Don’t miss your final chance to lock in tax savings, boost retirement contributions, and update your estate plan before the clock runs out.
As 2025 comes to a close, business owners and high-net-worth individuals should take a moment to ensure their financial and estate planning strategies are aligned with the changing tax landscape. Several key provisions will either expire or shift significantly in 2026, making this year-end an essential time for strategic action. At First American Bank, our team is here to help you navigate these important decisions and position yourself for continued financial success in the year ahead.
Below is a comprehensive checklist of actions to consider before December 31, 2025, to help preserve wealth, minimize tax liability, and maintain financial clarity going into 2026.
1. Maximize Year-End Gifting
One of the simplest and most effective estate planning tools is the annual exclusion gift. In 2025, you can gift up to $19,000 to any individual free of gift tax. For married couples, that amount doubles to $38,000 per recipient. These gifts must be completed within the calendar year, meaning the check must be cashed and debited from your account before December 31, 2025, to qualify. Charitable donations are a bit more flexible—you need only ensure that the check is mailed or sent by December 31, 2025, to qualify for the 2025 charitable deduction, regardless of when the charity deposits it.
2. Last Chance for Pre-Tax 401(k) “Catch-Up” Contributions
If you're over age 50, 2025 is your final chance to make pre-tax catch-up contributions to your 401(k). Starting in 2026, new IRS rules will require high earners to make all catch-up contributions on an after-tax basis into a Roth 401(k), eliminating the current-year tax deduction.
Here are the 2025 limits:
- Base contribution: $23,500
- Catch-up (for earners over $145,000): +$7,500
- Super catch-up (ages 60–63): +$11,250
In 2026, the catch-up limit is expected to be $8,000, but it will be after-tax only. If your goal is to reduce taxable income now, be sure to make your pre-tax contributions before December 31, 2025.
3. Energy Efficient Home Improvement Credit Expiring
Planning home upgrades? The energy efficient home improvement tax credit, once expected to run through 2032, will now expire on December 31, 2025. If you’ve been postponing projects like new windows, insulation, roofing, or energy-efficient HVAC systems, now is the time to act. Completing these improvements before year-end could provide valuable tax savings that won’t be available after 2025.
4. Review Gains and Losses in Your Portfolio
Year-end is an ideal time to sit down with your financial advisor and review your portfolio. Tax-loss harvesting—the process of selling investments at a loss to offset capital gains—can help minimize your overall tax burden.
This is also a smart time to rebalance your portfolio for the coming year and ensure your investment strategy aligns with your long-term goals.
5. Take Required Minimum Distributions (RMDs)
If you own an IRA with required minimum distributions, make sure you take your RMD by December 31 each year after you turn 73. If you don’t take your RMD, or if it’s too small, you could face a 25% penalty.
6. Review and Update Your Estate Plan and Beneficiaries
Your estate plan should evolve alongside your life, family, and business. Year-end is a great opportunity to:
- Update beneficiary designations on life insurance policies, IRAs, 401(k)s, and other financial accounts.
- Review key estate documents—including wills, trusts, and powers of attorney—to ensure they reflect your current wishes and circumstances.
Be sure to review your estate plan with your attorney at least every five years, or sooner if you experience a major life event such as a divorce, birth, death, business sale, or significant financial windfall.
By taking action on these year-end financial and estate planning steps, you’ll make the most of expiring tax opportunities and set yourself up for success in 2026. Don’t wait until it’s too late—begin today to keep your plans aligned and your goals within reach. Contact First American Bank now for personalized support to help you navigate these important decisions.
