In our year-end meetings, a number of valuable planning opportunities have surfaced. We’re sharing a few of them here so you can see how similar strategies might apply to your own situation.
Leveraging deferred compensation
A number of our clients have the ability to participate in deferred compensation plans through their employers. These programs allow you to shift a portion of your income into future years, often when you expect to be in a lower tax bracket. In one recent case, efficient use of a deferred compensation plan created nearly $50,000 in projected tax savings.
The main hurdle with deferring compensation is the reduction in take-home pay. But for many clients, this can be solved by supplementing the difference with existing after-tax assets—such as brokerage accounts or high-yield savings—so lifestyle spending doesn’t change.
If your employer offers a deferred compensation plan, it’s worth serious consideration. When structured properly, these plans can meaningfully reduce current-year tax liability while allowing the deferred amounts to grow in similar fashion to a 401K.
Optimizing health care choices during open enrollment
Open enrollment has surfaced a number of opportunities for clients to reduce annual health care costs simply by choosing a plan that better matches their actual usage. In several cases, clients were able to save meaningful amounts by switching from a traditional PPO to a high-deductible health plan paired with a Health Savings Account (HSA).
For dual-income households with two sets of employer options, we also evaluated whether it made sense to split coverage — such as placing a spouse on their own employer’s plan, or moving children onto the plan with better benefits or lower premiums. These changes can produce savings while improving overall coverage quality.
Our analysis compared total annual costs — including premiums, deductibles, employer HSA contributions, and expected utilization — to determine the most cost-efficient outcome. With many employers increasing premiums by 6% or more this year, these reviews created several hundred to several thousand dollars in annual savings.
Updating withholding in light of new tax law
Changes to the SALT cap under the OBBBA have made itemizing beneficial again for a number of households. In one case, a client’s combination of property taxes, state income taxes, and mortgage interest resulted in itemized deductions tens of thousands of dollars higher than the standard deduction.
Once we confirmed itemizing was advantageous, we adjusted the client’s payroll withholding to reflect the lower expected tax liability. This increased their monthly take-home pay immediately — effectively shifting money back into their pockets months before filing their return.
The best way to do a quick check if you will benefit from itemizing this year is to review a recent pay stub. If your combination of state income taxes, mortgage interest, and your yearly property taxes is greater than $31,500 ($15,750 if single) then you likely will itemize.
Spousal IRA contributions, Roth conversions, and i401K contributions
For couples with uneven retirement account balances, after-tax (nondeductible) IRA contributions can be a simple but powerful planning tool. Several clients this year benefited from contributing to the lower-balance spouse’s IRA, helping build parity between accounts over time.
These contributions create tax-deferred growth and are tracked through Form 8606, which records basis for the future. In some cases, these contributions were eligible for immediate back-door Roth conversions.
Even modest annual contributions compound meaningfully, and balancing account sizes between spouses provides greater flexibility in retirement distribution planning.
Business owners should also be aware of the powerful tax advantage afforded to them by way of individual 401K accounts (i401K). In one instance, we secured more than $15,000 of tax savings for a business owner through a profit-sharing contribution to their i401K.
Enhanced deduction and 0% long-term capital gains rates
For many clients age 65 and older, 2025 presents a unique combination of tax advantages. The enhanced standard deduction for this age group — which reduces income by $12,000 for those making less than $150,000 — can significantly reduce taxable income. In several cases, this lower income level also positioned clients to take advantage of the 0% long-term capital gains bracket.
This creates an ideal opportunity to harvest gains tax-free or simply take some profits on stocks after a solid 3-year run. By selling appreciated investments within the 0% bracket, clients can recognize gains with no tax owed. For some households, the combination of the enhanced deduction and careful income planning resulted in thousands of dollars in tax-free gains — all without changing lifestyle spending or portfolio strategy.
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As these examples show, small adjustments made before year-end can create meaningful tax savings and long-term planning advantages. If any of these strategies sound like they could apply to your situation, we’re happy to take a closer look. Reach out anytime and we can walk through the numbers together.
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