End-of-Year Tax Moves: 5 Strategies To Consider Before January 1

As 2025 comes to an end, it’s a perfect time to take stock of your retirement plan, investments, healthcare needs, and taxable income. The final weeks of the year bring opportunities that disappear once January begins. A few well-timed tax moves can affect what you keep and what you give, and can help improve your retirement planning in California.

This article from Bulman Wealth Group outlines five tax strategies worth knowing before year-end. Each one is designed with Californians in mind, blending federal tax rules with state-specific factors.

1. Maximize Retirement Contributions

One of the most direct ways to improve your tax situation is by reviewing retirement account contributions before December 31.

Employer plans (401(k), 403(b), 457): Contributions must be made by the end of the calendar year. These reduce taxable income now while growing retirement savings for the future.

Traditional and Roth IRAs: Contributions for 2025 can be made until April 15, 2026. The extended deadline offers flexibility, but starting early can make it easier to spread contributions throughout the year.

Self-employed plans:

• Solo 401(k): Must be established by December 31, though contributions can be made up to the business tax filing deadline (with extensions).
• SEP IRA: Contributions may also be made up until the business filing deadline.

Because deadlines differ across account types, it’s important to know which contributions must be made by December 31 and which can wait until April. This helps you prioritize and avoid missed opportunities.

2. Roth Conversions Before December 31

A Roth conversion moves money from a traditional IRA or 401(k) into a Roth account. The converted amount is taxed as current-year income, but future qualified withdrawals are tax-free.

Timing matters: conversions must be completed by December 31 to count for that tax year, making year-end a natural point to review income, check your bracket, and decide if a conversion fits.

Potential advantages include:

• Tax-free withdrawals later — useful if tax rates rise.
• No required minimum distributions (RMDs).
• Wealth transfer benefits — heirs may inherit Roth accounts with tax-free distributions (subject to federal rules).

Because conversions increase taxable income, planning is key to avoid moving into a higher bracket. By December, you’ll already know your income for the year and can decide accordingly.

3. Tax-Loss Harvesting

Not every investment will be a winner, but losses can sometimes be turned into opportunities. Tax-loss harvesting is the process of selling investments at a loss to offset capital gains and, in some cases, ordinary income.

For Californians, this can be particularly impactful since the state taxes capital gains as ordinary income, often at high rates. Tax-loss harvesting offers two main benefits:

• Offsetting gains — realized losses can balance realized gains, reducing your taxable income.
• Reducing ordinary income — if losses exceed gains, you can offset up to $3,000 of ordinary income each year.

When using this approach, keep these points in mind:

• Wash-sale rule — you cannot repurchase the same or “substantially identical” investment within 30 days before or after the sale.
• Portfolio balance — harvesting losses should not disrupt your overall asset allocation. Consider reinvesting in a similar (but not identical) security to stay invested.
• Carryovers — if your losses exceed annual limits, the remainder carries forward to future years.

Tax-loss harvesting works best in taxable accounts, not in IRAs or 401(k)s, and is a useful year-end review item for brokerage accounts.

4. Charitable Giving

Charitable giving is another powerful way to benefit causes close to your heart and can also be an excellent end-of-year tax move. Since many opportunities must be completed before December 31, this is a timely area to review.

Methods to consider:

• Appreciated stock or real estate — Donating long-held assets lets you avoid capital gains while receiving a deduction for the fair market value.

• Donor-advised funds (DAFs) — Contribute before year-end, receive the deduction now, and recommend grants to charities over time. Some investors also like that DAF assets can remain invested until distributed, allowing for potential growth.

• Bunching donations — With the 2025 standard deduction at $16,600 for individuals and $32,600 for married couples, many retirees don’t itemize every year. Grouping multiple years’ worth of gifts into one tax year can help cross the threshold and increase the deduction.

• Qualified Charitable Distributions (QCDs) — If you’re 70½ or older, you can donate up to $105,000 in 2025 directly from an IRA to a qualified charity. QCDs count toward RMDs but are excluded from taxable income.

These charitable giving strategies can be both generous and provide retirement tax benefits in California when completed before year-end.

5. Managing Your Tax Bracket and Other Year-End Priorities

The final weeks of the year are a good time to review where your income places you on the tax spectrum. Even minor adjustments may help you stay in a more favorable bracket and avoid unnecessary tax pressure. That could mean deferring income into the following year or realizing gains in a year when your taxable income is lower.

Other important year-end checkpoints include:

• HSAs: Must be established in 2025; contributions can be made until April 15, 2026.
• RMDs: If you’re 73 or older, required distributions from retirement accounts must be taken by December 31 to avoid penalties.
• Long-term care planning in California: Premiums for qualified policies may be deductible as medical expenses (subject to limits). Premiums must be paid by year-end to count for that tax year.

Together, these steps help position your retirement planning in California on a stronger footing heading into the new year.

How a Financial Advisor in California Can Guide You

End-of-year tax planning is about timing, strategy, and seeing how decisions fit together. At Bulman Wealth Group, our team can help you integrate charitable giving, retirement contributions, and tax strategies into one coordinated plan specific to your circumstances.

Working with Bulman financial advisors in California also means having someone to explain trade-offs, identify opportunities you may not see on your own, and adjust recommendations as your income or retirement goals change.

If you want to review which end-of-year opportunities may apply to your situation, now is the time.

Reach out to us for a free consultation or visit our website for more on how to build financial confidence in your California retirement.