Year-End Tax Planning 2025: 7 Critical Moves Before the TCJA Expires

It is December 11, 2025. The clock is ticking louder than usual this year.

Usually, year-end financial planning is a routine checklist: check your spending, buy a few gifts, maybe toss some money into savings. But 2025 is different. We are standing on the precipice of what financial experts are calling "The Great Tax Sunset." On December 31, 2025, the majority of the individual income tax provisions from the Tax Cuts and Jobs Act (TCJA) of 2017 are set to expire.

What does this mean for you? Unless Congress acts at the last minute (which looks unlikely), January 1, 2026, will bring higher tax rates, lower standard deductions, and a shrinking estate tax exemption. The window to lock in the lower tax rates of the last eight years is closing fast.

In this guide, we are going to walk through high-impact year-end tax planning 2025 strategies. These aren't just generic tips; these are urgent maneuvers to protect your wealth before the calendar flips. Let’s dive in.

1. Understand the "Sunset": Why 2026 Tax Bracket Changes Matter

Before you make a move, you need to understand the stakes. When the ball drops for 2026, the tax brackets revert to pre-2018 levels (adjusted for inflation). For many Americans, the marginal tax rate could jump by 2% to 4%.

The 12% bracket may return to 15%.
The 22% bracket may return to 25%.
The 24% bracket may return to 28%.
The 37% top bracket may return to 39.6%.

The Strategy: The goal of TCJA expiration 2025 explained simply is this: Accelerate income into 2025 while rates are low, and defer deductions into 2026 when they are worth more. This is the opposite of standard tax advice, but these are unique times.

2. The Roth Conversion Strategy: Pay Now, Save Later

One of the most powerful tools in your arsenal right now is the Roth conversion. Since income tax rates are likely lower right now than they will be in a month, it makes mathematical sense to pay taxes on your retirement savings now rather than later.

How to Execute a Roth Conversion Before the Deadline

You can take funds from your Traditional IRA (pre-tax) and convert them to a Roth IRA (after-tax). You will add that amount to your 2025 taxable income, paying the current lower rate.

Why do this? Once the money is in the Roth, it grows tax-free forever. If you wait until 2026 to withdraw or convert, you could be paying a significantly higher percentage to Uncle Sam. Be mindful of the Roth conversion deadline December 2025—the funds usually need to leave the traditional account by December 31st.

Warning: Converting too much could bump you into a higher tax bracket this year. Consult a CPA to find your "break-even" point.

3. "Bunching" Itemized Deductions

The TCJA nearly doubled the standard deduction, causing millions of Americans to stop itemizing. However, if the standard deduction is cut in half in 2026 as predicted, itemizing will come back in style.

However, for the 2025 tax year, the standard deduction is still high. A smart move is bunching itemized deductions.

How Bunching Works

Instead of giving $5,000 to charity in 2025 and $5,000 in 2026, you might choose to give $10,000 in 2025 (or wait and give $10,000 in 2026 depending on your strategy). However, specifically for 2025:

Medical Expenses: If you are close to the threshold (7.5% of AGI), pay for braces, LASIK, or elective surgeries before December 31st.
State and Local Taxes (SALT): The SALT cap expiration 2026 is highly anticipated. The current $10,000 cap has limited many taxpayers. While you can't prepay 2026 taxes to get around the cap now, keep an eye on this for your January planning.

4. Max Out Retirement Contributions (The Basics)

Before getting too complex, ensure you have hit the basics. Max out 401k limits 2025 to lower your taxable income if you are a high earner.

401(k) / 403(b): Ensure you've hit the contribution limit (check the specific 2025 inflation-adjusted limit, likely around $23,500+).
HSA (Health Savings Account): This is triple-tax-advantaged. The HSA contribution limits 2025 allow you to reduce taxable income today and pull money out tax-free for medical expenses. The deadline is technically April 2026, but getting it done by year-end simplifies your W-2.

5. Tax Loss Harvesting: Resetting Your Portfolio

The stock market has been volatile. If you have holding in your taxable brokerage account that are down, use tax loss harvesting rules 2025 to your advantage.

You can sell assets at a loss to offset capital gains. If your losses exceed your gains, you can use up to $3,000 of excess loss to offset your ordinary income (like your salary). This is a guaranteed way to lower your tax bill.

Watch out for the Wash Sale Rule: You cannot sell a security for a loss and buy the same or a "substantially identical" security within 30 days before or after the sale. If you do, the loss is disallowed. This applies to stocks and ETFs. Be careful with the wash sale rule crypto 2025 implications as regulations tighten.

6. Charitable Giving: Donor-Advised Funds (DAF)

If you have had a high-income year or want to reduce a potential estate tax burden before the exemption drops, consider a Donor-Advised Fund (DAF).

Why a DAF? You can contribute cash, stocks, or crypto to a DAF in 2025 and take the immediate tax deduction for the full amount this year. However, you don't have to distribute the money to specific charities immediately. You can let the funds grow tax-free and grant them out over time.

This is one of the best charitable giving tax strategies 2025 for those looking to "front-load" deductions while tax rates are lower on capital gains (if donating appreciated stock).

7. Business Owners: The QBI Dash

For small business owners, the Qualified Business Income (QBI) deduction—which allows a 20% deduction of qualified business income—is a gem of the TCJA. This is also set to expire or be heavily modified.

Action Step: If you operate a pass-through entity (LLC, S-Corp), speak to your accountant about maximizing income recognition in 2025 to utilize the Qualified Business Income (QBI) deduction while it is still guaranteed at current levels. Deferring income to 2026 might mean losing this 20% write-off.

Conclusion: Don't Let the Sun Go Down on Your Wealth

The expiration of the Tax Cuts and Jobs Act makes year-end tax planning 2025 the most critical financial period of the decade. While we cannot control what Congress does, we can control how we react.

Your 3-Step Action Plan for the next 20 days:

Review your marginal tax bracket and consider a Roth Conversion to fill up your current bracket.
Harvest losses in your brokerage account to offset any gains.
accelerate charitable giving if you plan to itemize this year.

The changes coming in 2026 are significant, but with proactive planning, you can navigate the transition smoothly. Don't wait until December 31st—start making these moves today.

Disclaimer: I am an SEO content strategist, not a CPA. Tax laws are subject to change. Always consult with a qualified tax professional regarding your specific financial situation.

Frequently Asked Questions (FAQs)

1. Will the TCJA really expire at the end of 2025?

As of late 2025, yes. Without new legislation from Congress to extend the cuts, the individual income tax provisions of the TCJA will sunset on December 31, 2025, reverting to 2017 tax law.

2. Should I defer income to 2026?

Generally, no. Because tax rates are expected to rise in 2026, it is usually better to recognize income in 2025 (at lower rates) and defer deductions to 2026 (when they effectively save you more money).

3. What is the deadline for Roth Conversions for the 2025 tax year?

You must complete the conversion distribution by December 31, 2025. Unlike IRA contributions, which can be made until Tax Day, conversions work on a calendar-year basis.

4. Are 401(k) limits increasing in 2026?

Contribution limits usually adjust for inflation. While we expect a slight increase for 2026, the tax benefit of contributing might change depending on your new tax bracket.

5. How does the sunset affect the Estate Tax exemption?

The TCJA doubled the estate tax exemption (approx. $13 million+ per person in 2025). In 2026, this is set to be cut roughly in half. High-net-worth individuals should consult estate attorneys immediately to utilize the higher exemption before it vanishes.

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Year-End Tax Planning 2025: Critical Moves Before the TCJA Expires