6 strategies to consider before year-end

As the year comes to a close, here are six strategies to consider when thinking about your finances. Consider talking to a J.P. Morgan representative and your legal and tax advisors to help you with your year-end planning.

Retirement plans/accounts and contributions

Contributions to a traditional or Roth IRA for 2025 must be made by the due date for filing your 2025 income tax returns (not including extensions) – or April 15, 2026. Review what you have already contributed for 2025 and plan for any future retirement contributions.

If you own a business and want to set up a retirement account for your business, the SECURE Act extended the deadline to set up and fund most employer-sponsored qualified retirement plans to the sponsor’s tax filing deadline, including extensions (generally September 15 or October 15 of the following year, depending on the type of entity).

Thanks to the SECURE Act 2.0, there have been additional changes to IRA contribution rules that began in 2024 and continue to be in effect for the foreseeable future. We recommend reviewing these changes and working with a legal advisor and tax professional to plan out your retirement contributions.

Required minimum distributions (RMDs)

Take any required minimum distributions from your own retirement accounts before December 31 to avoid stiff penalties. Under SECURE Act 2.0, the age at which individuals must take their first required minimum distribution rose to 73. You can defer your first RMD to April 1 of the year after the year in which you turn 73, but after your first RMD, subsequent RMDs must be taken by December 31 of each year to avoid additional taxes.

As the result of final RMD regulations issued in 2024, no excise tax will be assessed for designated beneficiaries (and certain others) who inherited IRAs in 2020-2023 and did not take minimum distributions in 2021-2024. However, on January 1, 2025, those regulations became effective, and most beneficiaries are required to take RMDs in 2025 and beyond. These rules are complex, and we recommend clients consult with their own tax advisors before making decisions related to required distributions from inherited IRAs.

Harvest investment losses to offset capital gains, but beware of the wash sale rule

Using capital losses to offset gains may lower or eliminate capital gains taxes.

However, in order to deduct a loss from the sale of stock or securities in the year you make the sale, you must not trigger the wash sale rule. Among other requirements, this means that you must wait at least 30 days either before or after your sale date to repurchase a security you’ve sold for a loss or another security that is “substantially identical.” If you’re not sure whether a security is “substantially identical,” check with your accountant or other tax professional. The wash sale rule is highly complex, and you should consult your tax advisor regarding it.

Note that the wash sale rule applies only to disallow certain losses: You can repurchase a winning security that you had sold at a gain shortly before or after you sold it without triggering the wash sale rule.

Make gifts before year-end

In 2025, you can make an annual gift of up to $19,000 ($38,000 for married couples) to each recipient – the annual exclusion. If you don’t use your annual exclusion in a particular year, you lose it. Even if you are over the annual exclusion in a given year, you can make aggregate lifetime gifts of up to $13.99 million ($27.98 million for married couples) – the lifetime exemption applicable to 2025 – without triggering gift or estate taxes.

If you used your full lifetime exemption in 2024, you have an additional $380,000 ($720,000 for married couples) to give away this year due to annual inflation adjustments. The unified credit for gift and estate tax will increase to $15 million for 2026 and indexed for inflation after that.

Donate to charity this year

Charitable contributions may be deductible from U.S. federal taxable income if certain requirements are met and you itemize deductions. Making contributions in 2025 can help you to maximize the value of your charitable deduction based on two changes in the  One Big Beautiful Bill (OBBB).

First, the OBBB introduced a 0.5% floor for charitable gifts made beginning on January 1, 2026. Individuals who itemize can only deduct charitable contributions that exceed 0.5% of their adjusted gross income (AGI). Existing AGI limits, such as the 60% limit for cash contributions to public charities, remain in place. Contributions disallowed due to the AGI limits can be carried forward for five years. However, deductions carried forward from tax years beginning on or before January 1, 2026, are not subject to the newly imposed 0.5% floor. The allowable deduction is generally the fair market value of the gift, subject to adjustments.

Second, itemized deductions—including the charitable deduction--for taxpayers in the highest income tax brackets are reduced by 2/37. If you’re in the 37% bracket and you itemize your deductions, prior to January 1, 2026 each dollar contributed to charity would save you 37¢ in tax. As a result of the changes under the OBBB, that deduction would only save you 35¢ on your 2026 taxes and in future years.

If you think you may be subject to these limitations in the future, consider front-loading your charitable deductions into 2025. You can make direct gifts to end charities, or you can fund a donor-advised fund or private foundation. Speak with your J.P. Morgan representative or your tax advisor if you think you may be interested in an accelerated charitable strategy.

If you contribute qualifying appreciated property (most frequently stocks, bonds or other securities that have grown in value), you can generally qualify for the income tax deduction described above based on the full fair market value of the contributed property and avoid paying capital gains tax on the appreciation, so long as you’ve held that asset for at least a year, which can be a tax-efficient way of managing your charitable giving.

You can also consider making a “qualified charitable distribution” of up to $108,000 (for 2025) from your IRA or an inherited IRA – but only if you are over age 70½. A qualified charitable distribution does not give you an income tax deduction, but the amount of the distribution also is not includible in your income for 2025 even though it counts as part of your required minimum distribution (if you’re subject to RMDs).

Consider your stock options

If you will not be subject to the Alternative Minimum Tax (AMT) in 2025, consider exercising vested in-the-money incentive stock options, as this may have little or no U.S. federal income tax consequence.

The bottom line

The end of the year can be a good time to review your financial situation and ensure that you’re on track to meet your goals. These year-end steps can be a good place to start. Speaking with a financial advisor and your legal and tax advisors can be helpful to strategize and set yourself up for success next year and beyond.

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