Our team at Bartlett wants to ensure you end the year on a strong note and are well-positioned for success in the new year. We invite you to follow along with the short video recording below from our October Strategy Update webinar, which highlights a few key end-of-year reminders.

Tax Planning

The deadline for Required Minimum Distributions (RMDs) is quickly approaching on 12/31/2025.  The penalty for RMDs that aren’t distributed by year-end is subject to 50% of the undistributed amount, plus ordinary income tax. If you are subject to RMDs from your IRA or inherited IRA accounts managed by Bartlett, our team will be reviewing your accounts to make sure you’re on track to meet your required amount before the deadline. If you have outside accounts that should be factored in or have questions about the specifics of your situation, please reach out to a member of your team.

Gifting Strategies

One important gifting strategy to highlight is Qualified Charitable Distributions (QCDs). QCDs are an excellent way for clients to meet their giving goals, while also supporting meaningful charitable causes. QCDs are charitable gifts sent directly from your IRA to a 501c(3) and can be used to reduce your required annual distribution amount. So rather than getting a tax deduction for your charitable gift, you’re able to reduce your taxable income. The current annual limit is $108,000 per person, and that amount is indexed for inflation annually.  Remember that inherited IRAs are also eligible for QCDs if you’re over age 70 ½.

For individuals who do not meet RMD requirements, another option to consider is gifting an appreciated stock to charity directly or through a Donor Advised Fund (DAF). If you itemize your taxes, contributing appreciated stock to a DAF allows you a deduction of up to 30% of your Adjusted Gross Income. If you itemize your taxes, contributing appreciated stock to a DAF allows you a deduction of up to 30% of your Adjusted Gross Income. Once you’ve funded a DAF, it acts like a charitable checking account; a separate pot of money solely intended for charitable purposes.

Outside of giving to charities, year-end is also a popular time to gift to family or loved ones.  The strategy for gifting stocks to family members is a bit different than for charitable organizations, given the different tax considerations.  We recommend working with your Bartlett team to determine the best assets to gift to family versus those better suited to gift to charity.

The One Big Beautiful Bill Act

While many items introduced in the One Big Beautiful Bill Act (OBBBA) don’t formally go into effect until next tax year, there are a few key items that remain top of mind for 2025. OBBBA made current tax rates, which would have sunset on 12/31/2025, permanent and maintained the higher lifetime estate and gift exclusion of $15M per individual. While the federal exclusion remains high, states (like Illinois) have a lower lifetime estate and gift tax exclusion rate that may require additional planning.

The State and Local Tax deduction (SALT) is also increasing, effective this year, from $10,000 to $40,000, before reverting to $10,000 in 2030. However, a phase out begins when income exceeds $500,000.

There are a couple more complex changes expected to go into effect in 2026, such as a floor on charitable giving deductions and changes to 401k contributions for high earners. If you have questions about these changes or how they might affect you, reach out to a member of your Bartlett team.

Final Considerations

Risk management is core to Bartlett’s investment and financial planning process, but it’s especially important after three strong years in the equity markets. Our investment advisors and financial planning teams work together to craft a plan that manages risk, while also balancing realized capital gains with an individual’s tax profile.

It’s important to remember that long-term capital gains are taxed at more favorable rates than other types of income like dividend, interest, or wages. We are mindful of this as we work to rebalance portfolios, ensuring we have enough cash for known distributions for the upcoming year.

Please reach out to a member of your Bartlett team if you have questions about your end-of-year situation.

DISCLOSURE

This material provided by Bartlett Wealth Management (“Bartlett”) is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Nothing in these materials is intended to serve as personalized tax and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Opinions expressed by Bartlett are based on economic or market conditions at the time this material was written; actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable. Bartlett, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.