Last-Minute Tax Savings Checklist: Smart Moves to Make Before December 31

As the year draws to a close, there’s still time to take meaningful steps that can reduce your tax bill and strengthen your overall financial position. These strategies are straightforward, practical, and designed to help you finish the year on solid footing.

1. Retirement Contributions: Maximize Tax Deferrals

Max Out Employer-Sponsored Plans:

One of the simplest ways to reduce taxable income before year-end is by reviewing your workplace retirement plan contributions. If you’re not on pace to max out your 401(k), you can often adjust your final paychecks to get closer to the annual limit. Even a modest increase here can lead to a noticeable tax benefit and improve future compounding.

Mega Backdoor Roth:

For those with access to after-tax contributions and in-plan Roth conversions, this is also a good time to revisit the mega backdoor Roth strategy. Increasing after-tax contributions before year-end can set you up for a larger conversion next year, which can be a meaningful long-term planning tool for higher earners. 

By now, you should be able to gauge your total contributions for the year to determine your allowable after-tax contributions. This is a great way to add tax diversity to your retirement income, and one of the only ways for high earners to fund a Roth account.

IRA Contributions and Conversions:

It’s also worth reviewing where you stand with IRA contributions. While you technically have until the tax filing deadline, confirming your eligibility now helps avoid surprises during tax season. These may not reduce your tax liability if you’re a high earner, but they’re great tax-deferred investment opportunities. 

Backdoor Roth IRA contributions or Roth conversions should be completed before year end. These won’t reduce your current tax liability but will help provide tax-deferred growth and future tax-free income. Just be mindful of your income tax bracket so you don’t go overboard.

Catch-Up Contributions:

And if you’re 50 or older, don’t forget the catch-up contributions available in both workplace plans and IRAs. These are often overlooked but can significantly increase what you're able to save, while reducing taxable income at the same time.

2. Harvest Tax Losses (or Gains) While Markets Are Still Open

If your portfolio includes positions that have declined in value, you may be able to use those losses to offset realized gains from earlier in the year. This approach, known as tax-loss harvesting, can also provide up to a $3,000 reduction in ordinary income if your losses exceed your gains. Even if you can’t use all the losses this year, they’ll carry forward into future tax years to continue providing tax benefits.

The end of the year is a natural time to review whether this strategy makes sense for you. It can also be an opportunity to rebalance your portfolio while keeping your tax exposure in check. Just be sure to avoid the wash-sale rules when reinvesting, so the losses remain valid.

On the flip side, this can be a great time to harvest some gains if needed. You can use your harvested losses to offset the gains or just harvest gains if you’re in the lower tax brackets.

3. Make Your Charitable Gifts Count

If charitable giving is part of your annual plans, the type of property donated can meaningfully affect your tax return. Donating appreciated securities, rather than cash, often provides additional tax benefits, since you avoid the capital gains tax you would have owed if you had sold the investment yourself.

Remember, even if you can’t deduct the entire charitable contribution this year, these deductions can be carried forward for 5 years. 

For those who prefer to load up multiple years of donations, a donor-advised fund can also be a helpful tool. It allows you to make a single larger contribution now, potentially boosting your deductions in the current year while distributing those gifts to charities over time.

4. HSA and FSA Deadlines

Health savings accounts (HSAs) and flexible spending accounts (FSAs) can be easy to overlook as the year winds down. If you have an HSA, it’s worth reviewing how much you’ve contributed so far and whether you want to make additional contributions before year-end to take full advantage of this triple-tax-advantaged account. Remember, the limits depend on whether you have self-only or family coverage health insurance.

FSAs require closer attention, since many plans still operate under “use it or lose it” rules. Reviewing your remaining balance now gives you time to schedule medical appointments, refill prescriptions, or purchase eligible items before any unused funds expire. It’s also a good time to review your contribution amounts for next year.

5. Tax Withholdings & Estimated Taxes 

If you’ve had variable income this year from equity compensation, bonuses, or a side hustle, it’s possible your tax withholding may not be enough. Year-end is your last opportunity to make adjustments to current-year withholdings. 

The cleanest approach is to increase withholding on your final paycheck(s). Because the IRS treats withholding as if it were paid evenly throughout the year, this single move can resolve a shortfall without needing to make a separate estimated payment.

If your withholdings and estimated payments meet the “safe harbor” rules, you can Avoid a Penalty. If none of these scenarios are met, you may want to adjust your estimated payments for next year to coincide with when your income is received.

6. Clean Up Business-Year Items  

For business owners, the final weeks of the year are a good time to review expenses, compensation, and retirement planning. This might include pre-paying certain business expenses you were already planning to make, ensuring your accountable plan is up to date, or confirming payroll and documentation for family employees.

It’s also a good moment to finalize your retirement plan strategy. Even if contributions aren’t due until next year, knowing your plan now helps ensure you take all necessary steps before December 31.

As the year wraps up, a little attention now can spare you stress and missed opportunities later. Whether you’re tightening up tax efficiency, strengthening your savings, or simply getting organized before the calendar turns, these final steps can make a meaningful difference, both now and in the future. Consider this your holiday gift to yourself. You’ll be glad you did.