Your Year-End Tax and Estate Planning Review Just Got Urgent

A man makes notes in a small spiral notebook while working on his laptop at his desk, only his hands showing.

As the year winds down, many people meet with their advisers to revisit taxes, estate plans and retirement accounts. This is a familiar routine, but 2025 is not an ordinary year.

Several tax provisions from the One Big Beautiful Bill Act (OBBBA) become effective in 2026, and those changes will alter your approach to charitable giving, gifting to loved ones or friends and retirement planning.

At the same time, interest rates have begun to drift lower, which opens doors for planning opportunities that were less attractive in recent years.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

In other words: This year, timing matters more than ever. Here are five areas to review before December 31.

About Adviser Intel

The author of this article is a participant in Kiplinger's Adviser Intel program, a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

1. Charitable giving rules are shifting, so consider acting now

Beginning in 2026, taxpayers who itemize will only be able to deduct charitable gifts that exceed 0.5% of adjusted gross income. The value of charitable deductions for top-bracket taxpayers will also decline from 37% to 35% under the new law.

As a result, many households may find that charitable gifts are more valuable when made in 2025. If you already know which organizations you plan to support, consider accelerating several years of giving into this year.

If you want the deduction now but need more time to choose specific recipients, consider setting up or contributing to a donor-advised fund (DAF), which allows you to make a deductible contribution this year and distribute grants anytime in the future.

Other charitable tools may also be attractive. A charitable remainder trust can create a current-year deduction while allowing you to receive an income stream over time.

And individuals who are at least age 70½ can also direct up to $108,000 in 2025 from an IRA to charity through a qualified charitable distribution (QCD).

A QCD satisfies part or all of your required minimum distribution (RMD) and avoids increasing your taxable income. Note that QCDs cannot be directed to donor-advised funds or private foundations.

2. Gifting rules are clearer and more favorable this year

Last year brought uncertainty about the future of the lifetime estate and gift tax exemption, but the OBBBA has resolved those questions.

The exemption remains at historically high levels for 2025: $13.99 million per individual and $27.98 million per couple. These amounts rise in 2026 to $15 million and $30 million, respectively.

Families with taxable estates may want to use some of their exemption in 2025. For those who have already used their full exemption, the 2026 increase provides an opportunity to "top off" with an additional $1.01 million per person early next year.

The annual exclusion also remains a simple and effective tool for transferring assets. You can give up to $19,000 per person in 2025 without using your lifetime exemption.

When possible, consider giving cash or high-basis assets so that recipients are not burdened with large built-in gains if they later sell.

You can also pay tuition or medical expenses directly to the institution or provider without those payments counting as gifts at all. This is often one of the most efficient ways for grandparents to support younger generations.

3. Lower interest rates open the door to new planning ideas

Declining interest rates improve the effectiveness of several estate planning vehicles that rely on IRS-published rates.

Intrafamily loans. Intrafamily loans allow family members to borrow at lower rates than those offered by commercial lenders. Any investment return above the loan's interest rate benefits the borrower rather than remaining in the lender's taxable estate.

If you made intrafamily loans in recent years, refinancing them at today's lower rates may also be worth considering.

Grantor retained annuity trusts. GRATs transfer appreciated assets to beneficiaries with minimal gift tax exposure when returns exceed the "hurdle rate" (the IRS Section 7520 rate) that has to be distributed back to the grantor.

That rate has been moving lower this year, which improves the likelihood of a successful GRAT.

Many families use a series of shorter-term GRATs to take advantage of market swings and increase the chances that at least one trust captures meaningful appreciation.

Charitable lead annuity trusts. CLATs follow similar interest rate dynamics. A CLAT provides annual income to a charity for a set period, and any remaining assets eventually pass to individual beneficiaries designated in the CLAT.

Lower rates increase the potential remainder amount at the end of the trust term, which can make this an appealing option for those who want to support charitable causes while also transferring future appreciation to heirs.

4. Use year-end to refresh your retirement planning

While retirement planning may seem like a "set it and forget it" process, year-end is the right time to review contribution levels, beneficiary designations and distribution requirements.

In 2025, the contribution limit is $7,000 for IRAs (or $8,000 for those 50 or older) and $23,500 for 401(k) and 403(b) plans ($31,000 for those 50 or older). Individuals ages 60 to 63 benefit from temporarily higher catch-up thresholds, allowing contributions of up to $34,750 in 2025.

Beginning in 2026, high-income earners — those who made more than $150,000 the prior year — will be required to make catch-up contributions to employer plans on a Roth basis, meaning contributions will be made after taxes but will grow tax-free.

If you are 73 or older, be sure to complete required minimum distributions (RMDs) from retirement accounts before year-end to avoid excise tax penalties.

Beneficiaries of inherited IRAs should pay particular attention to the rules: Under regulations finalized in 2024, many heirs must take annual RMDs rather than waiting to distribute the entire account in the 10th year.

5. Look for other ways to reduce your tax bill before year-end

Several smaller moves can meaningfully reduce your overall tax bill as well.

Harvest losses. Selling investments at a loss can offset realized gains and reduce your overall tax burden.

Be mindful of the 30-day wash sale rule, which can eliminate the benefit of the loss if the same or a substantially identical investment is purchased too soon.

Review income timing. Consider whether it makes sense to accelerate or defer income based on your expected 2026 tax bracket.

Some taxpayers may benefit from recognizing income this year, while others may benefit from waiting. Roth conversions are one option that can help manage future taxes.

Fund your health savings account. If you have a high deductible insurance plan, an HSA offers tax-deductible contributions, tax-deferred growth and tax-free withdrawals for qualified medical expenses.

Limits rise slightly in 2026, but contributing this year can provide immediate tax advantages.

Year-end planning always matters, but this year it matters more. With new rules arriving in 2026 and a more favorable interest-rate environment developing, smart decisions to close out 2025 can create meaningful long-term benefits.

A careful review before December 31 can help you enter the new year with greater clarity and confidence.

Denise McClain, JD, CPA, is a Director at Hirtle Callaghan with responsibility for leading family relationships from our Arizona office. Denise brings over 26 years of her legal and financial experience working with multigenerational client families on all aspects of their financial lives. Denise draws on her past experiences to help clients develop and implement their wealth transfer plans and makes recommendations about wealth transfer and tax-saving strategies.

Alan Weissberger, Esquire, is the Senior Tax and Estate Planning Solution Specialist with primary responsibility for the financial, estate and tax planning for individual clients at Hirtle Callaghan. Prior to joining Hirtle Callaghan, Alan worked for the law firm of Morgan Lewis and Bockius, LLP, in their Personal Law Practice Group.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

TOPICS

Alan is the Senior Tax and Estate Planning Solution Specialist with primary responsibility for the financial, estate and tax planning for individual clients at Hirtle Callaghan. Prior to joining Hirtle Callaghan, Alan worked for the law firm of Morgan Lewis and Bockius, LLP, in their Personal Law Practice Group. Alan earned a B.S. (High Honors) in Accounting from The Pennsylvania State University and a J.D. magna cum laude from the University of Pittsburgh School of Law. Prior to attending law school, Alan served as a Senior Auditor at Deloitte & Touche. He also obtained a Certified Public Accountant (CPA) designation but is not currently practicing.