Core Insights - The article emphasizes the importance of year-end financial housekeeping to enhance savings, reduce tax liabilities, and prepare for financial success in 2026 [1] Group 1: Retirement Contributions - Contributions to employer-based retirement funds, such as 401(k) plans, must be made by December 31, 2025, to count for the current tax year, unlike IRAs which can be funded until April 15, 2026 [2] Group 2: Tax Withholdings - Adjusting tax withholdings through Form W-4 is crucial to avoid overpaying taxes and receiving large refunds, which effectively act as interest-free loans to the government [3][4] Group 3: Capital Loss Harvesting - Investors can utilize loss-harvesting strategies to sell losing investments and offset gains, which can also allow for up to $3,000 of excess capital losses to offset non-investment income [5][6] Group 4: Charitable Donations - Charitable contributions must be made by December 31, 2025, to qualify for tax deductions on the 2025 return, with various forms of donations accepted [7]

Financial Strategies for Year-End Preparation - The article emphasizes the importance of taking financial actions before the end of the year to alleviate stress during the holiday season and prepare for 2026 [1][2]. Tax Strategies - Harvesting tax losses is recommended, especially in September, which is typically a weaker month for stock performance. Losses can offset capital gains and reduce overall tax bills, with up to $3,000 in excess losses applicable to ordinary income [3]. - It is crucial to avoid wash sales when harvesting tax losses, which occur if a substantially identical security is purchased within 30 days before or after the tax loss is taken [3]. Retirement Contributions - Maximizing contributions to retirement accounts, such as 401(k) plans, is advised before year-end. Contributions made before the end of the year count for the 2025 tax year [4]. - For individuals aged 60 to 63, the catch-up contribution limit increases to $11,250 for 2025, allowing for significant boosts to long-term account balances if spread out over the remaining months [5]. Portfolio Management - Portfolio rebalancing is suggested as a proactive measure, even before year-end. A review of the portfolio can help ensure alignment with investment goals, especially after significant market gains [6][7]. - Given the stock market's performance, with gains exceeding 20% in the past two years and a year-to-date return over 13% as of mid-September, reallocation may be beneficial to mitigate risks from potential market corrections [7]. Income and Capital Gains Monitoring - Monitoring income levels is important, particularly in low-income years, as this may present opportunities to realize capital gains at a lower tax rate. Some taxpayers may qualify for a 0% rate on long-term capital gains depending on their taxable income [8].