Year-End Strategies to Minimize Your Tax Bill
As the year draws to a close, it's essential to take a proactive approach to tax planning. Implementing smart strategies now can help you minimize your tax bill and maximize your savings. Here are some effective year-end tax planning strategies to consider:
1. Maximize Retirement Contributions
One of the most effective ways to reduce your taxable income is by contributing to retirement accounts. If you have a 401(k) or an IRA, consider increasing or maximizing your contributions before the year ends. Contributions to these accounts are often tax-deductible, which can significantly lower your taxable income.
Related Resource: WAEPA’s Retirement Planning Resources >
2. Harvest Tax Losses
Do you own investments that have fallen in value? Consider selling them to realize the losses. This strategy, known as tax-loss harvesting, allows you to offset gains from other taxable investments, reducing your overall tax liability. Be mindful of the “wash sale” rule, which prohibits repurchasing the same or a similar security within 30 days.
3. Make Charitable Contributions
Donating to qualified charities not only helps those in need but can also provide you with a tax deduction. Consider making contributions before the year ends to maximize your deductions. If you hold assets that have appreciated in value, such as stocks, donating them can help you avoid capital gains taxes while still receiving a deduction.
4. Review Your Withholding
As the year ends, review your tax withholding to ensure you're not overpaying or underpaying taxes. Adjust your W-4 form with your employer if necessary. This can help you avoid a large tax bill or a refund when you file your return.
WAEPA’s Free Financial Wellness Program
WAEPA members have access to a free Financial Wellness Program through our partnership with Ernst + Young (EY). This program includes access to tools and financial advisors to help manage day-to-day finances and work towards long-term goals.
Content courtesy of Ernst + Young (EY), © 2025 Ernst & Young LLP. All Rights Reserved. FinPlantFS 4.2025
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