action	Deadline
Maximize Retirement Contributions	Increase contributions to your 401(k), IRA, or Roth IRA; aim for employer match if available	ASAP to maximize contribution level for 2025 and beyond
Traditional (Pre-Tax) vs. Roth (After-Tax) IRA Contribution	Compare current tax savings vs. future tax-free growth to help choose contribution type; earnings limits apply to both contribution types	Tax return deadline (not including extensions), 4/15/2026
Roth IRA Conversion	Consider converting IRA funds if income is lower this year to lock in lower tax rates and potential tax-free growth	12/31/2025
Health Savings Account (HSA)	Contribute annually and defer withdrawals; invest funds and save receipts	Tax return deadline (not including extensions), 4/15/2026
Dependent Care (FSA)	Use full $5,000 for qualified childcare to avoid taxes on those funds (Note: this limit will increase to $7,500 in 2026)	12/31/2025 with grace period until 03/15/2026
Flexible Spending Accounts (FSA)	Use limited purpose and Health Care FSA funds	12/31/2025 with grace period until 03/15/2026
Education Savings/529 Accounts	Fund 529 plans; check for state-level tax deductions	12/31/2025

Retirement strategies and required minimum distributions

Required minimum distributions (RMDs) are the minimum amounts you must withdraw from your retirement accounts each year starting at age 73. These withdrawals are taxable, but if you’re charitably inclined, there’s a strategy you can use to avoid paying taxes on the distributions.

The qualified charitable distribution (QCD) strategy allows individuals aged 70 1/2 or older to donate up to $108,000, per taxpayer, per year, directly from a taxable IRA to charities, thus excluding RMD income from taxation.

By excluding RMD income from taxation, you may reduce your AGI, which may help reduce your overall tax burden and even positively affect your Medicare premiums. This approach can also make you eligible for enhanced deductions or credits under OBBBA, giving you even more financial flexibility.

One-time opportunity to fund a split-interest entity

Starting in 2023, the SECURE 2.0 Act introduced a one-time opportunity for IRA owners aged 70½ or older to make a QCD of up to $54,000 directly from their IRA to a split-interest entity. This includes:

• Charitable Remainder Unitrust (CRUT)
• Charitable Remainder Annuity Trust (CRAT)
• Charitable Gift Annuity (CGA)

This strategy allows donors to support charitable causes while also receiving lifetime income from the trust or annuity. Importantly, the QCD counts toward your RMD and is excluded from taxable income.

3. Solidify your estate and gift planning strategies

Sound estate planning can help you transfer wealth effectively, reduce income and estate taxes, and avoid expensive, public probate. Your financial advisor can help you align your investments and estate plans with approaches like:

• Revisiting your estate plan — Have your kids grown up and left the house? Do you have people included in your will and trust that are no longer alive? Have laws changed since you last updated your estate plan? Reexamine your plan periodically to make sure it’s accurate and reflects your current wishes.
• Making annual gifts — Use the annual exclusion to reduce your taxable estate by making annual gifts. Give up to $19,000 per person each year without tax.
• Exploring non-taxable gifts — Pay directly for someone’s education or medical expenses. These payments don’t count against the annual exclusion or lifetime exemption and don’t trigger gift tax filings or consequences.

4. Consider advantages of investing in an Opportunity Zone

Opportunity zones are a valuable tax-planning tool and investment opportunity. Generally, you may contribute the amount of your current-year capital gains to a Qualified Opportunity Zone Fund (QOF).

Here’s an example of how it can work:

• You sell a position in your portfolio in 2025, resulting in a realized capital gain
• You invest the gain in a Qualified Opportunity Zone (QOZ) and can defer the gain until December 31, 2026
• If you stay invested in the QOZ for at least 10 years, your basis in the investment is stepped up to its fair market value at the time of sale — effectively eliminating capital gains tax on any appreciation during the holding period

NOTE: Starting in 2027, new Opportunity Zones will replace current ones under OBBBA, with updated rules including rolling 5-year deferrals, enhanced rural incentives, and stricter compliance — making early planning essential.

There are many rules related to QOFs, including contribution deadlines and types of assets held. Consult your tax advisor regarding the specific options and benefits.

5. Get ahead of business transition and wealth planning

Year-end is a key time for future planning. For business owners, that may mean looking at what’s next for your business.

First, build a knowledgeable, trustworthy team of cross-skilled professionals to support you through the transition process. Then, compare your current state of readiness to your post-succession vision, and make a plan that considers your business, personal, and financial situation.

Start with areas that reduce risk to the business or you, personally. Plan to address any financial gaps you uncover, which can help further solidify the value of the business and increase readiness for a transition.

Aligning your investments, estate plans, and business transactions within a comprehensive tax and wealth planning approach can bring big returns. Whether you want to retire, pass on the legacy to your family, reward your loyal employees, or enhance your finances, take time to explore the various options available to you and learn how they can affect your personal and professional future.

How CLA can help with year-end financial strategies

These five personal tax planning strategies could help you start the new year strong, but each has pros and cons. Work with a team that knows your individual financial position and goals.

CLA’s tax and wealth advisory professionals will examine your current situation and discuss what the next few years might look like. Download our private client services (PCS) guide to learn how we can help connect the dots of your financial journey.

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