Finish Stronger, Begin Smarter: 5 Year-End Money Moves to Make Under the New Tax Rule
At Encompass Financial Planning, we take pride in helping our clients prepare to start off their next chapter on the right foot, whether that’s the next chapter of life in retirement or the next calendar year. But at year’s end, preparing is the name of the game—holiday meals, family plans, even New Year’s resolutions all take up space on the mental calendar. With all those logistics and details to manage, it’s easy to put your finances on autopilot.
But the end of the year is also one of the most powerful times to get proactive about your financial wellbeing, and even a few thoughtful steps now can make a big difference later.
“Year-end is when all the little details add up,” says Sarah Soria, CFP®, MBA, BPC, founder and lead advisor at Encompass Financial Planning. “It’s not about overhauling your entire financial picture right now. Making a few smart adjustments, or even just taking some time to review your plan before 2026, can have a positive effect on your long-term outcome.”
And there’s no better time than now. This year’s new tax rules bring fresh opportunities for savers, investors, and retirees alike. With lower tax brackets now made permanent, several temporary deductions available through 2028, and a few updates affecting retirement and charitable giving, this is the moment to make sure your hard work translates into lasting financial progress.
Here are five simple, practical money moves to help you finish 2025 strong—and start the new year even stronger.
Lock in Today’s Low Tax Rates
The new federal tax law permanently extended the lower income tax brackets originally set to expire after 2025. That means we’re still living in one of the lowest tax environments in modern history—a rare window of opportunity.
If your income has fluctuated this year, this may be the time to think about bracket management. “Bracket management” means intentionally realizing income—like Roth conversions or capital gains—up to the top of your current tax bracket, so you maximize today’s lower rates without pushing yourself into a higher one. Filling up the 12% or 22% bracket intentionally through a Roth conversion or capital gain harvesting could help you avoid paying higher taxes on that income later.
Example: John and Rebecca, both 60, expect higher income once they start Social Security and pension benefits. This year, while their income is lower, they convert $40,000 from a traditional IRA to a Roth, filling up the 12% tax bracket. They pay modest taxes now but reduce future RMDs and create a source of tax-free income for retirement.
Make Smart Retirement Account Moves
Year-end is prime time to double-check your retirement contributions and distributions:
- Max out your retirement accounts before December 31.
- Take your RMDs (Required Minimum Distributions) if you’re age 73 or older.
- Consider a Roth conversion if you’re temporarily in a lower tax bracket—especially before Social Security or larger RMDs begin.
These moves tend to work best when they’re part of an overall plan, not made in isolation.
For example, a Roth conversion can reduce future taxable income and create more flexibility in retirement, but only if it fits neatly with your other income sources and timing. Likewise, contributing to your 401(k), 403(b), or IRA before year-end could lower this year’s tax bill and build long-term savings power.
Example: Lisa, recently retired at 62, realized her income this year would be lower than usual. She converted $30,000 from her traditional IRA to a Roth while staying within the 12% tax bracket. The move increased her short-term tax bill slightly but set her up for years of tax-free withdrawals later.
Use the New Deductions While They Last
Several temporary deductions under the new tax rule can help certain taxpayers through 2028:
- Senior Deduction: An additional $6,000 per person age 65+ on top of the standard deduction (2025 standard deduction amounts are $31,500 for married couples filing jointly and $15,750 for single filers).
- Overtime & Tips Deductions: Qualified workers can now deduct up to $25,000 of tipped and overtime income.
- Auto Loan Interest Deduction: From 2025 through 2028, taxpayers can deduct up to $10,000 of qualified car loan interest on vehicles assembled in the U.S.
Even small adjustments—like maxing retirement contributions to reduce modified adjusted gross income—can help preserve eligibility for these deductions.
Example: Maria and David, both 66, expected their income to exceed the $150,000 limit for the Senior Deduction. By increasing their 401(k) contributions in November, they lowered their adjusted gross income just enough to qualify—saving more than $2,000 on their 2025 return.
Harvest Gains (or Losses) Strategically
If you hold investments in a taxable account, year-end is a great time to review how your portfolio fits into your tax plan.
Tax-gain harvesting means selling investments that have grown in value while your income is low enough to stay within the 0% capital gains bracket ($96,700 taxable income for married couples, $48,350 for single filers). This resets your cost basis and locks in gains tax-free.
Tax-loss harvesting is the opposite—selling investments that have declined to offset gains elsewhere. Both strategies can help smooth your long-term tax picture and reduce what you owe this year.
Example: Tom and Janet sold a rental property this spring, triggering capital gains. To offset some of the tax, they sold a few underperforming stocks at a loss before year-end. The result: a lower 2025 tax bill and a portfolio that’s better aligned with their goals.
Plan Charitable Gifts with Purpose
Generosity always feels good—but it can also be a smart financial move when done strategically.
Under the new tax law, there are now more ways to make your giving go further:
Give directly from your IRA. If you’re 70½ or older, a Qualified Charitable Distribution (QCD) lets you donate up to $108,000 (2025 limit) directly from your IRA to a qualified charity without paying income tax on the amount. It even counts toward your Required Minimum Distribution (RMD).
Use a Donor-Advised Fund (DAF) for flexibility. A DAF lets you make a large, tax-deductible gift now—especially useful after a high-income or asset-sale year—and decide later which charities to support. You’ll get the deduction immediately while your gift has the potential to grow tax-free over time.
Coordinate your giving with your overall tax plan. Pairing charitable gifts with other strategies—like Roth conversions, estate planning, or “bunching” multiple years of donations into one tax year—can help you maximize the deduction and reduce future taxable income.
Example: Jamie, age 71, wanted to support her local animal shelter while satisfying her RMD. She donated $15,000 directly from her IRA as a QCD, keeping her taxable income lower. Meanwhile, her friends, Mike and Erin, contributed appreciated stock to a DAF after selling a rental property, securing an immediate deduction and setting aside funds for future charitable gifts.
The Bottom Line
Year-end financial planning doesn’t have to feel like crunch time. Rather than seeing it as another “have to” to add to your list, think of it as your moment to pause, take stock, and make sure your financial picture still reflects your values and goals. Intentional reflection and the right guidance can help you walk into 2026 refreshed and with confidence.
At Encompass Financial Planning, we believe financial confidence comes from clarity—and from knowing you don’t have to figure it all out alone. Before the calendar flips, let’s take a moment to connect and put those small, meaningful moves in motion together. Schedule your complimentary consultation with us today.
