April 15 might be the most notorious tax deadline, but Dec. 31 brings us more federal income tax deadlines than perhaps any other day of the year.
That’s because Dec. 31 marks the last opportunity to qualify for certain money-saving tax credits and deductions. While you still might be able to earn those tax breaks next year, they won’t apply to the income tax return you file in the spring.
You should be aware of the following year-end IRS deadlines so you don’t miss out on valuable benefits.
1. Contributions to most workplace retirement plans
If your employer offers a 401(k) or other workplace retirement plan, Dec. 31 is typically the last day to make a contribution for the current tax year. Those who make contributions via payroll deduction probably don’t need to worry about this deadline, though — unless they’re able to make an additional contribution.
If you haven’t maxed out your workplace retirement plan contributions for this year and want to add more to your nest egg, talk to an HR representative or log in to your plan administration account to move that money before the end of the year. For most types of workplace retirement accounts, you can contribute up to $23,500 for 2025 plus, if you’re at least 50, an additional catch-up contribution of $7,500.
One exception is for workers who turned or will turn 60, 61, 62 or 63 this year. For them, the catch-up limit is higher — $11,250 — thanks to a recent change to federal law.
2. Donations to charity
Feeling generous? You can help others by making a charitable donation. However, in most cases, you must itemize your tax deductions — as opposed to taking the standard deduction, as most taxpayers do — to deduct charitable contributions for 2025.
Contributions must be made by the end of a given year to be deducted from that year’s income. So now’s the time to review your potential itemized deductions to see whether they add up to more than your standard deduction for 2025. If your itemized deductions are more, it’s more advantageous for you to itemize — and you’d therefore benefit from making more donations before the end of the year.
If you aren’t donating a large amount, however, you might be better off waiting to make your next donation to charity. See “Think Twice Before Donating to Charity This Holiday Season — Waiting a Few Weeks Could Save You Hundreds in Taxes.”
3. Tax-loss harvesting
If you’re rebalancing your portfolio or have less-valuable assets that you hope to get rid of, selling them before the end of the year can result in a potential tax deduction. If you realized gains by selling investments earlier in the year, you can use losses to offset those gains and reduce your capital gains tax liability. “Extra” losses can reduce your regular income by up to $3,000 per year (or $1,500 in the case of a married person who files a separate tax return). Additional excess losses can carry forward to another year.
While you don’t want to sell an investment “just because,” if selling a losing investment fits into your overall strategy, it might make sense to get a tax deduction by realizing those losses before the end of the year.
4. Roth IRA conversions
Are you planning to convert part or all of a traditional IRA to a Roth IRA? You need to have that conversion completed by year-end. You’ll also need to follow the rules set out by your trustee. For example, you might need to complete the conversion by a specific time on the last business day of the year.
Consider the tax implications of your conversion before you begin the paperwork. A financial professional might help you determine if a Roth conversion makes sense based on your income and tax bracket this year.
5. Required minimum distributions (RMDs)
For the vast majority of people who must withdraw a required minimum distribution (RMD) for 2025, the deadline is Dec. 31. If you don’t take it on time, the IRS could hit you with a 25% fine. Review your situation and the RMD formula to see if you need to take a distribution from your retirement account before the end of the year.
To learn more, see “Older Retirees Are Now up Against a Deadline That Could Cost Them Thousands. Here’s How to Avoid the 25% Fine..”
6. Qualified charitable distributions (QCDs)
If you’re on the hook for an RMD but don’t feel like you need the money (and don’t want to pay the resulting taxes), one way to get around this is to make a donation from your eligible account. This transfer, known as a qualified charitable distribution (QCD), counts toward your RMD.
For 2025, you can donate up to $108,000 as a QCD — tax-free.
7. Spending of health FSA funds
For the most part, money in a flexible spending arrangement (FSA) is use-it-or-lose-it. Whatever’s left in your FSA at the end of the year might not roll over into the coming year. So, if you still have money in your FSA, it’s a good idea to make some last-minute medical appointments or check the list of qualified medical expenses to see if you can make some purchases to spend down the account.
Some FSA providers offer a grace period or allow you to carry over a portion of your FSA funds. Check with your plan provider to see if you have those options, or if you need to make a plan to quickly use the money in the FSA so you don’t end up losing it.
8. Contributions to most 529 plans
Those saving for a child’s college education can contribute to a 529 plan at any time. States often establish these plans, and contributions don’t come with a federal tax deduction. However, some states offer tax benefits to those who contribute. For example, Arizona offers a tax deduction on state income taxes to residents who contribute to a 529, and Utah offers a tax credit.
Check your state tax policy on 529 plans. If you want to make an additional contribution and reap the state-level tax benefits, you likely can make it happen if you contribute by the end of the year.
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