As 2024 winds down, it’s time to assess your finances and take advantage of year-end opportunities to reduce your tax bill—both for this year and in the future. While this fall’s elections may impact tax policy, the current tax landscape is stable, giving you a clear runway for planning. Here are some tried-and-true strategies to keep in mind to help minimize taxes before December 31.

Timing Income and Deductions

For most taxpayers, the goal is to defer income and accelerate deductions, which can lower taxable income in the current year. But if you expect to be in a higher tax bracket in the future, it might make sense to reverse that strategy by accelerating income and deferring deductions.

Tax-Loss Harvesting

If you have investments with losses, you can sell them to offset capital gains—and even ordinary income, up to $3,000 per year. Even if the markets have performed well overall, there may still be opportunities to harvest losses from individual stocks, bonds, or funds. Be sure to review your portfolio with your financial advisor to identify any potential loss-harvesting opportunities.

If you had significant losses in 2023 or previous years, those losses might carry forward and apply to your 2024 tax bill. Your advisor or accountant can help determine whether any action is needed to take advantage of these carry forwards.

Capital Gains Harvesting

If your 2024 taxable income is below $94,050 (married filing jointly) or $47,025 (single), you could benefit from the 0% capital gains rate. This strategy is especially useful if you expect your income to increase in the coming years—say, if you’re a business owner expecting a profitable 2025. By realizing gains now, you lock in tax-free growth without adding to your future tax burden.

Charitable Giving Strategies

Giving to charity doesn’t just feel good—it can also help reduce your tax liability. Here are three charitable strategies to explore:

Qualified Charitable Distributions (QCDs)

If you’re 70½ or older, you can make a QCD directly from your IRA to a qualified charity. This reduces your adjusted gross income (AGI) and counts toward your required minimum distribution (RMD)—a win-win, especially if you take the standard deduction.

Bunching Charitable Contributions

Since the Tax Cuts and Jobs Act (TCJA) nearly doubled the standard deduction, fewer taxpayers benefit from itemizing. Bunching allows you to group multiple years of charitable gifts into a single year, allowing you to exceed the standard deduction. In off-years, you can revert to taking the standard deduction. Donor-advised funds can be a great tool for this strategy, giving you flexibility over when charities receive the funds.

Donating Appreciated Assets

Instead of giving cash, consider donating appreciated stocks or other publicly traded securities. You’ll avoid paying capital gains tax on the growth and receive a deduction equal to the asset’s market value (subject to AGI limits).

Retirement Planning Moves

If you’re preparing for retirement or already there, now is the time to make sure you’re using the tax benefits available to you.

Max Out Contributions

For 2024, you can contribute up to $23,000 to a 401(k) or 403(b), plus an additional $7,500 if you’re 50 or older. SIMPLE IRAs allow contributions of $16,000, plus a $3,500 catch-up for those 50 and older. For IRAs, the limit is $7,000, with a $1,000 catch-up contribution. Contributions to 401(k) and SIMPLE IRA plans must be made by December 31, but you have until April 15, 2025, to contribute to an IRA.

Take RMDs on Time

If you turned 73 this year, make sure to take your first RMD by April 1, 2025—but remember, waiting means you’ll need to take two distributions in the same year. For everyone else subject to RMDs, be sure to withdraw the required amount by December 31, 2024, to avoid a steep 25% excise tax.

Consider a Roth Conversion

With the TCJA’s lower tax rates set to expire at the end of 2025, now may be an ideal time to convert traditional IRA funds to a Roth IRA. Although a Roth conversion triggers taxes upfront, future qualified withdrawals will be tax-free—making it a savvy move if you expect tax rates to rise or anticipate higher income during retirement.

Estate and Gift Planning

The end of the year is also an ideal time to think about legacy planning. Here are a few strategies to consider:

Annual Gift Exclusion

You can gift up to $18,000 per recipient in 2024 without it counting against your lifetime estate and gift tax exemption. Married couples can double that amount to $36,000 per recipient. Use this exclusion wisely—any unused portion doesn’t carry over to the following year.

Leverage 529 Plans for Education Gifts

Contributions to 529 plans grow tax-deferred, and withdrawals for qualified education expenses are tax-free. You can even “superfund” a 529 by making five years’ worth of gifts at once—up to $90,000 per child (or $180,000 for couples).

Plan for the TCJA Sunset

The current gift and estate tax exemption of $13.61 million will drop to roughly $7 million in 2026, when the TCJA sunsets. To lock in today’s higher exemption, consider making large gifts in 2024 or 2025. The IRS’s anti-clawback rules ensure that gifts made under the current exemption won’t be taxed retroactively after the limit decreases.

Move Life Insurance Into an ILIT

If you hold a significant life insurance policy, consider transferring it to an irrevocable life insurance trust (ILIT). This strategy removes the policy’s death benefit from your taxable estate—provided you survive three years after making the transfer—potentially saving your heirs from a hefty estate tax bill.

Staying Ahead of the SECURE Act Changes

Recent changes under the SECURE 2.0 Act will affect retirement planning in the coming years. Starting in 2025, workers at larger companies will be automatically enrolled in 401(k) or 403(b) plans, and catch-up contributions will increase for those aged 60 to 63. If you inherit an IRA subject to the 10-year rule, you may also need to begin taking annual RMDs starting in 2025.

Plan Now to Maximize Your Savings

Year-end is the perfect time to review your financial situation, align it with your long-term goals, and explore ways to reduce your tax burden. Whether you’re managing investments, planning for retirement, or setting up gifts for future generations, working closely with a financial advisor can help ensure you make the most of the opportunities available. The clock is ticking—don’t wait to put these strategies into action.

If you've found value in these insights, I invite you to dive deeper into the world of business growth by subscribing to the Candy Valentino Show on Apple Podcast.

You can also explore further business training opportunities at foundersorganization.com to see our upcoming events and services.