Year-End Financial Checklist for High Earners 2025

If you're earning $250,000+ annually, the end of the year isn't just about holiday parties and New Year's resolutions. It's your last chance to make strategic financial moves that could save you thousands in taxes and set you up for a stronger financial position in the coming year.

Key Deadlines to Remember:

• December 31: 401(k) contributions, Roth conversions, tax-loss harvesting, charitable gifts, annual gift exclusions
• January 15, 2026: Q4 2025 estimated tax payment
• April 15, 2026: HSA and IRA contributions for 2025

Here's the thing most high earners discover too late: procrastinating on your year-end financial checklist can cost you. Miss the December 31st deadline for certain strategies, and you've locked in unnecessary tax bills and missed optimization opportunities that won't come around again until next year.

This isn't your typical checklist telling you to "review your budget" or "set financial goals." You already know that stuff. Instead, we're focusing on the specific, time-sensitive actions that matter most for professionals with complex financial situations and substantial income.

Tax-Deferred Account Optimization

Max Out Those Contribution Limits

This seems obvious, but you'd be surprised how many high earners leave money on the table. For 2025, make sure you're hitting these limits before December 31st:

2025 Contribution Limits:

*The enhanced catch-up for ages 60-63 is available under SECURE 2.0, but not all plans have adopted this provision yet. Check with your HR department or plan administrator to confirm availability.

If you're self-employed or own a business, you have even more opportunities. SEP-IRAs (Simplified Employee Pension IRAs) allow contributions up to 25% of compensation or $70,000 (whichever is less). A Solo 401(k) can let you contribute up to $70,000 in total contributions if you're under 50.

Action item: Check your year-to-date contributions now. If you're not on track to max out, increase your contributions for your remaining paychecks.

The Backdoor Roth Strategy

If your income exceeds the Roth IRA phase-out thresholds (2025: $150,000-$165,000 for singles, $236,000-$246,000 for married filing jointly), you can't contribute directly to a Roth IRA. But that doesn't mean you should skip this powerful tool.

The backdoor Roth IRA strategy:

• Contribute $7,000 ($8,000 if 50+) to a traditional IRA without taking a deduction
• Immediately convert to Roth IRA
• Pay minimal taxes on the conversion (only on any gains between contribution and conversion)

Watch out for: The pro-rata rule. If you have existing traditional IRA balances, this strategy gets more complex and potentially less beneficial. Consider rolling old IRAs into your current 401(k) before executing a backdoor Roth.

Mega Backdoor Roth (If Your Plan Allows)

This is one of the most underutilized strategies for high earners. If your 401(k) plan allows after-tax contributions and in-plan Roth conversions or in-service withdrawals, you can funnel tens of thousands of additional dollars into Roth accounts annually.

After maxing your $23,500 employee deferral, you can make after-tax contributions up to the overall 401(k) limit ($70,000 in 2025, or $77,500 if you're 50+ and your plan allows the standard catch-up), then immediately convert those after-tax dollars to Roth.

Action item: Contact your Human Resources (HR) department or plan administrator to ask if your plan allows after-tax contributions and in-service distributions or in-plan Roth conversions.

Strategic Year-End Tax Planning Moves

Tax-Loss Harvesting

If you have taxable investment accounts, tax-loss harvesting should be an annual discipline, not an afterthought. The strategy is straightforward: sell investments that have lost value to offset capital gains from profitable investments you've sold during the year.

The math:

• Capital losses offset capital gains dollar-for-dollar
• If losses exceed gains, you can deduct up to $3,000 against ordinary income
• Remaining losses carry forward to future years

Example: You sold company stock earlier this year, realizing a $50,000 capital gain. By harvesting $30,000 in losses from underperforming positions in your taxable account, you reduce your taxable gain to $20,000. Assuming you're in the 24% federal bracket plus 3.8% net investment income tax, that's about $8,340 in tax savings.

Critical detail: Watch out for the wash sale rule. You can't buy the same (or substantially identical) security within 30 days before or after the sale. But you can immediately buy a similar investment to maintain market exposure.

Action item: Execute the trade (trade date) by December 31st. Be mindful of the 61-day wash-sale window (30 days before and after the loss sale). Most brokerages offer free tax-loss harvesting tools to identify opportunities.

Worth noting: Some Assets Under Management (AUM) advisors are less motivated to implement tax-loss harvesting across accounts they don't manage directly (like old 401(k)s or accounts at other institutions) since they don't earn fees on those assets. A comprehensive approach should optimize your entire financial picture, regardless of which accounts generate advisor fees.

Bunching Charitable Contributions

If you're charitably inclined but your itemized deductions typically hover around the standard deduction ($30,000 for married filing jointly in 2025), bunching contributions into alternating years can significantly increase your tax benefit.

The strategy: Instead of donating $15,000 annually, donate $30,000 every other year. In the "on" year, your itemized deductions exceed the standard deduction, providing greater tax savings. In the "off" year, you take the standard deduction.

Even better: Use a donor-advised fund (DAF)

• Contribute two years' worth of donations this year
• Take the immediate tax deduction
• Distribute from the DAF to your chosen charities over the next two years

Advanced move: Donate appreciated securities

• Donate securities directly to charity or your DAF instead of cash
• Avoid capital gains tax on the appreciation
• Get a deduction for the full fair market value
• This double tax benefit saves significantly more than cash donations

Action item: If you're planning charitable contributions, execute them before December 31st. Credit card donations count if charged by year-end, even if you pay the bill in January. For appreciated securities, initiate the transfer at least two weeks before year-end to ensure completion for a proper receipt. Settlement timing depends on your broker and the receiving charity/DAF so confirm the delivery date with both your custodian and the charity.

Year-End Roth Conversions

Once you know your 2025 income and where you stand relative to tax brackets, December is prime time for strategic Roth conversions. The goal: fill up your current tax bracket with conversions without bumping into the next bracket.

Why this matters: If you're a high earner now but expect lower income in retirement (or in a transitional year like early retirement or between jobs), paying taxes today at known rates to secure tax-free growth might make sense.

The calculation gets more complex when you factor in:

• Net Investment Income Tax (NIIT) thresholds
• Medicare premium surcharges (IRMAA, Income-Related Monthly Adjustment Amount) for those 63+
• State tax implications
• Future Required Minimum Distribution (RMD) projections

This type of detailed, multi-variable analysis is where advisor fee structures matter. Comprehensive tax modeling takes significant time and expertise, work that benefits you directly but may not increase an AUM advisor's compensation. Make sure whoever handles your year-end planning is incentivized to dive deep into these calculations rather than just reviewing portfolio performance.

2025 Federal Income Tax Brackets (Married Filing Jointly):

Action item: Calculate your 2025 projected income and identify how much room you have before hitting the next tax bracket. Consider converting traditional IRA dollars up to that threshold. Remember: conversions must be completed by December 31st (unlike IRA contributions, which can extend to the tax filing deadline).

Equity Compensation Review

Stock Option Assessment

If you receive equity compensation, year-end is crucial for reviewing your position and making strategic decisions.

Key considerations by type:

Incentive Stock Options (ISOs): Check which options expire soon (typically 10 years from grant, or 90 days after leaving employment). Calculate potential Alternative Minimum Tax (AMT) implications before exercising, consider partial exercises to stay under AMT thresholds. The 2025 AMT exemption amounts are $88,100 for singles and $137,000 for married filing jointly (per IRS Revenue Procedure 2024-40).

Restricted Stock Units (RSUs): RSUs vesting in 2025 count as ordinary income. Review your withholding rate, the default 22% supplemental wage rate often under-withholds for high earners in higher brackets. Consider whether holding vested RSU shares creates concentration risk.

Non-Qualified Stock Options (NQSOs): The spread between exercise price and fair market value is taxed as ordinary income. Consider timing exercises in lower-income years if you have that flexibility.

Action item: Review your equity compensation statements, identify any options expiring in early 2026, and model the tax impact before exercising.

Employee Stock Purchase Plan (ESPP) Planning

If your company offers an ESPP, review your 2025 purchases and plan for 2026. The tax treatment depends entirely on your holding period:

ESPP Sale Tax Treatment:

The qualifying disposition is the sweet spot: only the original purchase discount (typically 15%) gets taxed as ordinary income, while all additional appreciation receives favorable long-term capital gains treatment.

Action item: Review ESPP holding periods and consider whether qualifying disposition sales make sense in 2025. If you're over-concentrated in company stock, diversification often trumps minor tax optimization.

Estate Planning Updates

Gift Tax Exclusion Opportunities

The annual gift tax exclusion for 2025 is $19,000 per recipient ($38,000 for married couples gifting jointly). This is a use-it-or-lose-it opportunity, unused exclusion amounts don't roll over to future years.

Strategic moves include:

• Direct cash or asset gifts up to the annual exclusion
• Direct payments to educational institutions or medical providers (unlimited and doesn't count against the exclusion)
• 529 plan superfunding: $95,000 upfront using five years of exclusions at once

Action item: If you're planning financial gifts to family members, execute them before December 31st to use this year's exclusion.

Business Owner Specific Items

If you own a business, you have additional year-end planning opportunities.

Retirement Plan Contributions

Business owners can make employer profit-sharing contributions to SEP-IRAs, SIMPLE IRAs, or Solo 401(k)s. While you have until your tax filing deadline (including extensions) to make these contributions, planning ahead ensures you understand the cash flow impact.

For high-earning business owners, cash balance plans deserve consideration; these allow much larger contributions than standard 401(k)s, potentially $200,000+ annually depending on age and income. This is where transparent fee structures benefit you: an advisor compensated for planning expertise rather than asset accumulation has every reason to explore these high-value strategies.

Action item: Work with your Certified Public Accountant (CPA) to estimate 2025 business income and calculate maximum allowable retirement plan contributions.

Important Year-End Financial Checklist Deadlines

Let's recap the critical year-end deadlines:

The Fee Structure Advantage in Year-End Planning

Here's something worth considering: the quality of your year-end tax planning often depends on your advisor's fee structure.

An advisor charging 1% of assets under management makes the same amount whether they spend two hours or twenty hours on your year-end planning. Their income comes from gathering and managing your assets, not from comprehensive tax strategy.

Compare this to a flat fee financial advisor whose compensation is specifically for planning work. They're incentivized to provide thorough year-end reviews, explore every tax-saving strategy, and coordinate complex planning, because that's precisely what you're paying them to do.

Consider: If your advisor could save you $15,000 through careful year-end tax planning, but they're already earning $20,000+ annually from your AUM fee, how motivated are they to spend the extra time required? Conversely, a flat fee advisor being paid specifically for this planning work has every incentive to maximize the value they provide.

Ready for flat fee financial advice? If you want an advisor who is structured to take a comprehensive look at strategies like those in this checklist, without incentives tied to asset gathering, consider working with a flat fee advisor. Take our 60-second quiz to get matched with vetted flat fee advisors who specialize in serving high earners.

Final Thoughts

The items on this checklist aren't one-size-fits-all. Your specific situation will determine which strategies provide the most value:

• Income level and tax bracket
• Family situation
• Business ownership
• Equity compensation
• Retirement timeline
• State tax considerations

That's why cookie-cutter year-end advice doesn't cut it for high earners with complex financial situations. You need someone who understands the interplay between different strategies and can model which combinations optimize your specific situation.

The key is starting early enough to avoid December 31st panic. Many of these strategies require:

• Coordination with your CPA
• Time to execute trades
• Paperwork processing that can take several weeks

If you haven't already started your year-end financial checklist, make it a priority this week. The tax savings and optimization opportunities are real and substantial, but only if you act before the calendar turns to January.

Up Next

If you are serious about choosing a financial advisor who will do more than manage your investments and actually strengthen every part of your financial life, this guide is your next step. In 11 Essential Questions to Ask a Financial Advisor Before Hiring, you will learn the exact questions sophisticated investors use to expose hidden fees, uncover conflicts of interest, and separate true experts from salespeople. Before you schedule your next advisor meeting, read this article to make sure you walk in with more clarity, confidence, and leverage.