Some moves need to happen now — others you’ve got until April 15

 

Saving on taxes is a goal for most taxpayers, and the best way to do it is to optimize your tax position throughout the year. But as the year draws to a close, taxpayers would be smart to look at several last-minute opportunities to review key savings and investment accounts and maximize the tax savings they can yield.

Most taxpayers keep their eyes on five tax optimization strategies that make tax time a little easier. Fortunately, only two of them require action before the end of the calendar year — the rest can be acted upon anytime before you file your income tax returns, or April 15.

  1. Harvest Tax Losses or Tax Gains

You may have positions in your joint or individual investment accounts that would generate a loss if sold before Dec. 31, 2025. Realizing losses can help you offset any other capital gains that you have realized during the year, lowering your tax liability. Even if you haven’t realized capital gains, the loss can be used to offset up to $3,000 in ordinary income, or can be carried forward indefinitely to offset future capital gains.

On the flip side, if you are in the 0%, 10% or 12% tax bracket, tax gain harvesting may benefit you by generating some immediate cash, as long as the securities have been held for more than one year. Taxation of long-term capital gains is related to your tax rate, and the tax rate is zero for taxpayers who are in the 0%, 10% or 12% brackets. Realizing those gains now may be a strategic move to avoid capital gains taxes in future years when you may be in a higher tax bracket. However, it’s important to remember that there may be tax liability at the state level for realizing gains, regardless of your tax bracket.

  1. Make Charitable Contributions

Charitable contributions must be made on or before Dec. 31, 2025, to count on your 2025 tax return. The “One Big Beautiful Bill” (OBBB) enacted in July 2025 made several changes to tax treatment of charitable contributions, and taxpayers at all income levels should be aware of them:

Permanent above-the-line charitable contribution deduction — Starting with the 2025 tax year, taxpayers may deduct up to $1,000 (individuals) or $2,000 (married filing jointly) in charitable contributions. This deduction is available to taxpayers who take the standard deduction. However, there is a 5% adjusted gross income floor, meaning for a taxpayer with AGI of $100,000, the first $500 of contributions would not count toward the deduction.

Additional provisions affecting tax incentives for charitable giving will take effect for the 2026 tax year.

  1. Fund Traditional or Roth IRAs

Max out your contributions to traditional and Roth IRAs before you file your taxes, or the April 15 deadline. Consult with your tax advisor about contribution amounts and eligibility issues.

If you have a traditional IRA, you must have earned income in order to contribute, and eligibility rules can be a bit complicated, particularly if you or your spouse is covered by an employer-sponsored plan. If this is the case, income limits may affect the amount you can contribute, or whether you can contribute at all. If you’re self-employed and neither you nor your spouse is covered by an employer-sponsored plan, there is no income limit.

If you have a Roth IRA, again, you or your spouse must have earned income, and there are income limitations based on your 2025 income, depending on whether you file your taxes jointly or individually. Since a Roth IRA is not tax-deferred, there is no immediate tax benefit to making a contribution. But the growth in your Roth IRA is tax free, now and in the future. If you have money sitting in a CD or brokerage account, shifting it to the Roth will boost the amount of tax-free growth from which you will benefit in future years.

The maximum contributions to both traditional and Roth IRAs are $7,000 for 2025. However, if you are over age 50, don’t forget about the benefit of catch-up contributions. For both traditional and Roth IRAs, the catch-up contribution for taxpayers over 50 is $1,000.

  1. Fund Health Savings Accounts

You can max out contributions to an HSA account before you file your tax returns or before April 15. An HSA is a tax-advantaged savings account similar to a traditional IRA, but designed to help individuals save for qualified health care expenses. Many companies offer employer-sponsored HSAs, but individuals may also establish their own HSA accounts.

If you are covered by a workplace plan, you can make an additional contribution through your payroll to max out your contributions for the year. Since it’s close to the end of the year now, you may need to talk to your payroll department about whether it’s possible to make an additional contribution through a payroll withholding. Or you could write a check made out to the custodian of the account. If you do the latter, be sure to let your tax accountant know because the extra contribution will not be reflected on your Form W-2.

If you have an individual plan (not employer sponsored), you will fund it similarly to the way you fund traditional or Roth IRA accounts, utilizing ACH transfer or writing a check payable to the plan custodian.

Contribution limits depend on whether you have a single HSA or family coverage. The contribution limit is $4,300 for an individual, or $8,550 for family coverage. The catchup contribution for individuals age 55 or older is $1,000.

  1. Fund 529 Accounts

While the beneficiary of a 529 college savings plan may not need the money for many years, the owner of the account, perhaps a parent or grandparent, can get an immediate state tax deduction for the contribution. This makes contributing to a 529 account an effective tax optimization strategy. There are limits to how much can be deducted, and each state is different. In Kansas, the deduction limit is $3,000 per owner, so a married couple who owns the account jointly could deduct up to $6,000. In Arkansas, the deduction limits are $5,000 and $10,000.

The deadline for funding 529 accounts is April 15 or before you file your income tax returns. It was formerly Dec. 31, but was changed for the 2024 tax year and beyond.

There is a way to “superfund” a 529 account by contributing an amount equal to the gift tax limit for five years. That limit for 2025 is $19,000. However, there is no tax advantage to superfunding.

Questions?

These are among the most common tax optimization strategies that taxpayers can use to better position themselves for the coming tax filing season, but there are other measures you can take, depending on your personal circumstances. If you would like to discuss the best tax optimization strategies for your situation, contact an Adams Brown Wealth Consultant.

About Adams Brown Wealth Consultants

Adams Brown Wealth Consultants is a nationally recognized financial advisory firm delivering holistic wealth management solutions for individuals, families and business owners. As a division of Adams Brown, a top CPA firm, the team integrates tax strategy, financial planning, estate planning, insurance and risk management and retirement plans into a seamless experience. As a fiduciary, the firm operates under a fee-based model and is committed to providing objective, client-first advice. At Adams Brown Wealth we go above+beyond® for our clients, acting as true strategic allies dedicated to supporting their growth at every stage of their journey.