December brings more than holiday schedules and budget meetings. The final weeks of the calendar year create a convergence of tax deadlines, contribution limits, and legislative changes that won’t exist again until next December. For 2025, that convergence includes something new: the One Big Beautiful Bill Act (OBBBA), which permanently extended many provisions of the Tax Cuts and Jobs Act (TCJA) while introducing several new planning opportunities.
These aren’t artificial urgencies. They’re structural features of the tax code that reset annually—and this year, some of those features have undergone big changes.
What changed under the one big beautiful bill act
The passage of the OBBBA in early 2025 permanently extended lower individual income tax rates, the higher standard deduction, and the elimination of personal exemptions. But beyond making those provisions permanent, it introduced several new federal tax changes that create planning opportunities before year-end:
- New temporary deductions through 2028 for individuals age 65 and older, qualified tips, overtime pay, and qualified passenger-vehicle loan interest
- Expansion of the child tax credit to up to $2,200 per qualifying child, plus up to $500 per other qualifying dependent in 2025
- Greater flexibility for 529 accounts, which can now be used for K-12 and postsecondary credentialing expenses beginning in 2025
- Increase in state and local tax (SALT) deductions to a $40,000 maximum for 2025, phasing out for those whose income exceeds $500,000
- Reinstatement of charitable contribution deductions for non-itemizers ($1,000 for single filers, $2,000 for joint filers), beginning in 2026
Each of these changes affects planning calculus differently depending on your income, household structure, and giving patterns. And for those in Texas—where state income taxes don’t exist—the planning question isn’t whether these rules matter, but how to sequence decisions around them.
| SALT deduction: State and local tax deduction that allows taxpayers to deduct certain taxes paid to state and local governments from their federal taxable income. Previously capped at $10,000, now increased to $40,000 for 2025. |
Tax-loss harvesting in a year of market strength
Equity investors have enjoyed an exceptionally rewarding 2025, and while there’s reason to celebrate, there’s also planning to be had. Portfolios with substantial capital gains may be in a position to benefit from strategic tax-loss harvesting, which could help offset gains before the end of the year.
The mechanics haven’t gone through any noticeable change with the OBBBA: sell positions that are below their cost basis, crystallize the result, and reinvest in similar (but not substantially identical, per wash sale rules) opportunities to maintain market exposure and portfolio balance. Properly executed, and this approach can improve your after-tax returns.
Alternatively, it can be used in conjunction with portfolio rebalancing—which we’ll touch on in further detail—for those with concentrated positions in technology or other specific sectors to accomplish two goals simultaneously: reducing risk localization and leveraging tax deductions.
| Wash sale rule: An IRS rule that disallows a tax deduction for a security sold at a loss if a substantially identical security is purchased within 30 days before or after the sale. |
Retirement accounts and required distributions
Contribution limits for 2025 remain elevated. Workers can contribute up to $23,500 to a 401(k), with catch-up contributions of $7,500 for those over 50—or $11,250 for those between 60 and 63. IRA limits sit at $7,000, or $8,000 with catch-up.
If you’re 73 or older, required minimum distributions (RMDs) must be satisfied by December 31st. The qualified charitable distribution (QCD) strategy remains one of the most efficient approaches: directing up to $54,000 from your IRA directly to charity satisfies your RMD while excluding the distribution from taxable income entirely. For those who don’t need the income and are charitably inclined, it’s a fitting approach.
Younger investors—or those in temporarily low tax brackets—may benefit from Roth conversions before year-end. Converting traditional IRA assets to Roth now, when income is lower, can shift future growth into tax-free withdrawals. With permanent lower individual rates now in place, the timing calculus has shifted from urgency to optimization.
Gift planning and estate considerations
The annual gift tax exclusion resets every January 1st. For 2025, you can gift $19,000 per recipient without touching your lifetime exemption or filing a gift tax return.
For families focused on multi-generational wealth transfer, these annual exclusions offer a systematic path to reduce estate size. A married couple with three married children and six grandchildren can transfer $432,000 out of their taxable estate in a single year through annual exclusion gifts alone.
The expanded SALT deduction also invites planning opportunities. For high-income families, the increase from $10,000 to $40,000 creates meaningful federal tax savings—but this benefit phases out at $500,000 of income. Gifting appreciated assets before year-end can reduce taxable income while simultaneously transferring wealth, a dual benefit that becomes more valuable as you approach the SALT phaseout range.
| Annual gift tax exclusion: The amount an individual can give to another person each year without incurring gift tax or using any of their lifetime gift and estate tax exemption. Resets January 1st each year. |
Charitable giving and donor-advised funds
December has always been prime time for charitable giving, but 2025 brings new context. While the expanded charitable deduction for non-itemizers doesn’t take effect until 2026, it creates a planning consideration for those who typically itemize but may not in future years.
Donor-advised funds (DAFs) remain one of the most efficient vehicles for substantial giving. Contributing appreciated securities to a DAF generates an immediate deduction for the full fair market value while avoiding capital gains tax on the appreciation. You receive the tax benefit now but retain flexibility to distribute funds to charities over multiple years.
This strategy works particularly well for “bunching” contributions—giving several years’ worth of charitable gifts in a single year to exceed the standard deduction threshold, then using the DAF to distribute those funds to charities over time. With the standard deduction now permanently higher, bunching becomes even more valuable for those whose annual giving wouldn’t otherwise exceed the threshold.
529 plans and expanded flexibility
One of the quieter changes in the OBBBA was the expansion of 529 account flexibility. Beginning in 2025, these accounts can now be used for K-12 expenses and postsecondary credentialing programs, not just college tuition.
For families with young children in private schools, contributing to a 529 before December 31st and then withdrawing for qualified K-12 expenses can create state tax benefits in many jurisdictions. And for longer-term planning, front-loading 529 contributions now allows more time for tax-free growth.
The change also affects families with adult children. If a child graduated college with 529 funds remaining, those dollars can now be redirected toward graduate programs, professional certifications, or trade school programs without penalty.
| 529 plan: A state-sponsored investment account designed to encourage saving for future education costs, offering tax-deferred growth and tax-free withdrawals for qualified education expenses. |
Portfolio positioning and cash management
Year-end serves as a natural checkpoint for portfolio alignment. Markets have rallied through much of 2025, and that strength inevitably creates drift. Equity allocations that were appropriate in January may have grown beyond target ranges by December.
Rebalancing addresses these imbalances through discipline, not market timing. And when paired with tax-loss harvesting, it becomes even more efficient: selling winners in overweight segments while harvesting losses in underweight areas maintains strategic allocation while improving after-tax returns.
Cash management deserves attention as well. With interest rates still elevated compared to historical norms, idle cash in low-yield accounts represents opportunity cost. Money market funds, Treasury bills, and high-yield savings accounts continue offering attractive rates—moving idle cash before year-end puts it to work from day one of 2026.
What year-end planning looks like in practice
Families who make the most of year-end share a common approach—they start early. They review their financial picture in November, identify opportunities, and implement changes with time to spare for settlement and processing.
While it may differ from one family to the next, here’s how it typically unfolds:
Mid-November: Comprehensive review of portfolio positioning, estimated year-end income, and potential tax-saving opportunities. Identify positions for tax-loss harvesting, estimate RMD amounts, and map out charitable giving plans.
Early December: Execute portfolio adjustments, complete required distributions, and finalize contributions to retirement accounts and 529 plans. Confirm settlement timelines—particularly for securities transactions, which require time to process.
Mid-December: Verify all transactions have settled, contributions are posted, and year-end tax strategies are complete. Review year-end statements and coordinate with tax advisors on documentation.
This timeline isn’t arbitrary. It accounts for market settlement periods—typically T+1 for equities, T+2 for bonds—administrative processing at financial institutions, and the inevitable year-end capacity constraints across the industry. Waiting until December 28th leaves little room for complexity or error.
| Settlement periods: Often expressed in shorthand through T+1 or T+2, where T represents the trade date, and the following number indicates how many business days afterwards it takes to settle. For example, a T+2 transaction executed on Friday would settle on Tuesday the following week. |
The value of coordination
You can choose to view year-end planning as checking the boxes—or you can treat it as financial coordination. Tax-loss harvesting affects cost basis calculations for future years. Charitable giving strategies interact with itemized deduction thresholds. RMDs influence Medicare premium calculations. Estate gifting reduces future tax exposure but requires proper documentation.
Each decision affects others, and the most effective plans account for those interactions. This is where working with advisors who understand the full picture becomes invaluable. Not just portfolio management or tax preparation, but the intersection of both—and how legislative changes like the OBBBA create new planning opportunities worth capturing before year-end.
At Promus Advisors, we monitor these developments before they’re signed into law, and by doing so, we can position clients to take advantage of change. By the time year-end arrives, our clients aren’t scrambling to identify opportunities—they’re implementing a coordinated plan that accounts for portfolio positioning, tax efficiency, and long-term wealth strategy.
The rules will continue to shift. Tax provisions will be extended, modified, or replaced. Markets will fluctuate. But a strategy rooted in thoughtful planning and timely execution remains a reliable path to long-term wealth preservation.