NEWSLETTER
Xerxes Nabong, CFP®, CDFA®
Philip M. Maliniak, CRPC®
Nicole Brown-Griffin, CFP®, CDFA®, EA
Aaron Petty, Client Associate
Hampton Roads: (757) 394-3486
Greater Phoenix: (480) 687-9339
Orange County: (949) 660-8869
Wealth Avenue September 2025 Newsletter – Year- End Tax & Investment Planning
With just 3½ months left in 2025, now is the time to make sure you’ve taken advantage of every tax-smart opportunity. Even small steps before December 31 can help you reduce taxes, build wealth, and strengthen your financial position going into 2026.
Back in July, Congress passed the One Big Beautiful Bill Act (OBBBA), a major tax and spending package that permanently extended lower tax brackets and introduced new deductions and credits. With those changes now in place, here are some timely strategies to maximize your tax savings and optimize your investment planning before it’s too late:
Maximize Retirement Savings
401(k), 403(b), TSP, and other employer-sponsored plans:
- Maximum contribution in 2025: $23,500
- Age 50+ catch-up: $7,500
- Ages 60–63: Special super catch-up: $11,250
- SIMPLE IRA participants: $16,500 limit, plus $3,500 catch-up if 50+
Increased pre-tax contributions can also lower your modified adjusted gross income (MAGI) to help qualify for the $2,200 Child Tax Credit (phaseouts at $200k Single / $400k MJF).
Roth IRAs:
- Contribution limits: $7,000 (under 50) / $8,000 (50+)
- Income thresholds for direct contributions:
- Single: Full under $150k, phased out until $165k
- MJF: Full under $236k, phased out until $246k
- MFS: Under $10k MAGI
Pre-tax 401(k) contributions can help keep your income below these thresholds to make direct Roth IRA contributions. If you are married and file separately, your ability to contribute directly to a Roth IRA may be limited or eliminated. It’s important to talk to your accountant to determine whether Married Filing Separately makes sense, as it can significantly impact your retirement funding options.
Backdoor Roth IRA:
- For those over the income limits, you can fund a Traditional IRA (non-deductible) and then convert it to a Roth IRA.
- The pro-rata rule applies, meaning all IRA balances are factored into the conversion.
For high earners who are locked out of direct Roth contributions, the backdoor Roth creates a path to build tax-free retirement income. This strategy is especially valuable for diversifying future tax exposure, giving you more flexibility to manage withdrawals and control taxable income in retirement.
Still working past 65:
- Higher pre-tax 401(k) contributions can reduce taxable income and help you qualify for the new senior deduction of $6,000.
- For 2025, that raises the standard deduction from $15,750 to $21,750 per person if income stays below $75k (Single) or $150k (MFJ).
For seniors who can qualify for the extra $6,000 deduction, the benefit is more than just a higher standard deduction. In the 22% tax bracket, that additional deduction could mean about $1,320 in federal tax savings each year, simply by coordinating contributions and income levels effectively.
Health Savings Accounts (HSAs)
- Contribution limits: $4,300 single / $8,550 family, plus $1,000 catch-up if age 55+.
- HSAs provide deductible contributions, tax-deferred growth, and tax-free withdrawals for qualified medical expenses.
- Unused balances carry over year to year, and many plans allow investing your HSA like a 401(k).
- Balances can grow long term to cover medical expenses in retirement.
HSAs aren’t just for today’s doctor visits… they can double as a stealth retirement account. A family contributing the full $8,550 in 2025 could see an immediate federal tax savings of about $1,881 if they’re in the 22% bracket, while invested balances continue to grow tax-free for future medical expenses.
Tax Planning Moves
Lower tax brackets made permanent: Creates more certainty for multi-year Roth conversion and capital gains strategies.
Standard Deduction increase (2025 onward): $15,750 Single / $31,500 MFJ. Many households no longer need to itemize.
Senior Deduction (65+): Extra $6,000 deduction (phaseouts: $75k Single / $150k MFJ). Careful planning of withdrawals and contributions is important to stay under limits.
State and Local Tax (SALT) Deduction temporarily raised:
- Increased from $10,000 to $40,000 (2025–2029). Phases out above $500k MAGI.
- Business owners in states allowing a Pass-Through Entity Tax (PTET) election can have their business pay state taxes directly, making them deductible at the federal level.
- Property taxes also count toward the $40,000 cap. The expanded deduction is temporary and reverts to $10,000 in 2030.
Charitable Giving:
- Non-itemizers can deduct up to $1,000 (Single) / $2,000 (MFJ).
- Itemizers must exceed 0.5% of AGI before donations become deductible. For example, at $100,000 AGI, the first $500 of donations is not deductible.
- This rule applies across all income levels and replaces the prior gradual phaseout system.
Lower permanent tax brackets, higher standard and senior deductions, and an expanded SALT cap provide new ways to reduce taxable income. With charitable rules also shifting, careful coordination of contributions, deductions, and income levels before year-end is more important than ever.
Other Year-End Actions
- Required Minimum Distributions (RMDs): Required beginning at age 73.
- Tax-loss harvesting: Sell investments at a loss to offset gains, while reinvesting in similar assets to maintain portfolio alignment.
- Capital gains harvesting: If your taxable income falls within the 0% capital gains bracket ($47,025 Single / $94,050 MFJ), you may be able to realize gains tax-free.
- Qualified Charitable Distributions (QCDs): If age 70½ or older, you can donate up to $108,000 directly from an IRA to charity. This satisfies RMDs and avoids taxable income.
- Beneficiary review: Confirm designations on retirement accounts and insurance policies.
- Qualified Business Income (QBI) deduction: Phaseout thresholds raised to $75k (Single) / $150k (MFJ), allowing more professionals in fields such as law, medicine, and consulting to qualify for the 20% deduction.
- Business equipment purchases: Section 179 expensing and bonus depreciation allow immediate deduction of qualifying equipment or technology placed in service by year-end.
From RMDs and charitable distributions to harvesting gains or losses and reviewing beneficiaries, these strategies ensure your investments and tax picture stay aligned. Business owners also have opportunities through the higher QBI deduction and accelerated equipment write-offs before year-end.
Family, Education, and Estate Opportunities
- Gift tax exclusion: Up to $19,000 per person ($38,000 for a married couple) in 2025 can be given without using lifetime exemption.
- 529 plan front-load funding: The same gift tax exclusion applies here. With 529 plans, the IRS also allows you to “front-load” five years’ worth of gifts into one contribution. That means a couple could put in up to $190,000 per child at once (5 × $38,000), jump-starting tax-deferred growth. With new rules, any unused 529 funds may roll into a Roth IRA for the beneficiary (up to $35,000 lifetime), giving added flexibility if education costs are less than expected.
- Dependent Care Exclusion: The limit for employer-provided dependent care benefits will rise to $7,500 starting in 2026. Eligible expenses include daycare, preschool, after-school programs, and inhome care for children under 13 or for a disabled spouse or dependent. This exclusion lowers taxable wages, reducing both income and payroll taxes, and can provide meaningful savings for working families. Since most employers hold open enrollment in November, be sure to review and adjust your elections if you plan to take advantage of this higher limit.
- Estate planning: With the federal estate exemption now at $15 million per person, fewer estates will be taxed, but it remains important to review trusts, wills, and state-level estate tax exposure.
Annual gifting, expanded 529 plan uses, and a higher dependent care exclusion give families more ways to save strategically. With the estate tax exemption now at $15 million per person, reviewing trusts, wills, and beneficiary designations remains essential for long-term planning.
Final Thoughts
The clock is ticking and with only a few months left in 2025, now is the time to align your retirement contributions, tax strategies, and investment planning. Coordinating these moves before December 31 could create meaningful tax savings and a stronger foundation for 2026.
Your Team at Wealth Avenue,
P.S. At Wealth Avenue, we work with clients like you who want to be proactive about year-end decisions that can lower taxes and strengthen their financial future. With so many factors to consider, we take a holistic approach and ask the right questions to help bring clarity and confidence to these choices.
If you know someone who is approaching retirement, managing a business, or simply unsure how to take advantage of the new tax rules before December 31, we’d be honored to connect. Whether it’s a friend, family member, or colleague, we’re happy to share these insights and explore how we can help.
With offices in Virginia, Arizona, and California, and the convenience of virtual meetings, we’re here to support clients wherever they are.
And finally, for anyone who has changed jobs in recent years, take note of this Investopedia piece on forgotten 401(k) accounts. A recent study found that leaving your retirement plan with a former employer could quietly cost you up to $18,000 over your career through account fees and missed growth. With more than 29 million accounts worth $1.65 trillion sitting forgotten, consolidating retirement plans into an IRA or your current employer’s plan can help reduce fees, simplify management, and keep your savings working harder for you. If you’re sitting on an old 401(k) or retirement plan, please get in touch with us so we can advise on the best strategy ahead.
