There’s only a couple of weeks left in December of 2025 so I decided to ask AI what I should consider from a tax planning perspective for 2025 and 2026.
Gemini AI Recommendations
Since the current date is December 2025, you are in the critical “final stretch” for the 2025 tax year.
The following checklist is divided into immediate deadlines (must be done by Dec 31), extended deadlines (can be done until April 2026), and preparation for the new year.
Phase 1: The “Hard” Deadlines (Action by Dec 31, 2025)
These actions generally cannot be done retroactively. You must complete them before the ball drops on New Year’s Eve to impact your 2025 tax return.
- Max Out Employer Retirement Plans (401k/403b)
- Why: Employee contributions typically must be made by year-end (payroll deduction).
- 2025 Limit: $23,500.
- Catch-up (Age 50+): Additional $7,500 (Total: $31,000).
- Action: Check your last pay stub. If you are short, ask HR if you can make a final “bonus” deduction, though it may be too late for some payroll cycles.
- Tax-Loss Harvesting (Taxable Brokerage Accounts)
- Why: If you have investments that are down, you can sell them to realize a loss. This loss can offset capital gains dollar-for-dollar. If losses exceed gains, you can offset up to $3,000 of ordinary income.
- Warning: Be mindful of the “Wash Sale Rule.” Do not buy a “substantially identical” security 30 days before or after the sale, or you lose the tax benefit.
- Roth IRA Conversions
- Why: If you had a low-income year or expect tax rates to rise, converting Traditional IRA money to Roth pays the tax now to allow for tax-free growth later.
- Deadline: The funds must leave the Traditional IRA by Dec 31.
- Required Minimum Distributions (RMDs)
- Who: Generally those age 73 or older (unless it is your first year, for which you may have a grace period until April 1).
- Action: Ensure the money has been withdrawn. The penalty for missing an RMD can be up to 25% of the amount that should have been withdrawn.
- Charitable Giving
- Cash/Goods: Must be donated (credit card charged or check mailed) by Dec 31.
- Strategy: Consider “bunching” donations (donating 2-3 years’ worth at once) to surpass the standard deduction threshold if you are close to it.
- Appreciated Stock: Donating stock held for >1 year directly to a charity allows you to avoid capital gains tax and take a deduction for the fair market value.
- Spend Your FSA (Flexible Spending Account)
- Why: FSA funds are “use it or lose it.”
- Action: Check your balance. If you have remaining funds, stock up on eligible items (glasses, sunscreen, first aid kits) or schedule last-minute medical appointments. Note: Some plans allow a small carryover (approx $640) or a grace period, but verify this with your provider.
Phase 2: The “Soft” Deadlines (Action by April 15, 2026)
You have until Tax Day to finalize these for the 2025 tax year, but it is better to plan them now.
- IRA Contributions (Traditional or Roth)
- 2025 Limit: $7,000.
- Catch-up (Age 50+): Additional $1,000 (Total: $8,000).
- Note: You must designate the contribution for “Tax Year 2025.”
- Health Savings Account (HSA) Contributions
- Requirement: You must have had a High Deductible Health Plan (HDHP) in 2025.
- 2025 Limit: $4,300 (Self-only) / $8,550 (Family).
- Catch-up (Age 55+): Additional $1,000.
- Tip: This is one of the most tax-efficient accounts available (tax deduction in, tax-free growth, tax-free out for medical).
Phase 3: New Year Preparation (Planning for 2026)
As you roll into January, adjust your automated settings to match the new IRS inflation-adjusted limits.
1. Update Contribution Amounts
The IRS increased limits for 2026. Adjust your payroll or automatic transfers to hit these new targets:
- 401(k) / 403(b): increased to $24,500.
- Catch-up (50-59 & 64+): $8,000.
- Super Catch-up (60-63): $11,250.
- IRA (Roth/Traditional): increased to $7,500.
- Catch-up (50+): $1,100.
- HSA: increased to $4,400 (Self) / $8,750 (Family).
- Gift Tax Exclusion: increased to $19,000 per recipient.
2. Portfolio Rebalancing
- Review your asset allocation (e.g., 60% stocks / 40% bonds).
- If the market rallied in 2025, you might be overweight in stocks. Sell high and buy low to return to your target allocation (consider doing this inside tax-advantaged accounts to avoid tax drag).
3. Administrative Housekeeping
- Update Beneficiaries: Check your 401k, IRA, and Life Insurance beneficiaries. These override your will, so ensure they are current (especially if you married, divorced, or had children in 2025).
- Digital Organization: Create a folder specifically for “2025 Tax Docs.” As 1099s and W-2s arrive in Jan/Feb, save them immediately to this folder.
- Check Withholdings: Did you get a massive refund or owe a lot last year? Adjust your W-4 with your employer now to smooth out your cash flow for 2026.
ChatGPT AI Recommendations
Year-End Tax Activities (Before Dec 31)
- Income & Expense Review
- Reconcile all income received for the year
- Post and categorize all expenses
- Review bank and credit card statements for missing deductions
- Close the books (monthly/quarterly reconciliations complete)
- Tax Deductions & Credits
- Maximize retirement contributions (401(k), IRA, SEP, Solo 401(k))
- Make charitable contributions (cash or appreciated assets)
- Prepay deductible expenses if allowed (rent, insurance, professional fees)
- Harvest capital losses to offset gains
- Review eligibility for tax credits (child tax credit, education credits, energy credits)
- Business-Specific Actions (if applicable)
- Purchase and place assets in service (Section 179 / bonus depreciation)
- Write off obsolete or unusable inventory
- Review business use of vehicle, home office, phone, internet
- Pay bonuses (must be paid by Dec 31 to deduct this year)
- Accrue payroll and benefits properly
- Payroll & Contractor Compliance
- Verify employee information (names, addresses, SSNs)
- Confirm contractor W-9s are on file
- Reconcile payroll tax payments
- Review fringe benefits and taxable perks
- Estimated Taxes & Withholding
- Make final estimated tax payment (Q4)
- Adjust withholding if under- or over-paid
- Review safe harbor rules to avoid penalties
- Recordkeeping & Documentation
- Organize receipts and supporting documents
- Save digital copies of invoices and contracts
- Back up accounting and tax records
- Keep mileage logs and asset purchase records
- Year-End Reporting Tasks (January Deadlines)
Prepare and issue:
- W-2s to employees
- 1099-NECs / 1099-MISCs to contractors
- File payroll reports (Forms 941, 940)
- Submit 1099s to IRS and states
- Reconcile year-end payroll totals
New-Year Tax Preparation (January–February)
- Tax Planning & Strategy
- Review prior year tax return for improvement areas
- Meet with CPA or tax advisor
- Identify opportunities to reduce taxes in the new year
- Adjust estimated tax payments
- Accounting Setup for the New Year
- Create new accounting period
- Archive prior-year records
- Review chart of accounts
- Set up budgets and forecasts
- Reset invoice numbering if applicable
- Payroll & Compliance Updates
- Update payroll tax rates and wage limits
- Apply new benefit limits (retirement, HSA, FSA)
- Review minimum wage changes
- Update employee handbooks or policies if needed
- Business & Financial Planning
- Set financial goals for the year
- Plan major purchases or investments
- Review insurance coverage
- Update business licenses and permits
- Personal Financial Planning
- Set savings and retirement contribution goals
- Plan charitable giving strategy
- Review health insurance and HSA elections
- Update estate planning documents if needed
Optional but Smart
- Perform a mid-year tax projection for the upcoming year
- Automate estimated tax payments
- Improve receipt tracking systems
- Review tax law changes for the new year
AI Fight Club
In reviewing both recommendations for year end tax planning (exact same question used), it’s clear that ChatGPT is more comprehensive but I wonder if ChatGPT is taking into account my years of use with it and incorporating the information the response. Gemini’s response is more “consumer” oriented while ChatGPT’s is more “business” oriented. I give this round to ChatGPT on this question but it’s more of a draw because ChatGPT had the unfair advantage of a few years history vs. Gemini. I will run this test again next year when I’m using Gemini Pro more than ChatGPT.
My Thoughts
Nothing jumped out at me from the list as something I needed to do except update my beneficiaries on a new account I just opened at Fidelity for cash management. Most of the list is a given for me but I wanted to check if there was anything new since I was surprised by new 401k rules for 2026. And this is the great thing about AI bots, you can search for information without having to comb through dozens of websites and annoying ads. Remember, this is the golden age of AI so use it to your advantage before the greed sets in and there are annoying ads plastered all over the interface!
Share The Wealth
Do you have any year end tax planning advice? Let me know in the comments below.