What's Happening?
As the year-end approaches, financial experts are advising investors on strategic tax moves that can be made before December 31 to potentially boost refunds or reduce taxes owed for 2025. Key strategies include tax-loss harvesting, where investors sell losing assets to offset gains, and tax-gain harvesting, which involves selling profitable assets strategically if the investor falls within the 0% capital gains bracket. These moves are particularly relevant given the S&P 500's 17% rise year-to-date, which may limit the availability of losses for offsetting gains. Additionally, the IRS did not update withholding tables following President Trump's tax law changes, potentially leading to larger refunds for some taxpayers in 2026.
Why It's Important?
These tax strategies
are crucial for investors looking to optimize their financial outcomes as the tax season approaches. Tax-loss and tax-gain harvesting can significantly impact an investor's tax liability, allowing for better portfolio management and financial planning. The potential for larger refunds due to unchanged withholding tables under President Trump's tax law highlights the importance of understanding tax implications and planning accordingly. Investors who act quickly can take advantage of these strategies to improve their financial standing before the year-end deadline.
What's Next?
Investors have until December 31 to execute these tax strategies, with New Year's Eve being a full trading day. Financial advisors are likely to continue guiding clients on these moves, emphasizing the importance of timing and strategic planning. As the tax season progresses, taxpayers will need to assess their financial situations and consider additional tax planning opportunities, such as Roth conversions, to further optimize their tax outcomes.
