As the end of 2025 quickly approaches, it’s time to consider tax tactics that could help you reduce your tax bill come April next year. While the official tax-filing deadline is months away, some important moves you can make now can prove essential to saving you money.
Here are 5 things to consider.
1. Remember December 31
April 15 may be the tax deadline everyone knows best, but December 31 is another important cutoff for contributions to some workplace retirement plans, college savings accounts, and more. So mark your calendar.
- Tax-advantaged accounts. While you have until the tax-filing deadline of April 15, 2026, to contribute to an IRA for tax-year 2025 you must make your final contributions to most workplace retirement plans, such as a 401(k) or 403(b), by December 31, 2025. You can contribute up to $23,500 in total combined traditional and Roth contributions. If you're 50 or over, you can make additional catch-up contributions of $7,500. If your employer allows, those who are age 60 to 63 may be able to contribute up to $11,250 as a catch-up contribution instead of the standard $7,500.
If you choose to make pre-tax contributions, that money will reduce your taxable income dollar for dollar.
- 529s. You may be able to receive a state tax deduction for contributions to a 529 college savings account, generally made by December 31, although deadlines may vary by state. Such plans are typically state-sponsored and may allow for state income tax deductions, but not federal income tax deductions. The federal gift tax may apply for contributions exceeding $19,000 per individual giving the gift and per beneficiary. You can also front-load 5 years' worth of annual gifts of up to $19,000, for a total of up to $95,000 per person, per beneficiary in 2025 without having to pay a gift tax or interfering with the lifetime gift tax exclusion.1 However, after that, you won’t be able to make gifts under the annual exclusion to the same beneficiary for the following 5 years.
You can also contribute to a custodial account, known as an UGMA or UTMA, but these contributions are also subject to the same, aggregate annual gift exclusion of $19,000 per individual giving the gift and per beneficiary in 2025. Combined 529 and UGMA/UTMA contributions in excess of this amount for a given year may constitute a taxable gift.2 Note: While such accounts are the property of the beneficiary once you set one up, the assets are considered part of the donor’s estate until the beneficiary is no longer a minor and takes control of them.
- Required minimum distributions. If you're 73 or older, you have until December 31 to take your required minimum distribution, or RMD, from traditional IRAs, 401(k)s, and other qualified retirement plans.3 This is an important deadline: Missing it can result in a penalty of 25% of the required RMD. (Note: The penalty for not fulfilling RMD requirements can be as low as 10% if the RMD is corrected within 2 years.) Your first RMD is due by April 1 of the year following the year you turn 73.4 If this is your first year, think carefully about waiting until the April 1 deadline of the following year. You may be taking 2 RMDs in a single tax year, which can increase your taxable income. Remember, withdrawals are taxable, but there are ways to help reduce taxes with careful planning.
2. Consider itemizing
Fewer than 10% of tax filers itemize,5 but maybe you bought a house, plan a large charitable donation, or had large out-of-pocket medical expenses this year.
First, you may want to itemize if you think your deductions will add up to more than the standard deduction, which is $15,750 for single filers and $31,500 for married couples for tax-year 2025. There are 5 primary categories of itemizable deductions. These include medical expenses, home mortgage interest, state and local taxes, charitable contributions, and theft and casualty losses due to a federally declared disaster, and they are subject to various limitations. If you want to itemize your medical expenses, for example, they must be 7.5% or more of your adjusted gross income.
Second, the new tax legislation signed in July 2025, raises the SALT deduction cap to $40,000 for single and joint filers—but with several caveats: The full deduction phases out for filers with modified adjusted gross income above $500,000 ($250,000 in the case of a married individual filing separately), and reverts to $10,000 for incomes of $600,000 and above. While the deduction and the phase-out levels will increase by 1% a year, these changes are in effect through 2029, after which point the cap reverts to $10,000. For married couples who file separately, the deduction increases to $20,000 and returns to its previous level of $5,000 in 2030.
If you plan to itemize, find out more about how the new SALT deduction works in Viewpoints: The bigger SALT deduction and you.
And whether you itemize or not, people who are age 65 and older will get an additional $6,000 deduction that begins to phase out at incomes of $75,000 for single filers and $150,000 for joint filers. The enhanced deduction, which is good for tax years 2025 through 2028, would be in addition to the $2,000 single filers and $3,200 married filers are currently able to deduct if they are 65 or older.
3. Make the most of losses
For nonretirement accounts, you might also want to consider year-round tax-loss harvesting where you use realized losses to offset realized gains first, and then can apply the remaining losses to offset up to $3,000 of ordinary income (depending on filing status) per year. Unused losses can be carried forward indefinitely. If you've got investments that are below their cost basis, and there's another investment (but not a substantially identical security), you could use it to replace the sold asset without a material impact to your investment plan. Consult a tax professional about your situation and beware of the wash-sale rule.
One exception is cryptocurrency—wash-sale rules currently do not apply to cryptocurrencies, as they are not regulated as securities. That means you can sell coins whose value has declined, and buy them back immediately at the same price, potentially realizing the loss while still holding the asset. This loophole could potentially be eliminated in the future, so be sure to work with a tax professional to stay on top of changes.
If you have a financial advisor, they may already be doing your tax-loss harvesting. If you're doing it yourself, it's always a good idea to consult a tax professional.
(Learn more about how Fidelity can help with tax-smart investing: Make tax-smart investing part of your tax planning.)
Turn market losses into potential tax savings
4. Roth conversions
There are several reasons you might start thinking about a Roth IRA conversion, which involves transferring money in a traditional IRA into a Roth IRA.
- First, if you think volatility could return to the stock market, potentially higher stock prices in the future could mean a bigger tax hit on converted pre-tax money.
- Also, while the new tax act made the current tax rates permanent, there’s no guarantee they won’t increase sometime in the future. (There’s also no guarantee they won’t continue to decrease.)
- A Roth IRA conversion could also potentially allow for qualified distributions in retirement that are tax-free and potentially reduce the need for RMDs during your lifetime.6
- You might also consider a Roth IRA conversion if you think your tax rate now will be lower than in the future.
With a Roth IRA conversion, you pay taxes on the converted amount, based on the percentage of your total traditional IRA balances that are pre-tax. If you meet the associated 5-year aging rule for the given conversion, the converted balance can be withdrawn tax- and penalty-free, or else you may have to pay a 10% penalty upon withdrawal. However, there are exceptions to this penalty, including death, disability, and turning age 59½. Also note that earnings on converted balances must meet a separate 5-year rule to be tax- and penalty-free.7 Additionally, a Roth IRA isn’t subject to required minimum distributions for the life of the owner.
If you’re a high earner, you might also want to consider a backdoor Roth IRA or a mega backdoor Roth. Both are "backdoor" ways of moving money into a Roth IRA, accomplished by making nondeductible contributions—or contributions on which you do not take a tax deduction—to a traditional IRA and then converting those funds into a Roth IRA. (They're different from a typical Roth conversion, which is the transfer of tax-deductible contributions in a traditional IRA to a Roth IRA.)
Estimate the potential effect of retirement income strategies on your taxes with Fidelity's Retirement Strategies Tax Estimator.
Find out about Roth conversions from a workplace retirement plan in Viewpoints: Rolling after-tax money in a 401(k) to a Roth IRA.
5. Gifting and charitable giving
The gift tax exclusion discussed in relation to 529 accounts could also apply for other kinds of giving. You can give up to $19,000 to as many people as you like each year without gift tax implications. If you and your spouse elect to split gifts for the year, each person in the couple can gift this amount—including to the same person—without the gift being considered taxable. The gifts can also help reduce the value of your estate, without using up your lifetime gift and estate tax exemption.
If you, your spouse, or family don’t need the money, donating to a qualified charity can help you with your tax planning in the year you’re donating, while also potentially lowering the value of your estate. For example, if you itemize your deductions you can contribute to a donor-advised fund (DAF) and become eligible for an immediate income tax deduction. (When you die, federal law allows for unlimited deductions of contributions to qualified charities from your estate.) You can also donate highly appreciated assets, such as stocks, bonds, and mutual fund shares held longer than a year and deduct their fair market value in order to potentially reduce or eliminate capital gains tax. Deducting charitable contributions may be subject to adjusted gross income (AGI) limits depending on the receiving charity and what you donated. Also be sure to check out any workplace giving benefits your company may offer that could help make this process easier to navigate.
Important to know: Beginning in the 2026 tax year, the new tax legislation reinstates a deduction that allows non-itemizers to deduct cash donations to charity—up to $1,000 for single filers or $2,000 for married couples filing jointly. This provision is permanent and is not indexed for future inflation. Further, some types of donations are ineligible for the deduction, including those to donor-advised funds or private nonoperating foundations.
The tax legislation also caps the tax benefits of itemized charitable deductions at 35% for those in the 37% marginal tax bracket. Additionally, itemizers who make charitable contributions will only be able to claim a tax deduction to the extent that their qualified contributions exceed 0.5% of their contribution base.8 Donors who itemize and are considering a philanthropic gift may want to think about accelerating their gift to 2025, or perhaps using a bunching strategy, to maximize their deduction under the current marginal rate before the new cap goes into effect.
Plan ahead
Everyone’s tax situation is unique, and it might make sense to consult with a tax professional to develop a financial plan that works for you. While December 31 is right around the corner, with some advance planning you’ll be ready to meet this and other important tax deadlines before the new year begins.