12 Smart Ways to Finish the Financial Year Strong

As 2025 winds down, a few smart moves can lower your tax bill and put you in a stronger position for 2026. Use this checklist to focus on the steps that fit your situation, especially if you file in California. 1) Make sure your tax payments are on track

A quick check of your withholding or estimated payments now can prevent a surprise bill in April. Use the IRS Tax Withholding Estimator and update your Form W‑4 if needed. If you pay quarterly estimates, the fourth payment for 2025 is due January 15, 2026, which generally covers income from September through December. California filers follow the federal calendar unless the state announces disaster‑relief changes. IRS

California note: If you sold investments this year, remember California taxes all capital gains as ordinary income, with no lower long term rate at the state level. That can make under‑withholding easier than it looks. State of California Franchise Tax Board

2) Capture your full workplace match and top up retirement

If your employer matches retirement contributions, verify you have contributed enough to earn every available match before your final paycheck of the year. For 2025, the employee limit for 401(k), 403(b), and most 457(b) plans is $23,500, plus $7,500 if you are age 50 or older. These limits are calendar‑year based. IRS

Why it matters: A full match is an immediate, risk‑free return. If you “capped out” early, confirm your plan did not shut off contributions in a way that missed match dollars.

3) Consider an IRA or Roth IRA, even if you have a plan at work

IRA contributions can be made up to your filing deadline, but choosing the right account now helps with cash planning. For 2025, the combined IRA limit is $7,000, plus $1,000 if you are 50 or older. Deductibility for traditional IRA contributions phases out when you (or a spouse) are covered at work; eligibility to contribute to a Roth IRA also phases out at higher incomes. For 2025, Roth IRA phase-outs run $150,000–$165,000 (single) and $236,000–$246,000 (married filing jointly). Traditional IRA deduction phase-outs (if you are covered at work) are $79,000–$89,000 (single) and $126,000–$146,000 (married filing jointly). IRS IRS+1

Tip: If your AGI is modest, your retirement contribution may also qualify for the Saver’s Credit; check the instructions for Form 8880 or ask a tax professional how this might apply to you.

4) Use your HSA eligibility wisely, and review FSA balances

If you are in a high‑deductible health plan, 2025 Health Savings Account limits are $4,300 for self‑only coverage and $8,550 for family coverage, with an extra $1,000 if you are 55 or older. HSA contributions can be made up to your filing deadline. Centers for Medicare & Medicaid Services

If you have a health FSA at work, the 2025 salary reduction limit is $3,300; if your employer offers carryover, the maximum carryover into the next plan year is $660. Most FSAs are use‑it‑or‑lose‑it, so check your plan’s grace‑period or carryover rules and schedule eligible spending before deadlines. For dependent care FSAs, the federal exclusion remains $5,000 in 2025 for most plans ($2,500 if married filing separately). Gold Rush Cam

California note: State tax generally follows federal rules on FSAs, but payroll reporting can differ. Review your last pay stub of the year to confirm totals.

5) Revisit your investment mix and rebalance if needed

Market moves during the year can quietly pull your portfolio away from your target mix. Before year end, compare your current allocation with your plan (for example, 60% in stocks, 30% in bonds, 10% in cash) and rebalance if it is out of line.

Whenever possible, make changes inside retirement accounts and HSAs, where you will not realize taxable gains. In taxable accounts, coordinate rebalancing with any tax loss or gain harvesting you are doing in move 8, and watch for short term gains that are taxed at higher rates. If you are holding large cash balances, confirm you are earning a reasonable yield and that those dollars are clearly earmarked for near term spending or your emergency fund.

6) Confirm RMDs and consider Roth conversions

If you are already taking required minimum distributions (RMDs) from traditional IRAs or employer plans, double-check that the total you have withdrawn for 2025 matches the amount on your custodian’s RMD notice and that the funds come out by December 31, unless you are in your very first RMD year and intentionally using the April 1 option. Missing or under-paying an RMD can trigger penalties, though recent law allows reduced penalties when you correct the mistake promptly.Investopedia+1

If you are not yet subject to RMDs but expect higher tax rates in future years, consider whether a partial Roth conversion this year makes sense. Conversions must be completed by December 31 to count for 2025 and will increase your taxable income, so coordinate them carefully with other moves on this list, especially withholding, capital gains, and credits.

California note: Both RMDs and Roth conversions are taxed as ordinary income for California as well, so use a combined federal plus state rate when you evaluate the trade-offs.

7) Use charitable giving rules to your advantage

Give by December 31 to claim 2025 deductions if you itemize. Cash gifts to public charities can be deductible up to a percentage of AGI, and non‑cash gifts above certain amounts may require a qualified appraisal. If you are age 70½ or older, you can make a Qualified Charitable Distribution directly from an IRA to an eligible charity. For 2025, the QCD annual limit is $108,000 per person, and there is a one‑time option up to $54,000 to certain split‑interest arrangements. QCDs can offset required minimum distributions for those subject to RMDs. IRS

California note: California’s conformity is mixed and may not provide a separate state‑level QCD benefit. The main advantage of a QCD is the federal exclusion from income; check how California treats your IRA distribution and charitable deduction on Schedule CA and in FTB Publication 1001. State of California Franchise Tax Board

8) Harvest losses—or realize gains in the 0% bracket—with care

If you have losses in a taxable account, realizing them can offset capital gains and up to $3,000 of ordinary income, with unused losses carrying forward. Avoid the wash sale rule by not repurchasing the same or a substantially identical investment within 30 days before or after the sale. On the other hand, if your taxable income sits in the 0% long term capital‑gains bracket, you can realize gains to raise basis without federal tax. For 2025, the top of the 0% bracket is $48,350 (single), $96,700 (married filing jointly), and $64,750 (head of household). IRS

California note: California taxes capital gains as ordinary income with no 0% bracket. A gain that is tax‑free federally can still raise your California tax. State of California Franchise Tax Board

9) Make a plan for child care, college savings, and family credits

If you use a dependent care FSA, confirm your 2025 elections and coordinate with the child and dependent care credit. For college savings, 529 plan contributions grow tax‑deferred and are tax‑free when used for qualified education expenses. California does not offer a state income tax deduction for 529 contributions, so you can use any state’s plan without losing a California tax benefit. Consider automatic monthly contributions and a year‑end top‑up if your budget allows. savingforcollege.com

Child Tax Credit: Under the One Big Beautiful Bill Act (Public Law 119‑21), the 2025 Child Tax Credit is up to $2,200 per qualifying child under 17 (the refundable portion remains $1,700). Update your withholding to reflect the credit you expect to claim. Congress.gov

10) Review your pay stub, benefits, and insurance before the last check

Open enrollment is the right time to confirm life and disability insurance at work, add or remove dependents, and check that taxable fringe benefits are reported correctly. If you changed jobs, verify that Social Security withholding is correct and that you did not over‑defer into multiple retirement plans. Small corrections are easiest to make before the final payroll of the year.

11) Tidy up your household finances

Aim for a basic emergency fund, automate transfers to savings, and review credit reports for accuracy. If you carry credit card balances, consider using any year‑end cash surplus to reduce the highest‑rate debt first. Update beneficiaries on retirement accounts, insurance, and 529s, and confirm transfer‑on‑death designations on taxable accounts.

12) Energy improvements can still earn credits in 2025 (but many end after this year)

For 2025, the Energy Efficient Home Improvement Credit (25C) generally equals 30% of qualifying costs, with annual caps that can total up to $3,200, including a separate $2,000 limit for certain heat pumps and related equipment. The Residential Clean Energy Credit (25D) is also 30% in 2025. Important: Under the One Big Beautiful Bill Act, both 25C and 25D end for property/expenditures after December 31, 2025. Keep receipts and manufacturer certifications with your records. IRS

California note: Many utilities offer rebates in addition to federal credits; check your local provider’s site and state programs.

Disclosures

Westlight Wealth is the primary FBN of Rounick Capital Management LLC, a state‑registered investment adviser in California. Registration does not imply a certain level of skill or training. This material is for educational purposes and is not tax, legal, or accounting advice. Always consult your tax advisor and attorney about your specific situation. Information is believed to be accurate as of the publication date and may change without notice. Investing involves risk, including possible loss of principal. Past performance does not guarantee future results. Hyperlinks to third‑party websites are provided for convenience and do not imply endorsement.