Year-End 2025 Planning Guide

As 2025 draws to a close, it’s an ideal time to review your finances and prepare for the year ahead. We outline below key year-end planning tasks to address now, important tax law changes that may impact your wealth planning, important 2026 updates, and essential estate planning best practices. This concise non-exhaustive guide has been prepared to help ensure you don’t miss critical planning opportunities before December 31st as well as set a strong foundation for 2026.

This is general educational information, not tax, legal, or investment advice; consult your professional advisors before acting. Information is believed accurate as of publication but is not guaranteed and is subject to change.

Key Year-End Planning Tasks

Before the year ends, prioritize completing the annual task deadlines outlined below. Moreover, we have outlined certain planning opportunities to consider. Always remember to coordinate with your professional advisors:

· Take RMDs: If you’re age 73 or older, confirm you’ve taken your required minimum distributions (RMDs) from applicable tax-deferred retirement accounts by December 31, 2025. Failing to take an RMD may trigger up to a 25% penalty on the amount not withdrawn. Those who turned 73 in 2025 can delay taking their first RMD until April 1, 2026, but doing so likely will result in two taxable RMDs in 2026. If future RMD income could push you into a higher tax bracket, consider discussing proactive strategies with your professional advisors now (e.g. Roth conversions, phased withdrawals) to potentially reduce future RMDs.

· Maximize retirement account contributions: Contribute as much as possible to your 401(k) or similar workplace plan, especially if your employer offers a match. The 2025 employee deferral limit is $23,500 (plus an extra $7,500 catch-up if age 50+, totaling $31,000; and an even larger catch-up for ages 60–63, totaling $34,750, if your plan permits). Topping off contributions now can lower your 2025 taxable income and boost retirement savings. It’s important to note that starting in 2026, if your wages exceed $145,000, any 401(k) catch-up contributions must go into a Roth (after-tax) account, so it’s important to consider maximizing pre-tax deferrals this year. You generally have until April 15, 2026 to contribute to IRAs and HSAs for 2025.

· Consider a year-end Roth conversion: If your income is lower this year or you expect to be in a higher bracket later, converting some traditional IRA assets to a Roth IRA by Dec. 31, 2025 could be worth considering. You’ll owe ordinary income tax on the converted amount now but likely benefit from compounding tax-free growth and withdrawals later. Aim to convert an amount that keeps you within your current bracket (e.g. fill up the 24% bracket) to avoid jumping into a higher tax bracket. This can be particularly effective if you expect to be in a higher tax bracket in retirement. You should always strategize with your tax and financial advisors on Roth conversion impacts as they are irreversible and can affect things like Medicare premiums and other taxes.

· Optimize charitable giving: Charitable contributions must be completed by Dec. 31 to count for 2025. If you itemize, you can generally deduct cash gifts up to 60% of your Adjusted Gross Income (AGI). Donating highly appreciated investments held over a year can be even more tax-savvy as you avoid capital gains tax and can deduct the full market value (up to 30% of AGI). If you’re 70½ or older, consider using a Qualified Charitable Distribution (QCD) from your IRA as you can donate up to $108,000 in 2025 directly to charity. A QCD counts toward your RMD but isn’t taxable income. Another strategy is front-loading donations by grouping multi-year gifts into 2025 to get over the standard deduction threshold and maximize the deduction; a donor-advised fund can help manage the timing of grants to charities. (See the later section on new charitable deduction rules effective in 2026.)

· Harvest tax losses: Review your taxable investments for any unrealized losses. At Fire Capital, we continuously engage in tax-loss harvesting for managed accounts to maximize after-tax returns, however you may want to consider selling losing positions in any held-away taxable accounts before year-end. Capital losses can fully offset capital gains, plus up to $3,000 of excess losses can reduce ordinary income. Moreover, unused losses can be carried forward in future years. It’s important to be aware of the IRS wash-sale rule, which disallows the loss if you buy the same or a substantially identical security within 30 days of the sale.

· Make tax-free gifts: Leverage the annual gift tax exclusion by gifting up to $19,000 per recipient in 2025 without using any of your lifetime estate exemption. Married couples can double up to $38,000 per beneficiary. These annual gifts are not income-tax deductible, but they can help reduce your taxable estate over time and transfer wealth tax-efficiently. If gifting appreciated assets instead of cash, remember the recipient takes on the cost basis. Also consider funding 529 college plans for children/grandchildren, as part of your year-end strategy; contributions qualify for the annual exclusion.

Important Tax Law Changes and New Charitable Donation Rules

The One Big Beautiful Bill Act (OBBBA), enacted on July 4th, 2025, extends many 2017 Tax Cuts and Jobs Act (TCJA) provisions as well as introduces several targeted adjustments. For Ultra-High-Net-Worth (UHNW) families and individuals, the primary impacts relate to income deduction rules, charitable giving treatment, and the permanent extension (and increase) of the federal estate and gift tax exemption.

Tax Law Changes

· Tax brackets: Current TCJA-era brackets (10%–37%) were made permanent with the passing of the OBBBA. That said, the 2026 Federal tax brackets will shift slightly upward due to inflation.

· Standard deduction: The standard deduction has been permanently extended and increased. Taxpayers will benefit from the following standard deductions of $15,750 single / $31,500 joint, respectively. Moreover, the OBBBA also introduced a new income-limited deduction for seniors that are 65+ of $6,000 that takes effect in tax year 2025 but phases out in 2028 unless extended.

· State and Local Tax (SALT) deduction: The OBBBA temporarily increased the SALT cap from $10,000 up to $40,000 starting in 2025 for married filing jointly and single filers. The deduction will increase annually by 1% until 2029, before reverting to $10,000 in 2030. It’s important to note that the SALT cap deduction begins to phase out for individuals or married filing jointly couples that have a Modified Adjusted Gross Income (MAGI) of $500,000 and more. Although SALT deductibility remains limited for high earners, many other individuals and families in states and localities with income tax may receive meaningful tax savings in 2025-2029.

· Reinstated 100% bonus depreciation: Under the OBBBA, businesses may once again immediately expense 100% of the cost of qualifying tangible property placed in service after January 19, 2025. The bill eliminated the prior phase-down schedule and significantly expanded near-term expense opportunities for capital investments, equipment purchases, and real estate improvements.

· New temporary deductions (2025–2028): Specialized deductions for qualified tips, overtime pay, and auto loan interest were introduced with OBBBA but are income-limited and generally not applicable for UHNW households.

Changes to Charitable Giving Rules

Due to the changes in charitable giving outlined below that go into effect in 2026, 2025 has become an optimal year to accelerate large charitable gifts or prefund Donor-Advised Funds (DAFs) to avoid the 0.5% floor and maintain full 37% deduction value. UHNW families making annual gifts to family foundations or DAFs may consider bunching or frontloading contributions in 2025. Consider reviewing your multi-year philanthropic plans for 2025–2030 to optimize deduction timing.

· New 0.5% AGI floor: The first 0.5% of AGI given to charity becomes non-deductible.

· Deduction benefit cap for top earners: The value of itemized deductions for those in the 37% bracket is capped at an effective 35% benefit.

· Above-the-line charitable deduction for non-itemizers: Up to $1,000 single / $2,000 joint; this does not apply to DAFs or private foundations.

· Cash donation deduction limit made permanent: 60% AGI limit for cash gifts is permanent.

Estate Planning Considerations

OBBBA not only eliminated the 2026 “sunset” of the TCJA-era estate, gift, and GST exemptions, but it also increased the exemptions going forward. The OBBBA reduced urgency in the estate planning world but not the importance of evaluating wealth transfer strategies for the next generation as well as updating core documents and funding trusts properly.

· Transfer tax thresholds: The lifetime estate and gift tax exemption is $13.99M per person in 2025 and $15M per person in 2026. The GST exemption matches these amounts, and the annual gift exclusion is $19,000 per recipient for both 2025 and 2026. The feared “use it or lose it” cliff is gone; however large gifts to irrevocable trusts may still be wise where asset appreciation is expected. Lifetime transfers remain a core tool for sheltering future growth from estate tax. UHNW families should revisit long-term wealth transfer structures within this more stable exemption regime.

· Core document review: Confirm that wills, revocable trusts, powers of attorney, health care directives, and all beneficiary designations (IRAs, 401(k)s, annuities, life insurance) are current, coordinated, and reflect your intended executors, trustees, guardians, agents, and distribution provisions. According to Fidelity, it is best practice to review your core estate documents every 3-5 years, or when major life events occur (i.e., marriage, divorce, significant health changes, etc.).

· Trust structuring & funding: Ensure trust structures are properly funded (real estate, brokerage accounts, entity interests), verify trustee succession and distribution standards for irrevocable trusts, and confirm irrevocable life insurance trust (ILIT) administration, including premium funding and Crummey notices is current and aligned with the broader estate plan.

· Business & governance: Review buy-sell agreements, valuations, and succession plans. Assess whether higher exemptions support recapitalizations or ownership transfers; and update family governance frameworks, including mission statements and long-term decision-making structures.

Key 2026 Updates & Looking Ahead

Looking forward to 2026, there are important updates courtesy of the OBBBA and inflation-adjusted figures to note. Keeping these in mind will help with planning as you set your goals for the new year. See below a non-exhaustive list of important updates for 2026.

· Social Security COLA: Social Security beneficiaries will receive a 2.8% cost-of-living adjustment (COLA) for 2026. This uptick means the average retiree benefit will rise by about $56 per month starting January 2026. Keep in mind, Medicare Part B premiums are also rising (see next point), which will net against some of this COLA.

· Medicare Part B: Medicare Part B premiums are set to jump significantly. The standard Part B premium, which covers doctor visits and outpatient care, will increase 9.7% in 2026 to $202.90 per month. For most retirees, this premium is deducted from Social Security.

· Higher Social Security wage base: If you’re still working, more of your wages will be subject to Social Security tax in 2026. The taxable earnings cap rises to $184,500 from $176,200 in 2025. Wages up to that cap are taxed at 6.2% for employees.

· Income tax bracket thresholds: Tax brackets widen in 2026. For example, the 37% top rate will kick in at taxable income over $768,700 for married couples filing jointly, up from $751,600 in 2025.

· Standard deduction: The standard deduction for 2026 will be $16,100 single / $32,200 married, slightly higher than 2025’s. Heads of households get a $24,150 standard deduction. Additionally, if you are 65+ then you may qualify for the senior deduction, subject to phaseouts.

· 401(k), 403(b), governmental 457 plans, and TSP elective deferrals: Employee contribution limits will increase $1k in 2026 to $24,500. Those age 50+ can add a catch-up of $8,000. This is up from $7,500, meaning $32,500 total can be contributed from your paychecks in 2026. Ages 60–63 may contribute up to an $11,250 “super catch-up” (total $35,750), if your plan allows it.

· Traditional and Roth IRAs: The annual IRA contribution limit increases $500 to $7,500 in 2026. The IRA catch-up for age 50+ is now indexed and set to rise to $1,100 in 2026. So, if you’re 50 or older, you could put in $8,600 to an IRA in 2026. Keep in mind income phase-outs for Roth IRA contributions beginning at $153,000 MAGI for singles (~$242,000 for joint filers) in 2026.

· Estate and gift tax adjustments: As noted previously, the federal estate, gift, and GST exemptions will be $15M per individual in 2026, up from $13.99M in 2025. This substantial increase courtesy of the OBBBA means individuals can gift an additional ~$1m from their estate tax-free. It’s important note that you should check state estate tax thresholds as those often don’t adjust with inflation and can be much lower.

· Alternative minimum tax (AMT) exemption: The AMT exemption will be $90,100 for single filers and $140,200 for joint in 2026. This is up slightly from 2025 but watch out for the AMT if you have high deductions or certain income types as the phase-out thresholds for AMT exemption start at $500k single/$1M joint.

· Social Security earnings test: If you are working while receiving Social Security before full retirement age, the earnings limit will rise in 2026 where you can earn up to $24,480/year before benefits are withheld. The year you reach full retirement age, a higher limit of $65,160 applies. These are important limits to account for if you plan to claim benefits but keep some employment.

Summary & Looking Ahead

As another year draws to a close, thoughtful planning can help strengthen your financial position heading into 2026. The OBBBA introduced meaningful changes to taxes, charitable giving, and transfer tax rules creating both new opportunities and new considerations, particularly for affluent families. At the same time, inflation-adjusted updates to Social Security, retirement plan limits, and federal tax brackets will influence cash flow planning, savings decisions, and long-term planning.

While each family’s circumstances are unique, the most effective year-end planning often includes coordinating retirement savings strategies, evaluating charitable giving objectives, reviewing estate documents and trust structures, and understanding the tax landscape that will shape the coming year. By working proactively with your tax, legal, and financial advisors, you can identify strategies that preserve flexibility, reduce avoidable taxes, and support long-term goals for you and your family.

As always, a well-coordinated and forward-looking approach remains one of the most powerful tools in sustaining and transferring wealth. Please reach out if you would like assistance evaluating any of these planning considerations or tailoring them to your individual situation.