Photo by Alexas Fotos
2026 is less than a week away, but as far as federal taxes are concerned, the last few days of 2025 could have a big impact on this year’s tax bill.
Several actions taken by the final day of a year could affect your tax circumstances for the other 364.
Here are 10 that could make a difference.
1: Tie the knot. The holiday season can be romantic. If your personal relationship advances quickly this time of year, ending with you and your partner saying “I do” on Dec. 31, then the Internal Revenue Service sends its congratulations.
Uncle Sam’s tax collector also wants you to know that it considers you two married for the whole year. That means when you file your tax return next year, it must be as married filing jointly or married filing separately.
I’ve heard way too many times from newlyweds who think that since they weren’t married for the full year, each spouse can still file as individual taxpayers. Nope. The only filing statuses the IRS will accept from legally married couples, even if they tied the knot on the last day of the year, is married filing jointly or married filing separately.
If taxes matter vis-à-vis your nuptials (and they did, but for other reasons, to the hubby and me lo those many years ago when wed), then postpone your vows for a few days.
2: Legally end your marriage. The same full-year marital status rule holds true for couples who determine that they’re better off apart. Your marital status on Dec. 31 still determines your tax status for the entire year.
Of course, it’s not as easy to time a legal break from your partner as it is to reschedule a wedding. You’re at the mercy of the court system and when a judge issues your final divorce decree. But if it happens late in the year, even on the last day of the year, then you are a single taxpayer again.
A quick filing status note here. If you have children and are the custodial parent, you’ll be able to file as head of household. That’s generally a more tax advantageous filing status than single, which is how the other parent/ex-spouse typically must file.
3: Add to your family. Biology, nature, and just plain old luck, not the tax code, tend to be the major factors on when and how your family grows. But where you can plan, it might be tax advantageous to increase your family by year’s end.
But lots of expectant parents aren’t thinking about taxes as the end of the year winds down. They hope their child will be born on Jan. 1, so they can collect the presents (and often cash awards) that accompany First Baby of the Year celebrations across the country.
The real rewards, however, are the tax benefits you can claim for the whole year if your bundle of joy is instead born on Dec. 31. The end-of-year arrival can be claimed as your dependent for the full preceding 364 days, 365 in Leap Years. And that means you get the Child Tax Credit and other child-related tax breaks for which you qualify for the full tax year.
It’s the same if your new family member joins your brood via adoption. For 2025, the tax credit and, in the case where your employer helps, workplace assistance amount is up to $17,280 for each adoptee. You can claim an adopted child as your dependent in the tax year that the adoption is legally finalized. If that’s on Dec. 31, then it again covers the full year.
Family related taxes are like families themselves; they can be complicated. If you have a question about what tax breaks apply to you and your child, any time of year, talk with a tax professional.
4: Harvest your capital losses. Many investors have made out quite well this year. Some, however, always find they have a dog or two in their portfolios. Now could be the time to finally sell those losing assets you’ve held for more than a year.
Disposing of these long-term capital losses, known as tax loss harvesting, can offset your capital gains and reduce the tax you owe. If you have more losses than gains, you can use up to $3,000 of those excess bad investments to offset your ordinary income.
However, since the markets generally have done well in 2025 — the S&P 500 alone was up nearly 17 percent year-to-date, as of Dec. 22 — many investors won’t have 2025 brokerage account losses, experts say. So, you might consider instead the next end-of-year investing move, tax-gain harvesting.
5: Harvest your capital gains. If you have lots of investing wins this year, congratulations. Now, consider selling some of them. Yes, it will be taxable income, but strategically selling profitable assets also could be a smart long-term tax move.
This tactic, known as tax-gain harvesting, lets you sell assets you’ve owned for at least 366 days, i.e., more than a year, and pay the generally lower capital gains tax rates that range from 0 percent to 15 percent to 20 percent, depending on your income.
Then you can repurchase the asset and reset its basis at a higher level. This is key to determining how much profit upon which you’ll owe taxes when, if the property continues to appreciate, you sell it again years down the investing road.
And don’t worry about the wash sale rule that comes into play if you sell a losing asset. In these cases, you can’t rebuy the stock or similar asset 30 days before or after your sale. This is to prevent taxpayers from selling simply to wash away taxable gains.
When you sell a profitable asset, you pay the IRS tax on the amount. Since you already handed over taxes, even at the lower capital gains rates, Uncle Sam is not concerned about you buying a profitable asset that you’ll likely sell again, and owe more tax on, later.
6: Bunch your tax-deductible expenses. If you find it will be more tax advantageous to itemize on your 2025 tax year filing, maximize those Form 1040 Schedule A amounts by bunching them into this year.
Yes, there are only a few days left in this year to do this, but my earlier post has more on ways to maximize your itemized deductions, some which require simply checking out tax moves you’ve already made in 2025. One way is to make sure you count all your medical expenses. Another is the next year-end tax move.
7: Donate to charities. Are your email and snail mail boxes as full as mine right now with pleas from nonprofits for donations? I swear I checked the “don’t sell my information” box when I gave last year. Still, the unsolicited appeals from nonprofits keep coming.
There’s a reason for the end-of-year avalanche of charitable donation requests. The organizations know that folks are doing some last-minute, back of the envelope tax calculations and have realized that itemizing and claiming tax deductible donations is the way to go next filing season.
But for the deductions to count this tax year, you must make them by Dec. 31. Changes in 2026 to charitable tax deductions could mean some donors want to make sure they meet that giving deadline. This is the case for taxpayers who will itemize to claim their charitable gifts. Provisions in the July 4 enacted Republican tax reform bill, aka the One Big Beautiful Bill Act, will make such donations less tax valuable next year.
The bottom line regardless of your charitable giving strategy is that the gifts must be made by Dec. 31. That includes donations of household goods and clothing, as well as a direct gift from your traditional IRA if you’re age 70½ or older. If the IRA donation appeals to you, call your retirement account trustee now to make sure there is time to complete the transaction.
8: Take your RMD. Speaking of older owners of tax-deferred retirement accounts, Dec. 31 is the deadline to take this year’s required minimum distribution (RMD) if you’re 73 or older.
If you turned 73 this year, you can delay your first RMD until next April 1. But that means you’ll have to take two required withdrawals next year, so run the numbers (quickly!) to see that that will mean to your 2026 tax bill. These mandated withdrawals apply to a variety of retirement accounts, including traditional IRAs and workplace 401(k)s and similar 403(b) and 457(b) plans.
The IRS provides a life expectancy table for you to use to calculate your RMD. Do the math and take out the proper amount (or make a QCD to cover it, or as much as is allowed) by Dec. 31, or face a 25 percent penalty.
9: Contribute to your workplace retirement plan. If you’re still well away from retirement, then keep adding to your nest eggs. Workplace plans are a great option, especially since most employers match at least a portion of their workers’ contributions.
Your workplace plan amounts, however, generally must be made by Dec. 31 to count for that tax year. Talk to your plan administrator about how to bump up this year savings in the next few days. If it is too late, make the change at the start of 2026 so you don’t have to worry about it this time next year.
10: Convert your traditional IRA to a Roth. If you prefer to avoid eventual RMDs, consider converting your traditional IRA to a Roth IRA. Dec. 31 is the last day in the tax year to do that.
Yes, you’ll owe tax on the converted traditional, tax-deferred IRA amount, but you don’t have to worry about tax bills when you take out already-taxed Roth IRA funds in your retirement. And you don’t have to make the change all at once.
You can convert just a portion of your traditional IRA to a Roth. Your tax and/or financial adviser can help your figure out how much to convert so that the move doesn’t dramatically increase your 2025 tax liability or push you into a higher tax bracket.
Talk with your tax pro and IRA trustee as soon as possible so that you can finalize the IRA conversion in time to meet the end-of-year deadline.
Wrapping up 2025 and its taxes: Yes, these 10 potential tax moves to make by Dec. 31 are more than the days left until that last day of 2025 arrives. But check them out to see which apply to your personal tax and financial circumstances.
Where you find some literal year-end moves that could help lower this (or a future) year’s tax bill, take the appropriate action by Dec. 31.
And you still should have plenty of time left to finalize your New Year’s Eve party plans!
