Twelve year-end tax strategies to consider before December 31

By Gina Coletti and Mark Hannon

As the year draws to a close, a focused review of your tax picture can help you lock in savings and position your finances for the year ahead. A short check-in with your financial team is often the most valuable move you can make now because the best strategies depend on your year-to-date income, realized gains, withholdings, charitable giving, and retirement plan activity.

1. Maximize retirement contributions before the deadline.

Take a moment to check whether you’ve fully funded your retirement accounts, such as employer plans and IRAs. Adding a little extra now can help grow your long-term savings and may lower your taxable income for the year. If you are eligible for catch-up contributions, make sure those are included. Contribution limits can change periodically, so verify the current-year thresholds to avoid leaving benefits on the table.

2. Evaluate Roth conversions and the backdoor Roth.

If your income is lower than usual this year, consider whether a Roth conversion makes sense. If you are willing to pay the tax triggered by converting pre-tax retirement assets to a Roth IRA today, qualified withdrawals in retirement will be tax-free, offering long-term flexibility and potential tax diversification.

High earners or high-net-worth individuals who are phased out of direct Roth IRA contributions may also consider a backdoor Roth strategy, which entails contributing to a traditional IRA and then converting it to a Roth IRA shortly thereafter. This approach requires careful execution, including ensuring there are no other pre-tax IRA balances that could complicate the tax treatment, so coordinate closely with your tax advisor before implementing this strategy.

 3. Harvest investment losses to offset gains.

Review your taxable investments—are there any positions showing a loss? Selling those can help offset gains you’ve already realized. If your losses are bigger than your gains, you can usually use up to $3,000 to reduce ordinary income this year and carry the rest forward to future years. Be mindful of your loss harvesting decisions to ensure that they align with your overall investment strategy rather than tax outcomes alone.

 4. Use qualified charitable distributions (QCDs) to satisfy RMDs.

If you are subject to required minimum distributions (RMDs) from your retirement account and are charitably inclined, a qualified charitable distribution can be an efficient way to give. A distribution sent directly from your retirement account to a qualified charity can count toward your RMD, delivering the double benefit of meeting philanthropic goals while also reducing your tax bill. Confirm eligibility rules and annual QCD limits if you’re interested in exploring this strategy, and coordinate timing so the transfer settles before year-end.

Charitable contributions aren’t only a financial strategy but are a good way to give back to the community and make a difference in people’s lives.

5. Plan tax-efficient withdrawals: Roth vs. traditional.

If you expect to draw upon funds for year-end needs, think strategically about which accounts you tap. Withdrawals from Roth IRAs are generally tax-free if requirements are met, while distributions from traditional IRAs and many employer plans are taxable. Consider your current bracket and future tax expectations to help balance withdrawals across account types and provide smooth and efficient tax planning in the future.

 6. Review your tax bracket and projected adjusted gross income (AGI).

Your tax bracket and year-end AGI can influence which strategies make the most sense. If income is trending higher than expected, accelerating deductions before December 31 through charitable donations, retirement contributions, or loss harvesting can help keep you in a lower bracket. Conversely, if income is unusually low, it may be an opportune time to realize long-term capital gains at favourable rates or complete a Roth conversion at a reduced tax cost.

Projecting AGI can also help you avoid surprises such as Medicare premium surcharges, the 3.8% net investment income tax, or the loss of certain itemized deductions.

7. Make the most of tax deductions and the standard deduction.

For many taxpayers, the standard deduction has replaced itemizing as the default choice. But with thoughtful planning, you may be able to exceed the standard deduction threshold and unlock additional tax benefits. Strategies include:

• Bunching charitable gifts into a single year
• Prepaying deductible expenses where appropriate
• Contributing appreciated assets to increase total deductible value

If you expect to itemize, be sure to review all potential deductions—state and local taxes (subject to current caps), charitable contributions, and mortgage interest—to maximize your return.

8. Manage capital gains across accounts.

Year-end is a good time to review how realized and unrealized capital gains fit into your broader portfolio and tax objectives. Consider:

• Realizing long-term gains strategically to take advantage of favourable tax rates
• Triggering gains in low-income years, where the long-term capital gains rate may be zero
• Avoiding short-term capital gains, which are taxed at ordinary income rates
• Coordinating gain realization with loss harvesting to manage overall tax impact

This coordinated approach can help refine your investment strategy while mitigating your tax burden.

9. Refinance or evaluate mortgage interest and property tax deductibility.

If you own a home, year-end is an ideal time to review how your mortgage interest and property taxes fit into your overall tax strategy. Both can be valuable itemized deductions, subject to current limitations. Reviewing the amount of deductible interest you have paid this year—and confirming whether your property tax payments have been fully accounted for—can help you determine whether itemizing or taking the standard deduction will provide the greater benefit.

If you are considering refinancing, assess whether a new loan structure would change the amount of interest deductible in future years. Similarly, some homeowners may have the option to prepay a portion of next year’s property taxes before December 31, which could increase total deductible expenses for the current tax year when strategically timed. These decisions should always be evaluated alongside broader cash-flow needs and annual deduction thresholds to ensure tax efficiency.

10. Integrate tax planning with estate planning.

Year-end tax planning is also a natural moment to revisit your estate plan and ensure a cohesive, intentional long-term plan is in place. Consider whether life changes, asset growth, or shifting goals merit updates to your estate documents or beneficiary designations. You may also want to evaluate:

• Annual gifting opportunities within IRS limits
• The use of trusts to manage wealth transfer
• Charitable giving strategies that integrate with estate planning, such as charitable remainder trusts or donor-advised funds
• Whether your estate plan is structured to minimize future estate tax exposure

Aligning estate planning with tax strategy ensures a cohesive and intentional long-term plan.

11. Prepare for an efficient tax return filing season.

Strong year-end organization can make your upcoming tax return filing much smoother. Now is the time to:

• Gather charitable acknowledgment letters
• Collect documentation for capital gains and losses
• Confirm RMD fulfilment
• Review estimated tax payments
• Verify correct withholding to avoid penalties
• Store year-end statements from retirement and brokerage accounts

This proactive approach helps reduce the risk of missing deductions or facing unexpected tax liabilities when filing your return.

12. Wrap up the year with a tax check-in.

 A quick tax check-in now can save you headaches later and even uncover opportunities you didn’t expect. Every situation is different, so confirming your RMD status, completing your tax return with taxable income and the right tax deductions, reviewing withholding, and fine-tuning charitable plans can make a big difference before December 31. Thinking about Roth conversions or loss harvesting? Modeling those moves now could pay off.

At Nixon Peabody Trust Company, we’re here to help you navigate these decisions with confidence. Our team works closely with you to align strategies, minimize surprises, and maximize savings. Ready to make the most of your year-end planning? Let’s talk.

Gina Coletti
Chief Fiduciary Officer
Office: +1 617.345.1110
gcoletti@nixonpeabody.com

Mark Hannon
Director of Tax Services
Office: +1 617.345.1064
mhannon@nixonpeabody.com