Five year-end tax moves advisors should discuss with clients

As the calendar year winds down, financial advisors have a shrinking window to help clients manage taxes — from scheduling charitable gifts and income to harvesting losses and preparing for a deadline affecting investors in the original opportunity zone program.

• Key insight: Year-end tax planning is about more than Dec. 31; advisors should also weigh the tax impact across multiple years.
• What's at stake: Overlooking important planning opportunities can lead to larger tax bills or surprise liabilities, especially for investors in the original opportunity zone program who face a deadline to recognize capital gains. The timing of charitable giving also matters, as a new floor on itemized charitable deductions takes effect starting with 2026 income.
• Expert quote: "The key takeaway here is if you have something that you could donate this year or next year, choose to donate it this year for sure." — Richard Lavina, CEO of Taxfyle

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Still, the strongest tax strategies are not always limited to one year. Advisors who look beyond Dec. 31 can help clients coordinate decisions across several tax years, said Joseph Medina, a Washington-based partner at EY Private.

"We're slowly going to need to move into a world where we are not thinking about year-end planning, but we're thinking about multi-year planning," he said.

That approach means thinking carefully about when income will be received and when deductible expenses can be claimed. Business owners and other clients may have some control over that timing, Medina said, whether they are choosing when to exercise options, buy equipment or take other steps that affect tax bills.

Here are five areas advisors should review with clients before year-end.

Charitable contributions

Charitable gifts can provide tax advantages even for clients who do not itemize deductions. The One Big Beautiful Bill Act created an above-the-line deduction for charitable contributions of up to $1,000 for individual taxpayers or $2,000 for married couples filing jointly.

Clients who do itemize may also benefit from bunching donations into a single tax year, either by giving directly to charities or by using donor-advised funds.

For itemized deductions, a floor equal to 0.5% of adjusted gross income will apply beginning with 2026 income, said Richard Lavina, co-founder and CEO of Taxfyle, a tax software company serving financial advisors and tax professionals.

Because of that change, the timing of donations is especially important this year, Lavina said.

"This is the year, then, to get all your charitable contributions [done]," he said. "The key takeaway here is if you have something that you could donate this year or next year, choose to donate it this year for sure."

There is also another limit to remember. Medina said itemized deductions are subject to a separate reduction in which 2/37 of the deductions are disallowed.

"[It] first has to get above the floor, and then it gets reduced by the lid," he said.

SALT deduction and income timing strategies

The state and local tax deduction is generally capped at $40,400 for 2026, making income management especially important for high earners.

For clients near the top of the phase-down threshold, advisors should pay close attention to income timing, Lavina said.

"Business owners should use their pass-through entities' election because that avoids the cap entirely," he said.

In some states, that election lets businesses pay state income taxes at the entity level rather than having owners pay them individually.

Income timing matters for more than just the SALT deduction. Clients who "have any control over when those are paid" may be able to manage their tax rate by deciding whether payments arrive in December or January, said AJ Kletkin, a New York City-based private wealth advisor at Private Advisor Group.

Contributions to retirement, education accounts

The end of the year is also a good time to review contributions to Section 530A accounts, also known as Trump accounts, for children; 529 education savings plans; and clients' own individual retirement accounts and 401(k) plans. Advisors should also check whether eligible clients age 50 and older can make catch-up contributions. Under the SECURE 2.0 Act, all 401(k) catch-up contributions must be made as Roth deferrals.

Not every contribution has to be completed by Dec. 31. For example, sole proprietors with solo 401(k) plans can wait until they file their tax returns to contribute.

Clients may also want to convert traditional IRA assets to a Roth IRA. Adam Bergman, founder of Sioux Falls, South Dakota-based IRA Financial, said he looks for room between a client's current income and the top of their tax bracket to add income without pushing them into a higher bracket.

Estimated tax payments

Advisors should make sure clients are ready to make quarterly estimated tax payments, said Brian Large, a partner at New York City-based financial planning firm Lenox Advisors.

"A lot of folks don't do it, and they should, and they get surprised at the end of the year with a pretty big number and some penalty on that because they haven't been doing it," he said.

Checking whether a client's budget can handle estimated payments can help avoid surprise tax bills and cash-flow problems.

"You build it into your budgeting … so when that bill comes, I already have the money. I'm not trying to figure out where I get the money from," Large said.

Original opportunity zone investments

Investors in the original opportunity zone program face a deadline to realize their capital gains by the end of the year. Investments in the newer version of the program can begin in January 2027.

The deadline has caught some clients off guard, Bergman said. A few have told him they may need to pull money from their IRAs to cover the tax bill that follows.

"Some people [weren't] properly prepared for the fact that this thing was coming," he said. "Time kind of goes pretty quick, and you wake up one day, and you're like, 'Oh no. It's October 2026.'"

Advisors dealing with clients' gains have several possible strategies. Bergman said he has seen clients generate capital losses or invest in master limited partnerships in the oil and gas sector to obtain tax deductions.

Vivek Chandrasekhar, a former tax counsel for the U.S. Department of the Treasury and now a partner at global law firm Ashurst Perkins Coie, said gains could be offset with losses from other investments, if those are available.

But realizing gains does not necessarily mean selling the underlying investment.

"The fact that there's gain does not mean you should sell the investment," he added. "You'll generally want to keep the investment for 10 years to get the benefit of excluding any kind of additional gain, to the extent the investment has performed well."