6 Essential Year-End Actions 2025 You Must Complete Before December 31

This guide outlines six (6) critical tax moves you need to make before December 31, 2025. Each action is explained in simple terms to help you through the process.

December 31 is the last day to put money into your 401(k) or similar workplace retirement plan for the 2025 tax year. The maximum amount you can contribute is $23,500. If you're 50 or older, you can add an extra $7,500, bringing your total to $31,000. Those aged 60-63 can contribute even more—up to $34,750.

Contributing to retirement accounts can lower your taxable income right now. For example, if you earn $60,000 and contribute $10,000 to your 401(k), you'll only be taxed on $50,000. This could put you in a lower tax bracket and save you money on your 2025 taxes.

Donations to qualified charities made by December 31, 2025, can be deducted on your 2025 tax return if you itemize deductions. Cash donations can be deducted up to 60% of your adjusted gross income (AGI). Donating stocks or other investments held for more than a year lets you deduct their full market value without paying capital gains tax.

If you're 70½ or older, you can make a qualified charitable distribution (QCD) of up to $108,000 directly from your IRA to a charity. This counts toward your required minimum distribution (RMD) but isn't included in your taxable income.

"Making charitable donations before year-end is one of the most effective ways to reduce your tax bill while supporting causes you care about."

If you have a Flexible Spending Account (FSA), you typically must use the money by December 31, 2025, or you'll lose it. Some plans offer a grace period or allow you to carry over a small amount, but don't count on it. Check your plan's rules and spend remaining funds on eligible medical expenses like doctor visits, prescriptions, or even items like bandages and sunscreen.

Health Savings Accounts (HSAs) don't have a use-it-or-lose-it rule, but December 31 is still important. For 2025, you can contribute up to $4,300 for individual coverage or $8,550 for family coverage. If you're 55 or older, you can add an extra $1,000. HSA contributions reduce your taxable income, and withdrawals for qualified medical expenses are tax-free.

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Tax-loss harvesting means selling investments that have lost value to offset capital gains from other investments. This strategy must be completed by December 31, 2025. For example, if you sold stocks earlier in the year and made $10,000 in capital gains, you could sell other investments that have lost $10,000 in value to cancel out those gains and avoid paying capital gains tax.

If your losses exceed your gains, you can use up to $3,000 of the excess to reduce your ordinary income. Any remaining losses can be carried forward to future tax years. Remember the "wash-sale rule" – if you buy the same or a very similar investment within 30 days before or after selling at a loss, you can't claim the loss on your taxes.