10 Smart Tax Moves Every Retiree Should Make Before December 31

Introduction

As you head into the year-end, now is the perfect time to sharpen your tax strategy and put proactive measures in place. Whether you’re enjoying retirement or nearing that milestone, taking action on key tax moves before December 31 can help protect your income, reduce your tax bill, and set you up for a smoother 2026. Retirees face a unique tax landscape—including required minimum distributions (RMDs), Roth conversion decisions, and the impact of new tax rules.
In this article, we’ll walk through 10 strategic actions you should consider to stay ahead of tax issues, plus practical steps you can take right away.

1. Review Your RMDs (Required Minimum Distributions)

If you’re age 73 or older, you’re required to take minimum distributions from your Traditional IRAs, 401(k)s or other qualified plans. Missing your RMD deadline—or delaying a first RMD into April of the following year—can trigger significant tax consequences, including being pushed into higher tax brackets.
Action step: Verify how much you owe for 2025, check whether you’re on track or will need to take two distributions in one year, and plan accordingly.

2. Think About Roth Conversions

Converting Traditional IRAs or similar accounts into a Roth IRA can make sense if your taxable income is relatively low now but likely to increase later. Accelerating a Roth conversion now may lock in tax-free growth and ensure your future withdrawals won’t be taxed.
Action step: Review your projected income for the year to determine whether a Roth conversion makes sense before December 31.

3. Harvest Investment Losses (Tax-Loss Harvesting)

Tax-loss harvesting involves selling investments at a loss to offset capital gains in your taxable brokerage account. This is a powerful strategy to reduce your tax liability if you’ve realized significant gains this year.
Action step: Review your taxable investment accounts and identify any loss positions that may help offset this year’s gains.

4. Consider Converting a 529 into a Roth

Recent rule changes now allow some taxpayers to convert unused 529 plan funds into a Roth IRA under specific conditions. This can be a smart move if you have leftover education savings and want to redirect funds toward long-term tax-free retirement growth.
Action step: If you have unused 529 funds, confirm your eligibility and evaluate whether a conversion fits into your long-term tax plan.

5. Use Deduction “Bunching” to Your Advantage

If you itemize deductions, you may benefit from “bunching” — grouping large deductible expenses into a single year so you can claim itemized deductions one year and the standard deduction the next.
Action step: Consider prepaying charitable contributions, medical bills or property taxes before year-end if you expect to itemize.

6. Finish Charitable Contributions Before Year-End

Charitable giving remains one of the most flexible and tax-efficient strategies available to retirees. Completing your charitable contributions before December 31 ensures the deduction counts for this tax year.
Action step: Finalize your charitable giving plan, whether through direct donations, donor-advised funds or qualified charitable distributions (QCDs).

7. Update Retirement Income Withholding and Estimated Taxes

If you receive retirement income—such as pension payments, annuities or Social Security—your withholding may need updating to avoid under-payment penalties.
Action step: Review your year-to-date withholding and estimated tax payments. Make adjustments now to prevent surprises at tax time.

8. Review Your Healthcare Coverage During Open Enrollment

Medicare and marketplace plans often change from year to year. Comparing your choices during open enrollment ensures you’re receiving the best benefits for your health and tax situation.
Action step: Review coverage changes, plan costs and potential impacts to your taxable income or Medicare surcharges.

9. Revisit Your Estate Plan and Beneficiary Designations

Estate tax thresholds, gift limits and inherited IRA rules continue to shift. Reviewing your estate planning documents annually helps ensure your assets are protected and distributed according to your wishes.
Action step: Update wills, trusts, designations and powers of attorney. Confirm everything reflects your current life situation.

10. Lock in the Year-End Review (Make Tax Planning a Priority)

Waiting until tax season to make changes often results in missed opportunities. By taking action now, you maintain control over your income, deductions and tax exposure.
Action step: Schedule a year-end meeting with your tax professional and review all income sources, deductions and upcoming tax-law changes.

Conclusion

The end of the year is more than just a holiday season—it’s a strategic tax planning window. For retirees, the difference between acting now and waiting until filing season can significantly impact cash flow, taxes owed and long-term financial security. With the right guidance—and a proactive plan—you can turn year-end tax decisions into long-term advantages.