Preparing for Year-End: Tax and Savings Tips

Preparing for Year-End: Tax and Savings Tips

As 2025 draws to a close, many Americans are seeking ways to stretch their dollars, manage rising costs, and enter the new year on a stronger financial footing. While the economy continues to feel the effects of ongoing inflation, year-end planning doesn’t have to be overwhelming. A few thoughtful tax and savings moves can help you keep more of what you earn, reduce financial stress, and set yourself up for a steadier start to 2026.

Here are practical, doable steps to consider as you wrap up the year.

1. Check Your Withholding and Estimated Taxes

If your income changed this year—whether through a raise, a side gig, a job switch, or reduced hours—your tax withholding might not be aligned with what you’ll owe. Use the IRS withholding estimator or consult a tax professional to make sure you’re not headed for an unpleasant surprise in April.

For self-employed individuals and freelancers, review your quarterly estimated tax payments to ensure accuracy. If inflation increases your project rates or hours worked, you may need to adjust your final payment in January.

2. Max Out Tax-Advantaged Accounts

This time of year is a good reminder to revisit your retirement contributions. For 401(k)s and similar employer plans, you have until December 31 to increase contributions. Even bumping up your percentage for the last few pay periods can reduce your taxable income and boost long-term savings—an especially helpful buffer during periods of higher living costs.

For IRAs, you’ll have until April 15 to make contributions for 2025, but reviewing where you stand now can help you plan ahead. If you’re eligible for a Roth IRA, the ability to pay taxes now (rather than later) can be beneficial during inflationary periods when future purchasing power is uncertain. As is always the case, be sure to consult your legal and/or tax advisor.

3. Use Remaining FSA Funds

If you contribute to a Flexible Spending Account (FSA), check your balance. Most FSAs operate under a “use-it-or-lose-it” rule, meaning unspent funds may disappear at year’s end. Eligible expenses include prescriptions, glasses, dental procedures, and over-the-counter medications.

Some employers offer a grace period or allow a small amount of funds to carry over—know your plan’s rules so you don’t leave money on the table.

4. Review Charitable Giving Opportunities

Year-end is a popular time to support causes close to your heart. If you itemize deductions, charitable giving may also reduce your tax burden. Cash donations, appreciated assets, or even contributions made through donor-advised funds can be beneficial options.

If you’ve felt the pinch of inflation this year and can’t give financially, remember that volunteering your time still makes a meaningful impact.

5. Revisit Your Budget Before 2026

Budgets can drift during the year—especially when everyday expenses creep up faster than expected. Take an hour to look at your spending patterns:

• Which costs increased due to inflation?
• What subscriptions or services aren’t serving you anymore?
• Are there ways to redirect even small amounts toward savings or debt reduction?

A quick budget refresh now can help reduce stress later, especially when holiday spending winds down and routine expenses resume.

6. Build or Rebuild Your Emergency Savings

If rising costs forced you to dip into your emergency fund this year, you’re not alone. Even adding $10–$50 per pay period can slowly rebuild your safety net. A modest but growing emergency fund can make a big difference in navigating 2026 with confidence, especially if unexpected car repairs, medical bills, or job changes occur.

7. Prep for Big Goals in 2026

Planning a home purchase, a big family trip, or college tuition payments next year? Start mapping out what those expenses may look like under current economic conditions. You don’t need a perfect plan—just clarity. Creating categories in your budget or opening a separate savings account can make long-term goals feel more manageable.

Year-end financial planning doesn’t have to be dramatic or stressful. With a few intentional steps, you can create more breathing room, reduce your tax burden, and enter 2026 feeling steadier—despite the economic challenges many households are facing. And if you need some help working out these strategies for your financial situation, be sure to get in touch with our Financial Consultant.

Your financial picture doesn’t need perfection, but it does need your attention. Starting now ensures you’re giving yourself the best possible foundation for the year ahead.