Review five tax-planning moves related to retirement savings, health accounts, investments, and charitable giving before year-end.
Quick takeaways
Tax planning is easy to put off—especially when the end of the year already feels full. But some tax-related moves need to happen by Dec. 31 if you want them to count for this year.
You don’t need a full financial overhaul. A few check-ins—on retirement savings, health accounts, investments, and charitable giving—may help you spot opportunities before the year ends.
How you use any retirement accounts can affect your tax situation—today and in the future. These accounts can be powerful tools for tax-deferred or tax-free growth, depending on the features available to you and how you use them.
Review your contribution rate before your final paychecks
If you contribute to a workplace retirement plan, pretax contributions reduce your taxable income for the year. That’s because the money goes toward your future before it’s counted as taxable income today. Instead, you’ll pay taxes when you withdraw the money in retirement.
The IRS sets limits on how much you can contribute to your account each year. If there’s room in your budget, even a small increase—1% or 2%, for example—can add up over time. Just consider making the change early enough to affect your remaining paychecks.
Revisit your pretax vs. Roth contribution mix
Pretax and Roth contributions are taxed differently. Pretax contributions are made before taxes are taken from your paycheck, which can lower your taxable income today. Roth contributions are made with after-tax dollars. Roth withdrawals are tax-free in retirement, as long as you’re at least 59 ½ and you’ve had Roth contributions in your account for at least five years.
Roth contributions may appeal to people who expect to be in a higher tax bracket later and would rather pay taxes now. If you’re unsure whether you’ll be in a higher tax bracket now or in retirement, you could consider splitting your contributions between pretax and Roth.
Employer matching contributions are often made on a pretax basis. If your plan offers a match, check how it works before deciding on your contribution mix.
Your income, tax bracket, and goals may change over time, so it can help to review your contribution mix occasionally and consider whether the pros and cons of each approach make sense for you.
Log in to your Principal account and review your contribution rate and contribution type(s). If your budget allows, consider saving more before your last paychecks of the year.
Log in to your Principal account and review your contribution rate and contribution type(s). If your budget allows, consider saving more before your last paychecks of the year.
Check whether you're maximizing your health savings account (HSA) contributions
If you’re eligible to contribute to an HSA, it can be a useful way to plan for healthcare costs. HSAs offer a triple tax advantage: Contributions are made before taxes (lowering taxable income today), earnings grow tax-free, and withdrawals are tax-free when used for qualified medical expenses. Contribution limits typically change annually, so check to see how much you can contribute this year.
HSA funds can help you pay for medical bills now and healthcare costs down the road, including in retirement. Unlike a flexible spending account, unused HSA funds roll over from year to year, and the funds may be investable.
Review your year-to-date HSA contributions and compare them with the annual contribution limit. If you're below the limit, have room in your budget, and your health plan allows, consider increasing contributions before year-end.
Use flexible spending account (FSA) funds before important deadlines
If you have a healthcare or dependent care flexible spending account, check your balance before the year ends. FSAs let you set aside pretax money for eligible expenses, but they usually come with deadlines.
Many FSAs follow a “use it or lose it” rule, so unused funds may be forfeited if they aren’t spent by your plan’s deadline. Some employers offer a carryover or grace period to use the prior year’s funds. Plan rules vary, so it’s important to understand the specific rules for your account.
Look for eligible expenses you already need—prescriptions, doctor or dental visits, glasses, contacts, over-the-counter health items, or dependent care expenses, like daycare or preschool. The point isn’t to buy things just to use the money. It’s to avoid leaving funds behind if you have qualifying expenses.
Check your FSA balance and identify eligible expenses you already need, such as medical appointments, prescriptions, glasses, or dependent care costs, that could help you use available funds before the deadline.
Review investment gains and losses before year-end
Year-end is a natural time to review what you own, how your investments performed, and whether your mix still fits your goals.
If you decide to sell any investments, it’s important to understand the tax consequences. Outside a retirement plan, selling an investment for more than you paid generally creates a capital gain. Selling one for less than you paid generally creates a capital loss. (Moving out of investments within a retirement plan should not result in tax consequences.)
In some cases, selling an investment that has lost value may help offset taxable gains from other choices. That strategy is called tax-loss harvesting. It can be helpful, but it should still fit your bigger plan. A financial or tax professional can help you navigate this strategy.
Review your accounts and asset allocation and consider if changes before year-end fit in with your overall tax and investment strategies.
If giving to nonprofits is part of your financial life, timing can make a difference. Donations generally need to be completed by Dec. 31 to count for the current tax year. The tax benefits of donating vary depending on whether you take the standard deduction or itemize.
For taxpayers taking the standard deduction, starting in 2026, there’s now an option to deduct a limited amount (up to $1,000 for single filers and $2,000 for joint filers) of cash charitable contributions. Rules and limits can change, so keep good records and check with a tax professional if you’re not sure if this affects you.
If you’re itemizing deductions, cash gifts are often the simplest route. Depending on your situation, you might also consider donating appreciated investments or “bundling” multiple years of planned giving into one tax year. These strategies may help, but the tax benefit depends on your circumstances.
If charitable giving is part of your year-end plans, decide which organizations you'd like to support and complete donations before Dec. 31. Keep records of all contributions for tax purposes.
Use this checklist to start your year-end tax review.
- Review retirement plan contributions
- Evaluate pretax vs. Roth contributions
- Check HSA contribution levels
- Review FSA balances and submit reimbursement requests for eligible expenses
- Assess investment gains and losses
- Complete charitable donations
- Save receipts and tax documentation
- Connect with a financial or tax professional if needed
You don’t have to do everything on this list. Even one or two well-timed moves may help your tax situation and support your longer-term financial goals.
If you’re not sure what applies to you, that’s understandable. Tax planning can get complicated, and the right next step depends on your income, benefits, investments, and family situation. A financial or tax professional can help you decide what makes sense before you make a tax-related move.
What’s next?
Want more tax strategies? Check out these prep steps you can take to be ready for tax time.
