Know Your Tax Strategy in the New Year

December 18, 2025

As the year draws to a close, it’s the perfect time to review your financial plan and implement strategies that can help reduce your tax burden and strengthen your long-term goals. One of the most effective moves is maxing out retirement contributions. If you haven’t reached the annual limit for your 401(k) or IRA, consider increasing contributions before December 31. These pre-tax contributions can lower your taxable income while boosting your retirement savings.

Another powerful tactic is tax-loss harvesting. Selling investments that have declined in value can offset capital gains from other assets, reducing your overall tax liability. Conversely, tax-gain harvesting—selling appreciated assets when you’re in a lower tax bracket—can lock in gains at favorable rates.

If you’re subject to Required Minimum Distributions, make sure mandatory withdrawals are completed by year-end to avoid penalties. For added efficiency, consider Qualified Charitable Distributions, which allow you to donate directly from your IRA to a charity, satisfying your RMD while reducing taxable income.

Finally, review your portfolio for asset location strategies—placing tax-efficient investments like stock funds in taxable accounts and less efficient ones, such as bonds, in tax-advantaged accounts. These steps, combined with professional guidance, can help you minimize taxes, preserve wealth, and start the new year with confidence. Every plan is different for every individual. The best plan for you is the one that includes all of your wants and needs.