Tax planning is most effective when done proactively throughout the year, but December is the final window for a range of specific actions that can meaningfully reduce your tax bill for the current year. Many of these opportunities close permanently on December 31, making the final weeks of the year a genuinely important time for tax-aware financial decisions. This checklist covers the most significant year-end tax planning moves available to most individual taxpayers, with enough explanation to help you evaluate which apply to your specific situation.
Maximize Retirement Account Contributions
For employer retirement plans — 401(k), 403(b), 457 — the contribution deadline is December 31 of the tax year (contributions come out of paychecks, so the last paycheck of the year is effectively the deadline). If you have not yet contributed the maximum allowed amount and your cash flow can support it, increasing your contribution percentage for remaining paychecks reduces your taxable income for the current year. The 2024 limit is $23,000 plus $7,500 catch-up for those 50 and older. Even increasing contributions for just the last few paychecks of the year can produce meaningful current-year tax savings at your marginal rate.
IRA contributions have more time — the deadline for contributing to a Traditional or Roth IRA for a given tax year is the tax filing deadline of the following April, typically April 15. This means you have until April 15, 2025 to make IRA contributions for 2024. However, if your cash flow allows, making the contribution before year-end lets it start growing tax-free sooner rather than waiting until spring. HSA contributions also have until the April filing deadline, providing similar flexibility.
Tax-Loss Harvesting Before December 31
Any tax-loss harvesting — selling investments at a loss to offset realized capital gains or ordinary income — must be completed by December 31 to count toward the current tax year. Review your taxable investment accounts for any positions currently showing unrealized losses and consider whether harvesting those losses now — selling to realize the loss, then reinvesting in a similar but not substantially identical security to maintain market exposure — makes sense given your overall gain-loss picture for the year. If you have realized significant capital gains earlier in the year from portfolio rebalancing, property sales, or business transactions, harvesting available losses before year-end can substantially reduce or eliminate the tax on those gains.
Be attentive to the wash-sale rule — do not purchase a substantially identical security within 30 days before or after the sale. If you want to remain invested in the same sector or market exposure while harvesting the loss, the safest approach is replacing the sold fund with one tracking a different index rather than the same one. Selling a large-cap growth ETF and replacing it with a total market index fund maintains broad market exposure without triggering the wash-sale rule.
Charitable Giving Strategies for Year-End
Charitable donations made by December 31 are deductible in the current tax year — cash donations to qualified organizations, donations of appreciated securities, and contributions to donor-advised funds. Donating appreciated securities rather than cash — giving stock that has grown significantly in value rather than selling the stock and donating the proceeds — is the most tax-efficient charitable giving method because it avoids the capital gains tax on the appreciation while still claiming the full fair market value deduction.
For taxpayers whose annual charitable contributions are below the standard deduction threshold that would make itemizing beneficial, bunching multiple years of planned giving into the current year — through a donor-advised fund contribution — creates the deduction in a single year while distributing grants to charities over subsequent years. If your normal annual giving is $3,000, contributing $9,000 to a donor-advised fund this year and zero over the next two years produces the same charitable impact with a meaningful tax benefit that the annual $3,000 pattern would not generate.
Review Flexible Spending Account Balances
Flexible spending accounts — healthcare FSAs and dependent care FSAs — have use-it-or-lose-it rules that make December a critical review month. Healthcare FSA balances that remain unused after the plan year typically expire, though many plans offer a grace period of up to two and a half months into the following year or a rollover of up to $640 (2024 limit). Review your FSA balance before year-end and schedule any outstanding medical, dental, or vision appointments that can be prepaid with FSA funds to avoid forfeiting accumulated balances. Stock up on FSA-eligible over-the-counter items — cold medicine, pain relievers, first-aid supplies, sunscreen — if you have balance at risk of expiration.