2025 Year-End Tax Planning Guide for Individuals & Families

Why it matters

As 2025 draws to a close, high-net-worth individuals and families face a critical window for strategic tax planning:

• The One Big Beautiful Bill Act (OBBBA)’s federal tax policy changes reshaped thresholds, limits and coordination strategies for high-net-worth individuals and families.
• Revisiting your financial strategy now — especially around gifting, investing and retirement — can help ensure tax efficiency and alignment with today’s evolving rules.
• Every move matters. From charitable giving to income recognition, each decision creates ripple effects across your financial life, making expert guidance essential.

2025 Year-End Tax Strategies for Individuals & Families

Earlier this year, the One Big Beautiful Bill Act (OBBBA) introduced sweeping updates to federal tax policy, reshaping thresholds, limits and coordination strategies for high-net-worth individuals and families.

Originally, the Tax Cuts and Jobs Act (TCJA) was set to expire at year-end. But the OBBBA extended many of its key provisions and, in some cases, made them permanent. While this brings greater long-term stability to the tax code, it also introduces new planning considerations, particularly around timing, income recognition and private wealth transfer.

At the same time, inflation and interest rates are beginning to settle, but uncertainty around future tax policy remains. That’s why now is a smart time to revisit your strategy. Aligning your gifting, investment and retirement decisions with today’s rules can help position your family for continued tax efficiency and prepare you for whatever comes next.

Every personal tax decision, from charitable giving to income deferral, creates ripple effects across your entire financial landscape. Working closely with a trusted advisor can help you make sure that each move fits your broader goals and makes the most of this new tax era.

• Time Revenue for Tax Impact — Deferral or Acceleration?
• Factor in the Alternative Minimum Tax
• Expect a 37% Marginal Income Tax Rate and 20% Capital Gains Rate
• Contribute to Tax-Advantaged Retirement Accounts
• Take Your Required Minimum Distributions
• Note the Biggest SECURE 2.0 Changes
• Explore the Potential Benefits of a Roth Conversion
• Understand Roth-Specific SECURE 2.0 Rules
• Claim Credit for Eligible Business Travel and Meal Expenses
• Review the Top 10 Tax Trivia Facts You Need to Know in 2025
• Jump on These Important Tax Planning Action Items
• Take a Deep Dive Into Tax-Smart Gifting Strategies
• Plan for Tax-Efficient Wealth Transfer
• Use Irrevocable Life Insurance Trusts Effectively
• Understand Your Goals and Motivations

Time Revenue for Tax Impact — Deferral or Acceleration?

Timing still makes a world of difference in tax planning, but under the new rules introduced by the OBBBA, the stakes are higher and the rules more complex. Traditional advice like deferring income and accelerating deductions may not always apply. With new thresholds, phaseouts and sunset provisions now in play, your timing strategy should be tailored to your unique financial picture.

Schedule an in-depth review with your tax professional now to determine the best option for your specific situation. That conversation should guide the actions you take before the end of 2025.

• If income deferral is right for you: Look for opportunities to shift income into 2026. For example, you may be able to defer a year-end bonus, invoicing or asset sales. This strategy could allow you to postpone paying tax on the income until next year, which may be especially beneficial if you expect to fall into a lower tax bracket or you want to stay under key adjusted gross income (AGI) thresholds that affect deductions and credits.
• If accelerating deductions makes sense this year: Consider pulling all deductible expenses into 2025. With charitable giving rules changing in 2026 — including a new 0.5% AGI floor on itemized deductions — this may be the last year to fully benefit from certain contributions. For instance, if you itemize deductions, you might accelerate deductible expenses like medical expenses, qualifying interest or charitable gifts. Making next year’s charitable contributions now could help you clear the new AGI floor and maximize your deduction before the cap takes effect.
• If the reverse is true: Depending on your financial situation, it may be most helpful to take the opposite approach — accelerating income into 2025 and delaying deductions until 2026.
• If a balanced approach works best: Spreading income and deductions across 2025 and 2026 may help you avoid spikes that trigger surtaxes, AMT exposure or deduction phaseouts. With OBBBA introducing new thresholds and limitations, a multi-year strategy can help smooth your taxable income and preserve more deductions. Carefully review your projected income and deductions with your advisor to identify the most tax-efficient path forward.

Factor in the Alternative Minimum Tax

While the alternative minimum tax (AMT) affects fewer taxpayers than it used to, it can still be an important consideration for high-income individuals, especially those with incentive stock options, significant capital gains or large state and local tax deductions.

The OBBBA permanently keeps the TCJA’s higher AMT exemption amounts, but changes the phaseout rules starting in 2026, which could increase AMT exposure for some taxpayers. The nuance here is tricky, so you’ll want to talk to a tax professional:

• The AMT exists to ensure everyone pays a “minimum” level of tax. It’s a parallel tax system with its own rules and rates (26% and 28%). You calculate your tax under both the regular system and the AMT, then pay the higher of your regular tax or the tentative minimum tax.
• AMT planning can be counterintuitive. Traditional year-end actions like deferring income or accelerating deductions may backfire if you’re subject to AMT. That’s because AMT effectively disallows certain deductions (like state and local taxes) and adds back items like tax-exempt interest and ISO exercise spreads.
• You can control some AMT triggers. Your tax advisor can help you calculate AMT exposure by factoring in ISO exercises, especially if you hold the shares after exercising. They will also consider tax-exempt interest earned on certain private-activity municipal bonds, Schedule K-1 adjustments from partnerships or trusts and SALT deductions, which are disallowed under AMT even though the cap has increased to $40,000 under regular tax rules.
• ISO timing matters. Exercising ISOs when your regular tax exceeds AMT can allow you to capture favorable tax treatment without triggering additional liability. Selling ISO shares within the same year (disqualifying disposition) may also help offset AMT exposure.
• Previous ISO events may help your current tax situation. If you’ve exercised ISO in prior years and paid AMT, you may be eligible for AMT credits — though OBBBA narrows eligibility for high-income earners starting in 2026. Review your ISO history with your tax advisor to determine the best approach.
• The AMT exemption is indexed for inflation. For the 2025 tax year, the AMT exemption amounts are:
  • $137,000 for married taxpayers filing jointly.
  • $88,100 for single filers.
  • $68,500 for married taxpayers filing separately.
  The exemption begins to phase out if your alternative minimum taxable income (AMTI) exceeds:
  • $1,252,700 for joint filers.
  • $626,350 for single and separate filers.

Expect a 37% Marginal Income Tax Rate and 20% Capital Gains Rate

The OBBBA made the TCJA’s rate structure permanent, so the top marginal income and capital gains rates remain unchanged for 2025. But inflation rates have shifted the income thresholds, and phaseouts tied to AGI still apply, making it essential to know where you stand before year-end.

• The top marginal tax rate remains at 37% in 2025. This rate applies to taxable income that exceeds:
  • $626,350 if single.
  • $751,600 if married filing jointly.
  • $375,800 if married filing separately.
  • $626,350 if head of household.
• The top capital gains rate is 20%. Your long-term capital gains and qualifying dividends could be taxed at this rate in 2025 if your taxable income exceeds:
  • $533,400 if single.
  • $600,050 if married filing jointly or a surviving spouse.
  • $300,000 if married filing separately.
  • $566,700 if head of household.
• Don’t forget the net investment income tax. As a top earner, you may owe an additional 3.8% net investment income tax (unearned income Medicare contribution tax). This tax could apply to some or all of your net investment income if your modified AGI exceeds the applicable threshold for your filing status:
  • $200,000 if single and/or head of household.
  • $250,000 if married filing jointly or widowed with a dependent child.
  • $125,000 if married filing separately.
• There’s also an additional Medicare tax. You’ll be subject to an extra 0.9% Medicare (hospital insurance) payroll tax on wages exceeding:
  • $200,000 if single, head of household or a surviving spouse.
  • $250,000 if married filing jointly.
  • $125,000 if married filing separately.

Contribute to Tax-Advantaged Retirement Accounts

Maxing out your retirement contributions is still one of the most effective ways to reduce taxable income and build long-term wealth. While high income may limit your options, it’s worth reviewing the updated thresholds to see where you can still contribute or convert.

• Anyone with taxable compensation can contribute to a traditional IRA. The limit is $7,000 for 2025, or $8,000 if you’re age 50 or older. If you have access to a retirement plan through your job, then you can’t deduct those contributions if your income is greater than:
  • $89,000 if single.
  • $146,000 if married filing jointly.
  • $10,000 if married filing separately.
  
  Deductibility on traditional IRA contributions begins to phase out at:
  • $79,000 if single.
  • $126,000 if married filing jointly.
  • $0 if married filing separately.
  If your income exceeds those limits but is below the cap on deductibility, you may be able to claim a partial deduction or make a traditional non-deductible contribution.
• Your spouse’s retirement plan matters, too. If your spouse participates in a job-based retirement plan, you’ll face income limits on the deductibility of your contributions to your traditional IRA:
  • Phase-out begins at $236,000 (married filing jointly) and $0 (married filing separately).
  • Contributions are not deductible if your income exceeds $246,000 (married filing jointly) or $10,000 (married filing separately).
• Contributions to a Roth IRA or a Roth 401(k) are never deductible. That means there’s no immediate tax benefit. The payoff comes later because qualified Roth distributions are completely free from federal income tax. You can contribute to a Roth IRA in 2025 if your modified AGI is less than:
  • $150,000 for single filers.
  • $236,000 for married taxpayers filing jointly.
  • $10,000 for married taxpayers filing separately.
• The maximum Roth IRA contribution for 2025 is $7,000 or $8,000 if you’re 50 or older. There’s an income phase-out for these accounts, though, so you won’t be able to contribute the full amount if your 2025 modified AGI is more than:
  • $150,000 for single filers.
  • $236,000 if you’re married filing jointly.
  • $0 if you’re married filing separately.
• You can contribute up to $23,500 to your 401(k) plan in 2025. If you’re at least 50 years old, the limit rises to $31,000. The limits apply across both traditional and Roth 401(k) accounts.
• Contributions to a Simplified Employee Pension Plan (SEP) have wage-related limits. You can contribute up to $70,000 or 25% of eligible compensation in 2025, whichever is less. For sole proprietors, the 25% calculation is based on net self-employment income, which includes adjustments for factors like self-employment taxes. For employees, it’s based on wages.

Take Your Required Minimum Distributions

Required minimum distributions (RMDs) are the minimum amount you must withdraw annually from your retirement accounts each year after you reach the required age. Planning ahead helps you manage tax consequences of these distributions, especially in your first year of RMDs. (If you also make charitable contributions, explore the contribution discussion for another planning opportunity.)

• You must start taking RMDs when you reach age 73. If you miss an RMD, you’ll owe a penalty of 25% which applies to the amount you failed to withdraw. If corrected within two years, the penalty drops to 10%.
• You can defer your first RMD until April 1 of the year after you reach the required age. All subsequent RMDs must be taken by December 31. Deferring the first RMD could result in two taxable distributions in one year. For example, if you turn 73 in 2025, you can take your first distribution by April 1, 2026. However, you’ll still need to take your second RMD by December 31, 2026, which could result in two taxable distributions in one year.
• Roth accounts are not subject to RMDs. Original owners of Roth IRAs, Roth 401(k)s or Roth 403(b)s are not subject to lifetime RMDs, so you can leave funds in the account for as long as you like. Beneficiaries, however, are subject to RMD rules.
• RMD rules differ for inherited retirement accounts. If you inherit a retirement account, you may have to take distributions earlier, depending on the type of account and your relationship to the original account owner. Most non-spouse beneficiaries must deplete inherited IRAs within 10 years and may be required to take annual RMDs depending on the account owner’s age at death. Your tax advisor can help you determine when you are subject to RMDs.

Note the Biggest SECURE 2.0 Changes

The Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act continues to reshape retirement planning, with several key provisions now in effect or newly activated for 2025. Key SECURE 2.0 updates include:

• Penalty-free withdrawals for emergencies, domestic abuse, terminal illness and qualified disasters remain available under SECURE 2.0. Check whether your plan offers these options.
• IRA catch-up contributions indexed for inflation. The $1,000 catch-up contribution limit for individuals age 50+ applies in 2025 and will adjust annually going forward.
• Enhanced catch-up contributions for ages 60 to 63. If you’re in this age range, you can contribute up to $11,250 to eligible workplace plans in 2025 — 150% of the standard catch-up limit. This applies to 401(k), 403(b) and 457(b) plans and will be indexed for inflation starting in 2026.
• Roth catch-up requirement begins in 2026. Starting next year, catch-up contributions for participants with prior-year wages exceeding $145,000 (indexed) must be made as after-tax Roth contributions. Review your deferral strategy now to prepare.

Explore the Potential Benefits of a Roth Conversion

Is a Roth conversion right for you? Year-end is a great time to evaluate whether it makes sense to convert a tax-deferred account like a traditional IRA or a 401(k) to a Roth account to reduce future tax liability. Here’s what to know about a potential conversion in 2025:

• You’ll pay more taxes this year. When you convert a traditional IRA to a Roth IRA or a traditional 401(k) to a Roth 401(k), the amount converted is taxed as ordinary income in the year of conversion. This doesn’t apply to any non-deductible after-tax contributions already in the account.
• Taking the one-time tax hit can be a smart move. Once the funds are in a designated Roth account, qualified withdrawals are tax-free. And if you have net operating losses (NOLS) or other deductions available in the year you make the conversion, they may be able to offset most or all of the tax liability from a conversion.
• Timing is critical. With the TCJA tax brackets now made permanent under OBBBA, conversions remain attractive — especially in 2025, before new deduction limits take effect. But conversions increase your income, which can trigger phaseouts for deductions, Medicare income-related monthly adjusted amount surcharges and higher state taxes in places like California.
• It’s a complicated decision. Whether a Roth conversion is right for you depends on many factors. The decision demands a thorough analysis of your current and projected income, available deductions, applicable tax rates and long-term goals. Always discuss the potential costs and benefits with your tax advisor before you commit to a Roth conversion.

Understand Roth-Specific SECURE 2.0 Rules

Several SECURE 2.0 provisions continue to affect how Roth accounts function within retirement plans. These updates affect contribution types, employer plan design and rollover flexibility, all of which may influence your year-end strategy. SECURE 2.0’s new Roth-related rules include:

• Mandatory Roth catch-up contributions begin in 2026. If your prior-year wages exceed $145,000 (indexed for inflation), any catch-up contributions you make at age 50+ must be designated as Roth (after tax). This applies to 401(k), 403(b) and governmental 457(b) plans. Plans that don’t offer Roth options will need to restrict catch-up contributions for affected participants.
• Optional Roth treatment for employer contributions. If you’re participating in a 401(k), 403(b) and 457(b) plan through your employer, SECURE 2.0 gives you the right to receive some or all of your matching contributions and nonelective contributions in the form of Roth contributions — if your plan allows it and you’re fully vested. These contributions are taxable in the year they’re made and reported on Form 1099-R, not through payroll.
• 529-to-Roth IRA rollovers. If you’re the beneficiary of a Section 529 educational savings account, you may roll over unused funds into a Roth IRA, tax- and penalty-free, up to a lifetime limit of $35,000. To qualify:
  • The 529 account must have been in place for at least 15 years.
  • Contributions made in the last five years are ineligible.
  • Rollovers are subject to annual Roth IRA contribution limits (e.g., $7,000 in 2025).
  • The beneficiary must have earned income equal to the rollover amount.

Claim Credit for Eligible Business Travel and Meal Expenses

Under current tax law, you can only claim a tax deduction for business travel and meal expenses if you’re self-employed. If that applies to you, then be sure to keep records and receipts to document expenses that directly relate to your business travel:

• Required travel expenses are 100% deductible. You can deduct costs for airfare, cab fare, hotels and other travel necessities.
• Only legitimate business expenses qualify. Outings not tied to your business aren’t eligible. Entertainment expenses remain non-deductible — even if business-related.
• You can deduct 50% of the cost of meals on business travel. That’s true even if you’re not conducting business during the meal. All meals and lodging must qualify as reasonable. The IRS won’t allow you to deduct “lavish or extravagant” expenses.
• If the trip is a mix of business and pleasure, you’ll need to separate the costs. You can’t deduct hotels, meals or transportation costs you incur during personal days. The trip also has to be primarily for business or you can’t deduct any of the costs.
• Local business meals qualify for the same 50% deduction. You don’t lose your tax deduction just because the business meeting is in your hometown. As long as the expense is reasonable and tied to a business purpose, like hosting clients or discussing a potential deal, it’s eligible.
• The standard business mileage rate is 70 cents per mile in 2025. You can choose to deduct actual expenses instead (and might get a bigger deduction), but doing so requires meticulously detailed recordkeeping. Most people find the standard rate easier to manage. To claim the standard rate, keep a log of business travel that includes:
  • Who you met.
  • Where you went.
  • Purpose of the trip.
  • Number of miles traveled.

Review the Top 10 Tax Trivia Facts You Need to Know in 2025

Reading the entire tax code would take a lifetime or longer (and probably wouldn’t be a lot of fun). Luckily, you can skip that and stay in the know with these highlights for 2025.

1. The standard deduction is:
   • $15,750 for single filers and those married filing separately.
   • $31,500 for married filing jointly and qualifying surviving spouses.
   • $23,625 for head of household.
2. The annual gift tax exclusion is $19,000 per recipient. You and your spouse can each give up to the limit to as many different people as you choose.
3. You can deduct qualified, unreimbursed medical and dental expenses for yourself, your spouse and your dependents, but only for the portion that exceeds 7.5% of your AGI.
4. You can deduct up to $40,000 ($20,000 if married filing separately) for state and local income, sales and property taxes, a significant increase under the OBBBA from the previous cap of $10,000. However, this benefit begins to phase out once your Modified Adjusted Gross Income (MAGI) exceeds $500,000 (or $250,000 if married filing separately) and expires after 2029. For incomes above $600,000 ($300,000 if married filing separately), the deduction reverts back to the original cap of $10,000 (or $5,000 if married filing separately).
5. You can deduct mortgage interest on up to $750,000 ($375,000 for married filing separately) of qualifying debt. Mortgages that originated before December 16, 2017, may still qualify for the $1 million cap ($500,000 for married filing separately).
6. Home equity loan interest is not deductible unless the loan was used to make substantial home improvements.
7. Personal casualty and theft losses from federally declared disasters may be deductible, but only to the extent they exceed insurance reimbursements. Business casualty and theft losses are also deductible, with fewer restrictions.
8. Miscellaneous itemized deductions subject to the 2% floor, such as investment expenses and unreimbursed employee business expenses, remain non-deductible at the federal level. But talk with your advisor because some states still allow them.
9. Bonus depreciation is back at 100% for qualified business property acquired and placed in service after January 19, 2025. Property placed in service earlier in the year may only qualify for 40%.
10. You can carry net operating losses (NOLs) forward but these are limited to offsetting 80% of taxable income in any given year. Carrybacks are generally disallowed.

Jump on These Important Tax Planning Action Items

Many tax planning opportunities have a hard cutoff at the end of each year. Review this short list of to-do items so you don’t miss the tax savings boat:

• Perform tax-loss harvesting. Even the most successful investment portfolio usually has some losers in the mix. You may want to harvest capital losses to offset any gains you’ll recognize in 2025. If losses exceed gains, you can use up to $3,000 to offset ordinary income and carry the rest forward indefinitely.
• Tell your tax advisor about life changes. Many life events can make a huge difference in your tax picture. Your advisor needs to know what’s going on so they can make the appropriate elections, adjustments and projections. Report things like:
  • Marriage or divorce.
  • Births and deaths in the family.
  • Job or employment changes.
  • Starting a business.
  • Significant expenditures (e.g., real estate purchases or college tuition).
• Consider funding or contributing to an existing Section 529 Plan. These accounts still offer tax-advantaged ways to fund education for family members. Under SECURE 2.0, you may also be able to roll up to $35,000 in unused 529 funds into a Roth IRA for the beneficiary (subject to annual contribution limits and eligibility rules).
• Consider a Roth conversion. If 2025 is a good time for you to roll over funds from a traditional IRA or 401(k) to a Roth IRA, remember to complete the conversion process before December 31.

Take a Deep Dive Into Tax-Smart Gifting Strategies

You give because it matters. With the right strategy, your generosity can also deliver real tax benefits. Here are some tips to help your giving make the most impact and save you money on taxes:

• Think through your charitable giving. You and your family have very personal reasons for making charitable gifts. Those reasons probably include helping others, making a difference in the community, creating a family legacy and reducing your income tax liability.
  While planning your annual charitable gifts, consider how layering an intentional year-end gift into your overall strategy can reduce your 2025 tax bill. For itemizers, charitable gifts offset income taxed at your highest marginal rate — still 37% in 2025.
• Make gifts to public charities. You can claim an itemized deduction for your contributions to qualified public charities. There’s an almost limitless number of IRS-approved charities, from large organizations like the United Way and the American Red Cross to art museums, hospitals, educational institutions and religious groups. You can deduct cash gifts to public charities up to 60% of your AGI. If your gift is in the form of publicly traded securities, artwork or other appreciated property, you can deduct their value up to 30% of your AGI, but only if you’ve held the assets for at least a year and a day. These limits remain unchanged under current law.
• Consider giving through a donor-advised fund (DAF). These charitable vehicles let you claim a tax deduction now while retaining control over when and where the funds are distributed. Contributions to a DAF are deductible like other gifts to public charities, up to 60% of AGI for cash gifts and 30% for appreciated assets. With deduction limits expected to tighten in 2026, DAFs are a powerful tool for “bunching” gifts into 2025 to maximize your tax benefit.
• Establish a private foundation. A private foundation allows your family’s charitable legacies to continue through multiple generations. It offers you greater administrative control over assets and grant-making powers, with a board composed of family members and other trusted advisors. But a private foundation isn’t right for everyone. Along with their many benefits, they come with additional administrative requirements.
  These organizations pay a minimum excise tax of 1.39% on their net investment income and have annual distribution requirements. Filing requirements include getting tax-exempt status and submitting annual federal and state tax returns.
  • Cash gifts to a private foundation are deductible up to 30% of your AGI.
  • Gifts of appreciated property are deductible up to 20% of AGI.
• Take qualified charitable distributions from retirement accounts. You can turn RMDs into a tax-smart giving opportunity by making a qualified charitable distribution (QCD). A QCD is a direct transfer of funds from your IRA custodian to one or more public charities. Amounts up to $108,000 per person in 2025 won’t count as taxable income. For couples, that’s up to $216,000 total. (Transfer more if you like, but it will be a taxable distribution.)
  You can begin making QCDs at age 70 ½, even though RMDs don’t start until age 73. QCDs can satisfy all or part of your RMD for the year. Note:
  • DAFs and private foundations do not qualify as QCD recipients.
  • Only IRAs are eligible for QCDs, not 401(k)s or other retirement plans.
  • If you’re interested in making a similar donation from another type of retirement account, talk to your advisor about potential workarounds.
• Form a charitable split-interest trust.
  • A charitable remainder trust lets you donate assets like low-basis marketable securities. You’ll receive an immediate tax deduction for the present value of the charitable beneficiaries’ remainder interest and then collect an annuity stream back from the trust. At the conclusion of its term, the trust ends with a residual donation to one or more charities. The remainder must equal at least 10% of the initial fair market value of the assets placed in the trust.
  • A charitable lead annuity trust allows you to contribute to the trust and benefit from a substantial tax deduction in the year of contribution. The trust pays out an annuity stream to the charitable organizations you choose (which can include public charities, DAFs and private foundations) over the term of the trust. The remainder interest in the trust at the end of the term transfers to the residual beneficiaries that you’ve named (either individually or in trust), free of gift or estate tax. This strategy is especially useful if you’ve already used up your lifetime exemption and want to transfer additional wealth tax-efficiently.
  • These charitable trusts take time to establish, and it’s important to select the right assets to contribute. They also require filing annual split-interest trust tax returns with the IRS. Consult your tax and estate planning advisors if either of these split-interest trusts sound like solutions for your personal, estate, gift and charitable goals.
• Factor charitable giving considerations into your gifting plan. The IRS has many rules that affect the deductibility and net tax impact of your gift. Always work with your advisor to address these considerations before making a gift or claiming a related tax benefit:
  • Substantiating charitable gifts. For all gifts above $250, you’ll need a receipt from the charity. This applies to all charities, including DAFs and your own private foundations. The receipt should:
    • Be in writing (emails are okay).
    • State the amount or value of the cash or property donated.
    • Describe the nature of any non-cash donation (such as XX shares of ABC company stock).
    • Disclose any goods or services received in return.
  • Verifying the holding period and nature of gifted assets. How long you’ve held an asset you later donate can make a big difference in your tax deduction amount. You can claim the fair market value of donated assets that:
    • Meet long-term holding period requirements (that’s at least a year and a day). Short-term holdings are only deductible at cost basis.
    • Have readily available market quotes for the value of the stock.
  • Timing your gifts for tax purposes. Any gift you initiate before midnight on December 31, 2025, counts for this tax year, even if the charity receives it in January. “Initiate” means you’ve requested an online transfer, charged a credit card or mailed a check postmarked by year-end. But be careful here. Many last-minute gifts aren’t considered complete in time to qualify for a current-year tax deduction. Allow plenty of time so you can be sure you’ll get the credit you’re counting on.
  • Making complex gifts. Begin discussions with the receiving organization early if you plan to donate partnership interests, company stock or hard-to-value assets. Many public charities and DAF sponsors have cutoff dates in mid-December for accepting these types of gifts.
  • Seeking qualified appraisals. If you donate non-cash assets worth more than $5,000, the IRS requires a qualified appraisal. For gifts of greater than $500,000, you must attach the full appraisal to your tax return. The appraisal must be:
    • Prepared by a qualified appraiser.
    • Dated no earlier than 60 days before the gift.
    • Received before the due date of your return, including extensions.
  • Bunching charitable gifts. With the 2025 standard deduction of $15,750 (single) and $31,500 (married filing jointly), you may want to bunch two years of donations into one to exceed the threshold and itemize. You’d then claim the larger standard deduction in alternating years. This strategy works well for recurring gifts, such as tithing or annual support for nonprofits.

Plan for Tax-Efficient Wealth Transfer

It’s impossible to overstate how important it is to use the federal estate and gift tax exemption while it remains historically high. This provision offers a rare opportunity to transfer significant wealth tax-free. And while the urgency has shifted under the OBBBA, strategic planning is still essential.

The 2025 estate tax exemption is $13.99 million per person ($27.98 million per married couple) and will increase to $15 million per person ($30 million per couple) in 2026, with future adjustments indexed for inflation. The TCJA sunset provision has been repealed, so the exemption will not revert to around $7 million as previously expected.

Even with the exemption preserved, you may still benefit from acting now, especially to remove future appreciation from your estate.

• Use it or lose it — strategically. Consider making large gifts, either outright or in trust, to fully utilize your lifetime exemption. Your advisor can help you evaluate your estate makeup, cash flow and family goals. Depending on your situation, you might:
  • Gift cash or marketable securities.
  • Gift a partnership interest at a discount.
  • Gift shares of an S- or C-corporation (including qualified small business stock) at possible discounts.
  • Gift real estate (watch for reassessment rules in states like California).
  • Forgive an existing intra-family loan.
  • Structure part-sale/part-gift transactions.
  • Gift tangible personal property (art, cars, collectibles).
  • Gift partial interest in assets to get valuation discounts.
• Explore the benefits of a grantor trust. Under IRS rules, you can structure a trust that’s treated as a grantor trust for income tax purposes and a completed gift for estate and gift tax purposes.
  • The assets placed in a grantor trust are excluded from your estate. Meanwhile, the trust is treated as a disregarded entity for income tax purposes, meaning you pay the taxes on its income, not the trust itself. This setup allows the trust to grow without incurring its own tax liability, effectively benefiting your beneficiaries while avoiding additional gift tax implications.
  • You can also sell assets to the trust. And since the trust is ignored for income tax purposes, the sale doesn’t trigger a gain at the time of the sale.
  • If you sell assets to the trust as an installment sale with a promissory note over a period of years, you don’t have to report the interest payments on the installment sale as taxable income. That’s because, for income tax purposes, it is as though you are selling an asset to yourself.
  • Depending on how your trust agreement is drafted, you can include features like powers of substitution, allowing you to swap assets of equivalent value for income tax and cash flow planning. You may also choose to “toggle off” grantor status by releasing certain powers, shifting the income tax burden back to the trust when it makes sense.
  • A grantor trust offers significant flexibility. By building in adaptable provisions, you can respond to future legislative shifts or changes in your personal financial situation without losing the advantages of the trust.
• Use up one spouse’s exemption and keep the other. If you’re married and don’t plan to gift an amount up to the current exemption limit during your lifetime, consider having one spouse use their lifetime exemption while the other retains theirs. For example:
  • If you gift $13.99 million in 2025 and split it, both spouses use nearly $7 million of their respective lifetime exemptions. But if only one spouse makes the full gift, the other retains their full exemption in 2026 — which will be $15 million. This strategy allows you to shield more assets from estate tax over time.
• Update your estate plan. It’s easy to procrastinate drafting and updating estate planning documents — but outdated or incomplete plans can be costly for your beneficiaries and prevent you from leaving the legacy you’d wanted. Avoid that outcome by taking concrete steps:
  • Contact your estate planning attorney to draft or revise wills, trusts and healthcare directives.
  • If you already have estate documents, take time to review them closely and make any necessary changes and updates. This is especially important if you’ve had family or financial changes (birth, death, marriage, divorce, job change, inheritance, adult children becoming financially independent, etc.)
  • Confirm that all assets are properly titled. Assets in a trust need to be titled in the trust’s name, or the trust becomes useless. Setting up a trust won’t avoid probate unless you actually transfer the assets to the trust.
• Review irrevocable non-grantor trust distribution powers. If your trust allows discretionary distributions, consult with your advisor to determine whether to make them before year-end:
  • Review the current 1041 income tax rates versus the rates that apply to individual beneficiaries. This can help you evaluate the potential income tax benefit of making distributions.
  • For complex trusts, you can make distributions for the prior income tax year within 65 days of the trust’s year-end.
  • Consider a pause or delay in making distributions if:
    • The trust agreement limits the trustee’s ability to make distributions, and doing so could violate the agreement.
    • Assets in the trust are protected from the beneficiaries’ creditors, and a distribution could make the distributed assets vulnerable.
    • You feel that a beneficiary does not have the judgment to manage a distribution responsibly. In this case, paying taxes at the trust level may be a better idea.
    • The terms of an irrevocable trust no longer meet your objectives. In this case, you should talk with your advisor because there may be ways to restructure the trust under your state’s trust laws.
• Assess additional strategies to manage exceptional wealth. If you’re dealing with a level of assets or income that pushes you into the ultra-high-net-worth category, there are more tactics you can use to manage your tax burden. Consult an experienced tax advisor to talk through estate planning techniques that could be helpful in your situation, including:
  • Grantor retained annuity trusts.
  • Sales to intentionally defective grantor trusts.
  • Charitable lead trusts.
  • Refinancing old family loans.
  • The sale of remainder interests.
  • Annual exclusion gifting.
  • Direct payments of tuition or medical expenses.
  • Funding Section 529 plans for children or grandchildren, including looking at funding with five years of annual exclusion gifts.
  • Late allocation of unused generation-skipping transfer tax exemption to prior appreciated gifts.

Use Irrevocable Life Insurance Trusts Effectively

Irrevocable life insurance trusts (ILITs) remain a useful estate planning tool for high-net-worth individuals and families. They serve as both a financial asset and a strategic lever to reduce estate tax exposure.

If you’re considering establishing an ILIT, or you already have one, keep these insights in mind:

• ILITs help reduce estate tax liability. If you own an insurance policy in your own name, it’s typically part of your taxable estate. When an ILIT owns the policy and pays the premiums, the death benefit is excluded from your estate, potentially saving you millions in estate taxes.
• An ILIT provides liquidity when it’s needed most. Upon your passing, the ILIT receives the insurance payout, which can be used to loan funds to your estate, This can prevent the forced sale of illiquid assets to meet estate tax obligations, which are due nine months after death.
• You can use ILITs to achieve year-end gifting goals. The IRS treats premiums you pay into an ILIT as gifts to the trust beneficiaries. In 2025, the annual gift tax exclusion is $19,000 per recipient ($38,000 for married couples). You can use this exclusion to prefund multiple years of premiums, helping reduce your taxable estate while avoiding gift tax. Prefunding also protects against future premium increases that could potentially exceed the annual exclusion.
• ILITs are not “set it and forget it” structures. Work with your advisor to review the trust regularly and address questions like:
  • Are the ownership and beneficiary designations up to date?
  • Is the policy functioning as expected? For example, has the trust experienced shortfalls in funding? Are better-suited products emerging?
  • Does the ILIT still align with your overall estate plan?
  • Should you file an annual gift tax return for premium payments to track gift and generation-skipping transfer exemptions?

Understand Your Goals and Motivations

While a tax advisor can help you save money and make plans, there are some questions that they can’t answer:

• Why do you do what you do?
• What’s important to you?
• What’s your “why” for preserving wealth?

Naturally, the answers are different for everyone. But thinking through these questions helps you create a tax-planning strategy that truly works for you and your family — when you have the right team behind you.

Tax planning shouldn’t be limited to last-minute year-end adjustments. Instead, it should be a year-round, collaborative process involving regular meetings with your CPA, estate planning attorney and financial advisor.

This approach lets you do much more than stay compliant and capture a few tax benefits. By getting to know you and your family, your financial team can help you design strategies that fit your personal philosophies and preferences, as well as your family dynamics.

By keeping open lines of communication, your team can work together seamlessly to put your overarching financial plan into action. This collaboration means less stress for you and helps you reduce your lifetime tax burden, preserve your wealth and achieve your legacy goals.

Achieve Your Goals With Smarter Year-End Tax Planning

We know year-end tax planning can feel overwhelming, especially when you’re managing significant income and assets. If you’re unsure where to start or which strategies to prioritize, we can help. Find out how Armanino’s private tax planning advisors can help you apply the latest year-end tax strategies, minimize your tax liability and preserve wealth.