As 2025 draws to a close, there are several areas in which high-net-worth taxpayers should be focusing their attention to maximize tax savings for the year and plan for changes to tax law in the year ahead.
Use Qualified Charitable Distributions (QCDs): For taxpayers over the age of 70½, up to $108,000 can be transferred directly from an IRA to a qualified charity in satisfaction of Required Minimum Distributions. Funds are paid directly to charity using pre-tax dollars, making it a more tax-efficient way to give compared to withdrawing the funds as ordinary income and then making a cash donation. This strategy also provides significant benefit, in that unlike a normal IRA withdrawal, the amount donated is excluded from gross income, lowers adjusted gross income and also reduces the taxable estate.
Consider Tax-Loss Harvesting: To the extent a taxpayer realized a large capital gain during the tax year, working with financial advisors to strategically sell investments at a loss could help offset capital gains realized in the portfolio.
Utilize Annual Exclusions: In 2025, each taxpayer is entitled to make a $19,000 per recipient gift — free of gift taxes and gift tax reporting. This can be an effective strategy to provide support for younger generations, family and friends while reducing the taxpayer’s taxable estate and preserving the taxpayer’s lifetime exemption.
Maximize Retirement Contributions: Fully utilize tax-advantaged retirement accounts, including 401(k)s ($23,500 limit in 2025, plus catch-up if applicable) and IRAs. Business owners can also explore SEP IRAs or other employer plans to maximize contributions.
Consider Roth Conversions: A “backdoor” Roth conversion involves contributing after tax funds to a traditional IRA and then converting the traditional IRA to a Roth IRA (and paying taxes on any appreciation on the traditional IRA that accrues between the original contribution and the conversion). The 2025 IRA contribution limit is $7,000 ($8,000 if you are age 50 or older). This strategy can allow high income earners, who would otherwise be restricted from contributing directly to a Roth IRA because of income caps on contributions, to take advantage of a Roth IRA’s tax-free growth and withdrawals.
Employ Advanced Trust Strategies: Just because the One Big Beautiful Bill Act (“OBBBA”) introduced a $15 million per person gift, estate and generation-skipping transfer tax exemption beginning in 2026 does not mean taxpayers can wait to focus on lifetime planning. Taxpayers should work with their trusts and estates attorney to minimize estate and gift taxes while transferring asset growth to the next generation by creating trusts. Trusts like Spousal Lifetime Access Trusts (SLATS), Grantor Retained Annuity Trusts (GRATS) or Intentionally Defective Grantor Trusts (IDGTS) are all common strategies that remove appreciating assets from a taxpayer’s estate while retaining some access, control or income.
Non-grantor trusts, which are treated as separate taxpayers, can be used to optimize both the state and local tax (SALT) deduction and the qualified small business stock (QSBS) gain exclusion, both provisions having been modified favorably under the OBBBA.
Fund 529 Plans: Contribute to 529 education savings plans, which allow for a lump-sum contribution of up to five years’ worth of annual exclusions to accelerate wealth transfer and reduce the taxable estate.
Accelerate Charitable Contributions: The OBBBA creates a new “floor” on itemized charitable deductions beginning in 2026. Additionally, the OBBBA creates a 35% “cap” on the tax benefit individuals may receive from itemized deductions. For taxpayers in the highest tax bracket, causes itemized deductions to reduce the tax rate on corresponding taxable income from 37% to 2% rather than down to 0%. Because of this and the new charitable deduction floor discussed above, taxpayers in the highest tax bracket should consider accelerating charitable gifting to receive the full benefit of charitable deductions in 2025.
To learn more about any of the strategies discussed above and how they may apply to you, please contact Julia Schall, Laura Jeltema or a member of Warner’s Private Client and Family Office Industry Group.
This post is part one of a two-part series. Next, we’ll take a closer look at how the OBBBA reshapes charitable deductions starting in 2026 and what these changes mean for high-net-worth donors.
