As 2025 winds down, the window for effective tax and financial planning is closing quickly. This year has presented unique opportunities and considerations: permanent tax brackets, restored business deductions, updated Washington state capital gains rules, and historically high federal estate thresholds.
To provide clear, actionable guidance, the ODC team hosted two end-of-year planning webinars—one for individuals and one for business owners. Both sessions reinforced that proactive planning creates control and flexibility that cannot be regained after December 31.
Our recap highlights high-impact actions from the webinars, with five steps for individuals and five for business owners to prioritize before year-end. For a deeper dive into long-term strategies and comprehensive planning considerations, read our year-end planning blog.
For Individuals: Five Steps to Maximize Your Financial Position
These are five high-impact moves identified during the webinar that can help protect wealth, optimize taxes, and strengthen your estate and retirement strategy. By prioritizing these steps, you can position your personal finances and legacy planning for success in 2026.
1. Revisit Roth Conversions While Tax Brackets Stay Favorable
With current federal tax brackets now permanent, converting portions of a traditional IRA or 401(k) can reduce future taxable income, mitigate large Required Minimum Distributions (RMDs), and create tax-free growth for beneficiaries. For example, converting up to the 22% tax bracket each year can help manage your tax liability over time. Even small, staggered conversions can make a meaningful difference.
2. Plan for IRMAA, Medicare Premiums, and the New Senior Deduction
Your income today affects Medicare premiums two years later. For 2025, individuals with modified adjusted gross income (MAGI) above $106,000 (single) or $212,000 (joint) may face higher premiums. Managing withdrawals or conversions from taxable and tax-deferred accounts before year-end can help keep premiums lower.
This is also an opportunity to maximize the new Senior deduction: seniors aged 65+ can claim an additional $6,000 deduction (in addition to the standard or itemized deduction). The deduction phases out above $75,000 MAGI (single) or $150,000 (joint), reduced 6% for every dollar over these thresholds, phasing out completely at $175,000 (single) and $250,000 (joint). Managing withdrawals or conversions from taxable and tax-deferred accounts can help you stay below, or at least within, the phase-out range.
3. Shape Your Capital Gains
Long-term capital gains are taxed at 0%, 15%, or 20%, while short-term gains follow ordinary income brackets. Harvesting investment losses to offset gains—and coordinating with your wealth advisor to manage realized gains—ensures your tax outcomes are intentional. Remember, up to $3,000 of remaining capital losses can offset ordinary income annually, with the rest carried forward.
4. Make Charitable Giving a Strategic Move
Charitable contributions can reduce taxable income while supporting causes you care about. Options include Qualified Charitable Distributions (QCDs), available up to $108,000 per person in 2025, and Donor Advised Funds (DAFs), which allow “bunching” contributions to exceed standard deduction limits. These strategies can also help manage AGI for IRMAA purposes.
5. Advance Estate Planning Conversations
With the federal estate exemption at $13.99M in 2025 (rising to $15M in 2026), now is the time to review your estate strategy. Tools like Grantor Trusts, Spousal Lifetime Access Trusts (SLATs), and Charitable Remainder Trusts (CRTs) can reduce future estate taxes, provide for heirs efficiently, and align with long-term legacy goals.
For Businesses: Five Moves That Matter Before the Calendar Turns
These five actions highlight the most impactful steps for business owners who want to optimize taxes, plan capital investments, and set themselves up for a strong 2026. Acting now allows you to protect cash flow, minimize tax exposure, and strategically position your business.
1. Reassess R&D Expenses Under the New Expensing Rules
The One Big Beautiful Bill (OBBB) restores immediate expensing for domestic R&D costs. Small businesses with gross receipts under $31M can retroactively amend prior returns, while larger businesses can deduct unamortized costs in 2025 or ratably over 2025–2026. Evaluating past capitalization and potential adjustments now can unlock meaningful deductions.
2. Time Your Capital Purchases for Maximum Bonus Depreciation
With 100% bonus depreciation restored for assets placed in service after January 19, 2025, consider whether planned equipment, technology, or property acquisitions should be accelerated or delayed. Proper timing can reduce taxable income in the current year while supporting operational growth.
3. Review and Optimize Your QBI Strategy
The 20% Qualified Business Income deduction is now permanent. Updated phase-in ranges are $150,000 for MFJ filers and $75,000 for single filers. Confirm that W2 wages, qualified property, and entity structure are aligned to maximize this deduction. Small adjustments now can produce substantial tax savings.
4. Evaluate PTE Elections Before Year-End Payments
For pass-through entities in states with state and local tax (SALT) limitations, consider the timing and benefit of a PTE election. OBBB increased the SALT cap to $40,000, with phase-out thresholds at $600,000 (MFJ) and $300,000 (single/HOH). Coordinating elections with your overall tax strategy before final payments are made can preserve deductions and reduce taxable income.
5. Plan for Washington Capital Gains on Sales or Transfers
For businesses in Washington state, proactive planning is essential. In 2025, gains above the $278,000 standard deduction are taxed at 7%, with gains over $1M taxed at 9.9%. Planning for potential sales, installment arrangements, or residency changes before year-end can minimize tax exposure and maximize exemptions.
Act Now to Protect Your Financial Future
These steps represent just a few actions you can take to influence your financial and tax outcomes for 2025 and beyond. ODC advisors are ready to review your unique situation, help prioritize the right moves, and implement strategies that align with your long-term objectives.
Reach out today to schedule your year-end planning consultation to ensure a strong start to the new year.
