The tax code is fundamentally annual. Deductions taken by December 31 reduce your 2025 liability, while those taken on January 1 apply to 2026. This distinction is critical: income recognized this year is taxed at current rates, and strategies requiring setup must be implemented before the year closes .
Missing the deadline doesn’t just mean a delay; it often means the opportunity is lost permanently.
The 6 Best Year-End Tax Moves for High Earners
To reduce taxable income legally, prioritize these strategies based on impact and implementation complexity.
Quick Reference: Strategy Impact & Deadlines
| Strategy | Impact | Complexity | Deadline |
| 1. Retirement Contributions | High | Low | Dec 31 (401k) / Apr 15 (IRA) |
| 2. Tax-Loss Harvesting | Med-High | Medium | Dec 31 |
| 3. Charitable Contributions | Med-High | Medium | Dec 31 |
| 4. Accelerate Deductions | Variable | Med-High | Dec 31 |
| 5. Business Entity Elections | High | High | Varies (Retroactive options) |
| 6. Alternative Investments | Very High | High | Dec 31 |
1. Maximize Retirement Account Contributions
This is the easiest and most certain tax reduction available.
- Employees: Confirm you are contributing the maximum ($23,000; $30,500 if 50+) to employer plans.
- Self-Employed: Calculate and contribute to a SEP IRA or Solo 401(k), with limits up to $69,000.
- Low-Income Year? If your income is temporarily low, consider Roth conversions.
2. Execute Tax-Loss Harvesting
If you have capital gains, this strategy provides immediate relief.
- The Move: Sell losing positions to realize losses.
- The Benefit: Offset capital gains dollar-for-dollar. Excess losses can offset up to $3,000 of ordinary income.
- Warning: Avoid “wash sales” (repurchasing identical securities within 30 days).
3. Make Strategic Charitable Contributions
For charitably inclined individuals, year-end gifts combine tax efficiency with values alignment.
- Appreciated Securities: Donate stock directly to avoid capital gains tax while deducting the full market value.
- Donor-Advised Funds (DAF): Use a “bunching” strategy—making several years’ worth of donations in one year—to maximize itemized deductions.
4. Accelerate Deductions or Defer Income
- Defer Income: If you expect lower income next year, delay bonuses or business income.
- Accelerate Deductions: Prepay state taxes, property taxes, or business expenses before December 31.
- Note: Be mindful of the $10,000 SALT cap which affects state/local tax deductions.
5. Review Business Entity Elections
Entity decisions compound over years. Getting the structure right creates ongoing savings.
- S-Corp: Evaluate the S-Corp election to save on self-employment taxes.
- Restructuring: Consider entity changes to optimize for pass-through deductions.
6. Implement Alternative Investment Strategies
This strategy offers “Very High” impact with 80-100% immediate deductions possible.
- Oil and Gas: Evaluate investments for Intangible Drilling Cost (IDC) deductions.
- Opportunity Zones: Review qualified opportunity fund investments for capital gain deferral.
- Execution: Subscription agreements must be complete before December 31.
The 4-Week Implementation Calendar
Parkinson’s Law states that work expands to fill available time. Use this compressed calendar to ensure execution.
- Weeks 1-2 (Assessment): Calculate projected 2025 income and identify unused strategies .
- Week 3 (Decision): Confirm strategies, contact advisors, and gather funding .
- Week 4 (Execution): Complete all transactions. Ensure checks are mailed and electronic transfers initiated .
- December 31 (Absolute Deadline): All subscription agreements must be executed .
The High Cost of Inaction: A Case Study
What does procrastination actually cost? Consider a scenario with $600,000 income and a 40% combined tax rate where no optimization is performed.
- Missed 401(k): $9,200 lost savings.
- Missed Tax-Loss Harvesting: Estimated $5,000–$20,000 lost value.
- Missed Oil & Gas Investment: On a $100k investment, $32,000 in lost savings.
- Missed Charitable Bunching: $12,000 lost efficiency.
Total Potential Savings Not Realized: $58,400 – $73,40035.
This is not just paying taxes; it is leaving money on the table36.
Common Year-End Mistakes to Avoid
- Waiting for Perfection: You will never have complete certainty about year-end numbers. Estimate conservatively and act .
- Focusing on Small Savings: Don’t chase $500 deductions while ignoring $50,000 opportunities.
- Assuming Your CPA is Strategic: Most CPAs focus on compliance (filing correctly), not optimization (paying less). You must drive the strategy .
Next Step: The High-Income Earner’s Guide to Family Office Tax Strategies provides a comprehensive framework for year-round optimization. Download it now to implement these strategies before the window closes.
