The holidays are upon us—but before you finish wrapping gifts, consider wrapping up your financial to-do list. Year-end is more than a calendar milestone: It’s a hard deadline for moves that could help lower your tax bill, boost savings, and set you up for success in 2026. Miss these dates, and you might leave money on the table or even face penalties for failing to act.
Here’s a comprehensive checklist of 10 smart steps to consider before December 31.
1. Last-minute retirement contributions
Workplace plans like 401(k)s and 403(b)s require contributions by December 31. For 2025, you can contribute up to $23,500. If you’re 50 or older, you can add a $7,500 catch-up—or if you’re between 60 and 63, you may qualify for an extra $11,250 in place of the $7,500 catch-up amount, if your plan allows.
IRAs and health savings accounts (HSAs) give you until April 15, 2026, but contributing now could help reduce taxable income sooner. Plus, if you get a year-end bonus, consider directing some of it into your retirement plan.
And here’s a key HSA tip: HSA contributions made via your employer’s pre-tax payroll avoid FICA taxes (aka Social Security and Medicare) while direct HSA contributions do not. To capture FICA savings for 2025, ensure desired amounts are withheld from your final 2025 paycheck(s). You’ll generally need to make a new payroll election for 2026.
For more little-known facts about HSAs, read Fidelity Viewpoints: 8 myths about HSAs
2. Take required minimum distributions (RMDs)
If you’re age 73 or older, you must withdraw your RMD from traditional IRAs and most workplace plans by December 31 to avoid a penalty of up to 25%.
Want to reduce taxes? Consider a qualified charitable distribution (QCD) from your IRA. A QCD can satisfy your RMD and won’t count as taxable income—plus, it supports a cause you care about.
If you inherited an IRA as a non-spouse beneficiary, you may need to take a required minimum distribution by December 31. If the original owner of your inherited IRA passed away after they reached RMD age, after 2020, you must take RMDs at the end of each year, fully withdrawing all the money in the account by the end of the year that concludes a 10-year period. To find out more, read Fidelity Viewpoints: New inherited IRA rules for non-spouses.
3. Consider a Roth conversion
Thinking about moving money from a traditional IRA to a Roth IRA? The deadline for 2025 is December 31 to be considered in 2025 income. You’ll pay taxes on the converted amount now, but future qualified withdrawals are tax-free as long as certain conditions are met1—and Roth IRAs aren’t subject to RMDs.
If your investments are down, converting now could mean paying less tax on the same number of shares. This strategy can also help diversify your tax picture for retirement.
Read Fidelity Viewpoints: Why convert to a Roth IRA now?
4. Harvest tax losses
Selling investments that are down and replacing them with similar ones can offset gains and up to $3,000 of ordinary income. Unused losses carry forward indefinitely to future years.
Watch out for wash-sale rules, which prevent you from buying a substantially identical security within 30 days of the sale. (Crypto is an exception for now, but rules could change—check with a tax professional.)
Read Fidelity Viewpoints: How to reduce investment taxes
5. Make charitable contributions
Donations to qualified charities must be made by December 31 to count for 2025. Strategies like “bunching” contributions or using a donor-advised fund can help maximize deductions.
Donating appreciated assets—such as stocks held for more than a year—may also reduce capital gains taxes. If you don’t typically itemize, bunching several years’ worth of donations into one year could make itemizing worthwhile.
New rules around charitable gifting may make it advantageous to accelerate some gifts to 2025 to take advantage of 2025 laws. Read Fidelity Viewpoints: 3 big changes to charitable giving
6. Use flexible spending account (FSA) funds
Most FSA dollars are “use it or lose it.” Spend remaining funds before year-end unless your plan offers a grace period or rollover. Check your employer’s rules so you don’t leave money behind.
7. Contribute to education savings
Adding money to a 529 plan account by December 31 could help qualify for state tax benefits, if they’re available. You may also want to prepay tuition for the first semester of 2026 to maximize education credits like the American Opportunity Tax Credit.
Planning a major gift to a 529 account? You can front-load up to 5 years of the annual gift tax exclusion—$95,000, or $190,000 if you’re splitting gifts with a spouse—without triggering a gift tax. Just remember to file IRS Form 709.2
8. Make the most of gifting
You can gift up to $19,000 per recipient in 2025 without triggering a gift tax—double that if you’re married and split gifts. This can help reduce the value of your estate without using your lifetime exemption.
Gifting can also be a way to help loved ones now, whether for education, housing, or other needs.
9. Accelerate deductible expenses
If you’re close to the medical expense threshold (7.5% of AGI), consider paying for treatments or prescriptions before year-end. This could help you qualify for itemized deductions.
Other deductible expenses—such as mortgage interest or property taxes—may also be worth accelerating if you plan to itemize. You may be able to pay January’s mortgage bill in December to include the interest on your 2025 tax form—if you itemize. The payment must be credited in 2025. Check your Form 1098 to be sure the extra month of interest was accounted for.
10. Defer income if possible
Freelancers or gig workers might delay billing until January to reduce taxable income for 2025. This strategy can help keep you in a lower tax bracket, but check with a tax professional to make sure it fits your situation.
Looking ahead
If you miss a deadline, you may still have options next year. But acting now could mean more savings and less stress later. Tax laws are complex and subject to change, so consider talking to a financial or tax professional to tailor these strategies to your situation.