We recently shared a post about 2025 being a very unique year from a tax perspective, and we explained why now is the time to consider converting a 401(k) to a Roth.
Our hypothetical example explained how Daniel could net $10,500 in retirement savings this year by taking action before tax brackets reset.
It got us thinking: What other moves should be considered now, in October, when you have time to work with your investment advisor and your CPA to evaluate and prepare for potential moves?
This is a one-time window where today’s brackets, deductions, and portfolio gains create opportunities that may not return once new rules take effect.
This isn’t just about tax rates. With markets near highs and brackets set to rise in 2026, 2025 may be your best chance to protect gains, reduce future Required Minimum Distributions (“RMDs”), and build long-term tax flexibility.
These are the five conversations every investor should be having NOW!
1. Should I accelerate income into 2025 or defer it into 2026?
With rates scheduled to rise after 2025, many investors will benefit from recognizing more income this year, whether that’s bonuses, stock option exercises, or business distributions. For others, deferring income may still make sense depending on deductions and cash flow.
What to ask: Based on my income projections, would I save more by pulling income forward into 2025?
2. How can I maximize this year’s expanded deductions?
The One Big Beautiful Bill Act (“OBBBA”) increases deductions:
- Higher standard deduction ($15,750 single / $31,500 joint)
- Additional $6,000 per senior
- SALT deduction cap expanded to $40,000 through 2029
These provisions create more “room” to reduce taxable income.
What to ask: Which deductions apply to me, and how do I take full advantage of them this year?
3. Should I adjust my retirement account strategy?
With portfolios up significantly in 2025, higher balances bring both opportunities and risks:
- Future RMDs: Bigger pre-tax accounts mean bigger required minimum distributions later, and higher taxable income in retirement.
- Consider conversions: Moving part of those gains into a Roth now locks in today’s rates and shields future growth from taxes.
- Tax diversification matters: Having a mix of pre-tax, Roth, and taxable accounts gives flexibility when drawing income later.
- Rebalancing: Strong gains may have thrown off your allocation; rebalancing inside tax-advantaged accounts avoids triggering capital gains.
What to ask: Given my portfolio’s growth, should I rebalance or convert some of these assets in 2025 while rates are still low?
4. Help me establish my priorities by painting a picture of what I stand to gain if I spread this out over 2025 and 2026.
Daniel’s tax bill, should he elect to convert it 100% in 2025, would be $112,000 at 32%. As we discussed, he would save $10,500 compared with waiting until 2026 at 35%.
- Advantage: All growth becomes tax-free immediately
- Drawback: Large one-time tax hit, potential impact on deductions or Medicare premiums
If Daniel decided to split the conversion (half in 2025, half in 2026):
- 2025 conversion: $175,000 × 32% = $56,000
- 2026 conversion: $175,000 × 35% = $61,250
- Total tax owed: $117,250
- Advantage: Cash flow burden spread across two years, avoids one large tax hit.
- Drawback: Costs $5,250 more in taxes than converting all at once. Plus, half the balance stays taxable for another year.
What to ask: Am I better off paying more in total tax to manage cash flow and avoid a single large hit, or should I prioritize minimizing taxes and maximizing long-term tax-free growth by converting everything now?
5. What steps should I take for estate and legacy planning before rules change?
Estate planning is often left for “later,” but 2025 could be a turning point. Higher exemptions, favorable gifting rules, and Roth strategies all affect how wealth passes to the next generation.
What to ask: What can I do this year to make my estate plan more tax-efficient before thresholds change?
Your 2026 return could present you with a significant opportunity, but only if you plan proactively. By asking your CPA these five questions, you’ll gain clarity on how today’s unique tax landscape applies to you, where the most significant savings may be, and what steps set you up best for the future.
Need help getting your list ready? Schedule some time to speak with me HERE.