Anyone who has filed federal taxes knows that the typical tax year runs from January 1st through December 31st, with returns due around April 15th the following year. While you have those four months after year-end to file your return, many critical tax-saving opportunities have a hard deadline of December 31st. Miss that deadline, and you’ve lost the chance to optimize your taxes for the year.

As retirement planning specialists, we’ve seen too many retirees leave money on the table simply because they didn’t know about these year-end strategies—or didn’t act in time. The good news? With a little planning, you can significantly reduce your tax burden and/or lifetime tax liability, and keep more of your hard-earned money working for you in retirement.

Let’s walk you through the most important year-end tax moves for retirees, including several that must be completed before the calendar flips to 2026.

Understanding the December 31st Deadline

First, it’s important to understand why December 31st matters so much. Unlike IRA contributions, which you can make up until the tax filing deadline (typically April 15th) and still have them count for the previous year, most of the strategies we’ll discuss today operate on a strict calendar-year basis. Once January 1st arrives, your opportunity to use these strategies for the 2025 tax year is gone.

Required Minimum Distributions (RMDs)

If you’re age 73 or older (or age 75, depending on your birth year), you’re required to take distributions from your traditional IRAs, 401(k)s, and other tax-deferred retirement accounts. This is one deadline you absolutely cannot afford to miss.

The penalty for missing an RMD is severe: 25% of the amount that should have been withdrawn. While the IRS may reduce this to 10% if you correct the mistake promptly, there’s simply no reason to pay any penalty when you have the entire year to complete your distribution.

One important note: In the first year you’re required to take an RMD, you actually have until April 1st of the following year to take that initial distribution. However, be careful with this strategy. If you defer your first RMD to the next year, you’ll need to take two RMDs in that year (the deferred one and the current year’s), which could significantly increase your taxable income and potentially push you into a higher tax bracket or trigger Medicare IRMAA surcharges.

After that first year, all subsequent RMDs must be taken by December 31st.

Tax Loss Harvesting and Tax Gain Harvesting

If you have investments in taxable brokerage accounts (not IRAs or 401(k)s), year-end is the perfect time to review your portfolio for tax harvesting opportunities.

Tax Loss Harvesting

Tax loss harvesting involves selling investments that have declined in value to realize losses that can offset gains elsewhere in your portfolio. If you have a long-term capital gain in one fund but a loss in another, you can sell both and offset the gain with the loss, effectively resetting your cost basis.

The key here is avoiding what’s called a “wash sale.” You cannot deduct losses if you purchase the same security or a substantially similar security within 30 days before or after the sale. As long as you avoid this rule, you can use your losses strategically to reduce your tax bill.

Tax Gain Harvesting

This strategy is particularly powerful for retirees in lower tax brackets. Long-term capital gains (from assets held more than one year) are taxed at different rates than ordinary income: 0%, 15%, or 20%, depending on your taxable income.

For 2025, married couples filing jointly can have taxable income up to $96,700 and pay 0% on long-term capital gains. This creates an incredible opportunity for retirees.

Let me give you an example: Fred and Joan Harris are married, both over age 65. In 2025, they recognize $126,500 in long-term capital gains as their only income. After accounting for the standard deduction of $31,500 plus the additional standard deduction of $3,200 for being over 65 (total $34,700 in deductions), they could potentially receive all of this income federal tax-free by strategically managing their capital gains within the 0% bracket.

When we tack on the enhanced senior deduction ($12,000 total), that’s even more room at 0%!

Even if you’re not able to stay entirely within the 0% bracket, harvesting gains at these preferential rates—rather than letting them compound and potentially be taxed at higher rates in future years—can be an incredibly valuable strategy.

Roth Conversions

Roth conversions are one of the most powerful tools in a retiree’s tax planning arsenal, but they must be completed by December 31st to count for the current tax year.

When you convert traditional IRA funds to a Roth IRA, you pay taxes on the converted amount in the year of conversion. However, that money then grows tax-free forever, and you’ll never pay taxes on qualified withdrawals. Even better, Roth IRAs aren’t subject to RMDs during your lifetime, giving you more control over your retirement income.

The key to successful Roth conversions is having a good projection of what your income will be before you convert. Converting too much could push you into a higher tax bracket, trigger Medicare IRMAA surcharges, or affect other income-based benefits.

Many retirees find their “golden years” for Roth conversions are between retirement and age 73 (when RMDs begin) or in years when their income is temporarily lower. This is your chance to convert funds at today’s historically low tax rates and fill up lower tax brackets with conversion income.

Remember: Unlike Roth IRA contributions, Roth conversions cannot be made after December 31st and count for the previous year. If you’re considering a conversion, don’t wait until the last minute—give yourself time to process the paperwork.

Charitable Giving Strategies

For charitably inclined retirees, year-end offers several powerful tax-saving opportunities.

Qualified Charitable Distributions (QCDs)

If you’re age 70½ or older, QCDs allow you to donate up to $108,000 directly from your IRA to qualified charities in 2025. For married couples where both spouses are 70½ or older, that limit doubles to $216,000.

The beauty of a QCD is that the distribution counts toward your RMD but is excluded from your taxable income. This can be more valuable than taking the distribution and then donating the cash because:

It lowers your adjusted gross income
It can help you avoid Medicare IRMAA surcharges
You benefit even if you take the standard deduction
It doesn’t count against the limits for itemized charitable deductions

Important note: The funds must go directly from your IRA custodian to the charity—you cannot take the distribution yourself and then write a check. Also, while your custodian will show the distribution on your 1099-R, they typically won’t mark it as a QCD. Beginning in 2025, custodians may use a new Code Y to identify QCDs, but you or your tax professional need to ensure it’s properly reported on your tax return.

Regular Charitable Contributions

If you itemize deductions, you can deduct cash contributions up to 60% of your adjusted gross income and non-cash contributions up to 30%. If you contribute more than these limits in a given year, you can carry forward the excess for up to five years.

Donor-Advised Funds

A donor-advised fund (DAF) allows you to make a large charitable contribution in one year (perhaps when you’re in a higher tax bracket), get the immediate tax deduction, and then distribute the funds to charities over time. The money grows tax-free within the fund, and you maintain advisory privileges over which charities receive grants.

This strategy is particularly powerful for “bunching” charitable contributions—concentrating multiple years’ worth of giving into one year to exceed the standard deduction threshold and itemize, then taking the standard deduction in other years.

Donating Appreciated Securities

Instead of donating cash, consider donating highly appreciated stocks or mutual funds that you’ve held for more than one year. You’ll generally get a deduction for the full fair market value of the securities while avoiding the capital gains tax you would have paid if you sold them first. This double tax benefit makes donating appreciated securities one of the most tax-efficient giving strategies available.

Gifting Strategies

Year-end is also a great time to consider your gifting strategy, especially if you have a large estate or want to help family members.

In 2025, you can gift up to $19,000 per person without any gift tax reporting requirements. For married couples, that doubles to $38,000 per recipient if you both make gifts. These gifts don’t count against your lifetime estate and gift tax exemption (currently $13.99 million per person in 2025, increasing to $15 million in 2026).

For example, if you and your spouse want to help your child and their spouse, you could gift them a combined $76,000 in 2025 with no reporting requirements: $19,000 from you to your child, $19,000 from your spouse to your child, $19,000 from you to their spouse, and $19,000 from your spouse to their spouse.

Remember, the annual exclusion is “use it or lose it”—any unused portion doesn’t carry forward to the next year.

Additional Year-End Considerations for Retirees

Review Your Tax Withholding

Take a close look at your paycheck (if you’re still working part-time), pension payments, and IRA distributions to ensure you’ve had enough tax withheld. The last thing you want is an unexpected tax bill—or worse, underpayment penalties—when you file your return.

If you’re behind on withholding, you can make up the difference by having extra tax withheld from an IRA distribution before year-end. The IRS treats withholding as if it occurred evenly throughout the year, even if you have it all withheld on December 31st, which can help you avoid underpayment penalties.

Watch Your Medicare IRMAA Brackets

Your Medicare Part B and Part D premiums are based on your modified adjusted gross income (MAGI) from two years prior. While you can’t change your 2025 premiums now, the income decisions you make before December 31st, 2025, will affect your 2027 Medicare premiums.

Be mindful of how Roth conversions, capital gains realizations, and other income events might push you over IRMAA thresholds. Sometimes it makes sense to spread income across multiple years to avoid these surcharges.

Don’t Wait Until the Last Minute

While December 31st is the hard deadline for most of these strategies, don’t wait until the last week of the year to act. Financial institutions need time to process transactions, charities need to receive your gifts, and you need time to make informed decisions.

I typically recommend my clients review their year-end tax planning strategies by early December at the latest. This gives you time to:

Project your final tax situation for the year
Consult with your financial advisor and tax professional
Execute transactions with enough time for processing
Make adjustments if needed

Creating Your Year-End Action Plan

As we approach year-end, here’s what I recommend:

Pull together your tax projection – Estimate your total income for the year
Review your RMD requirements – Confirm you’ve taken all required distributions
Assess your portfolio – Look for tax loss and tax gain harvesting opportunities
Consider Roth conversion opportunities – Especially if you’re in a lower-income year
Review your charitable giving goals – Don’t forget about QCDs if you’re eligible
Check your annual gifting strategy – Use your $19,000 per person exclusion
Verify adequate tax withholding – Avoid surprises when you file

Remember, the plan you create should align with your overall retirement goals and financial situation. These strategies aren’t one-size-fits-all, and what works for one retiree may not be appropriate for another.

The Bottom Line

Year-end tax planning is one of the most valuable things you can do as a retiree. The strategies we’ve discussed can save you thousands—even tens of thousands—of dollars in taxes over your retirement years. But they only work if you take action before December 31st.

Don’t leave money on the table. Review these strategies, consult with your financial and tax advisors, and make sure you’re taking full advantage of every opportunity available to you.

The information discussed in this article is meant to be educational and general in nature and is not meant to be taken as any type of investment, tax planning, or financial planning advice. Every retiree’s situation is unique, and you should consult with qualified professionals before implementing any of these strategies.