Five Year‑End Tax Moves For High Earners in 2025

Lock in deductions, trim surcharges, and set up next year’s tax bill now. Here are the highest‑impact plays for high‑income households.

1) Max out tax‑advantaged accounts

Prioritize every available bucket: workplace plans, HSAs, IRAs/Roth strategies, and education savings. You’re buying tax deferral or tax‑free growth while reducing this year’s taxable income.

Quick Table: Common Tax‑Advantaged Accounts for High Earners

Account	Main Benefit	Who’s Eligible	Tax Notes
401(k)/403(b)	Tax deferral	Employees	Large annual limits; consider pre‑tax vs. Roth
457(b)	Extra shelter	Certain government/hospital employees	Government vs. non‑government plans have different rules
HSA	Triple tax advantage	HDHP participants	Deduction now; tax‑free growth and qualified spending
Backdoor Roth IRA	Tax‑free growth	High earners over Roth limits	Fund non‑deductible IRA, then convert
529 Plan	Tax‑free education growth	Anyone saving for education	Possible state tax break; no federal deduction
Solo 401(k)/Mega Backdoor Roth	High contribution potential	Self‑employed/side‑income	Combine pre‑tax, Roth, and after‑tax strategies where allowed

Tip: If you have both W‑2 and 1099 income, you may be able to stack plans (e.g., workplace 401(k) + Solo 401(k)).

2) Tax‑loss harvesting (and avoiding wash sales)

Realize losses to offset realized gains and up to $3,000 of ordinary income each year. Stay invested by swapping into similar, but not substantially identical, holdings to avoid the wash‑sale rule. Start in the fall so you’re not trading on December 31.

 

3) Charitable giving that actually moves the tax needle

If the standard deduction keeps you from itemizing, bunch gifts or use a donor‑advised fund (DAF). Retirees 70½+ can send IRA dollars directly to charities via QCDs to satisfy RMDs without boosting taxable income.

Recap Table: Charitable Giving Power Moves

Strategy	Who Should Use	Big Benefit
Bunching	Donors who typically take the standard deduction	Pushes deductions above the standard‑deduction threshold in the gift year
Donor‑Advised Fund (DAF)	Planners/investors	Get a deduction now; grant over time; donate appreciated assets to avoid capital gains
Qualified Charitable Distribution (QCD, 70½+)	Retirees with IRAs	Satisfies RMDs; lowers AGI‑based taxes and Medicare surcharges

4) Watch the stealth surcharges (NIIT & Medicare)

Crossing AGI thresholds can trigger: (a) 3.8% Net Investment Income Tax on investment income and (b) 0.9% Additional Medicare Tax on earned income. Manage year‑end bonuses, capital‑gain distributions, and asset location (e.g., municipal bonds in taxable) to avoid tipping over.

5) Pre‑RMD Roth conversions

In lower‑income years – often between retirement and RMD age – convert portions of pre‑tax IRAs/401(k)s to Roth. You prepay tax at a controlled bracket, shrink future RMDs, and create a pool of tax‑free dollars for later.

Year‑end checklist

• Max all available plans (workplace + HSA + IRA/Roth strategy + education savings)
• Run capital‑gain/loss report; harvest losses and avoid wash sales
• Decide on bunching vs. DAF; execute QCDs if 70½+
• Project AGI to manage NIIT/Medicare surcharges and phaseouts
• Model a Roth conversion (fill up lower brackets before year-end)
• Verify estimated taxes/withholding to avoid penalties

Reminder: These tactics are powerful in combination. Coordinate timing, entity type, and cash flow, and loop in a tax pro for your specifics.