By Jena Regan, CFP®
This article was adapted and updated from a previous version published in October 2023
As the year winds down, calendars tend to fill quickly with gatherings and long-standing traditions. It can be a natural time to pause and reflect, acknowledge the challenges of the past year, and celebrate all we have accomplished.
In addition to holiday preparations, there are also practical financial steps to take as we wrap up the year. Taking these steps now, before seasonal celebrations are in full swing and the year comes to a close, can help us feel calmer and leave us better positioned for the new one on the horizon.
A Plan for Giving
Often, donations are made at year-end. A little advance planning benefits both the organizations we support and our own finances. This gives charities more time to put gifts to work, and more room to give with intention and confidence.
Some important charitable giving rules have changed starting in 2026. Those who take the standard deduction may now deduct cash gifts to qualifying public charities, up to $1,000 for individuals and $2,000 for married couples filing jointly[1]. For those who itemize, only the portion of charitable gifts above 0.5% of adjusted gross income is now deductible.[2] How these rules apply will depend on your individual situation. For example, high earners may want to, in consultation with their tax preparer and financial advisor, consider donating a few years’ worth of gifts to charity in a single year.
Year-end gifting also commonly includes contributions to Donor Advised Funds (DAF), accounts designed specifically to give money to charity. A DAF can offer flexibility, since a contribution made now can be granted to charities over time, allowing us to be thoughtful about where and when our giving has the most impact. Contributing appreciated stock to a DAF may also allow a charitable deduction in the year the gift is made, while avoiding capital gains tax on the appreciation.
Generosity often extends to family and friends, too. Under the annual gift-tax exclusion, individuals can each give up to $19,000 [3] per recipient this year without owing gift tax or using any of their lifetime exemptions. Some people make these gifts a part of their holiday giving.
Open Enrollment
Year-end is also the time to review insurance coverage during annual open enrollment windows. Reviewing current plans and comparing new offerings can help us navigate healthcare expenses for the following year. Adjusting contributions to a Flexible Savings Account (FSA) or Health Savings Account (HSA), for those who have access to them, can help prepare for higher or lower medical expenses. If your FSA does not allow rollovers, use the remaining funds before the year ends. It is also worth checking how much of your health insurance deductible you have met and whether it makes sense to schedule a procedure or update an eyewear prescription before it resets.
Medicare Open Enrollment runs from October 15th – December 7th this year, and allows participants to make changes to their Medicare, Medicare Advantage plans, and prescription drug coverage for the following year. As with an employer insurance plan, it’s important to review your current coverage and other options, since medical care needs can change over time.
Maximize Retirement Contributions
Those under age 50 can contribute up to $24,500 to their workplace’s 401k or 403b in 2026. Those aged 50 and above can contribute an additional “catch-up” amount of $8,000, bringing the total allowable contribution to $32,500 for 2026.[4] Starting this year, certain higher earners must make this catch-up amount in after-tax dollars and direct it to a Roth 401k.[5]
Most 401k contributions must come directly from your paycheck before the end of each calendar year, unless you are self-employed. If you aren’t on track to hit your maximum target and would like to be, it may not be too late to increase your contributions. If you typically receive a year-end bonus, for example, you might direct a larger portion of it to top up your retirement contribution.
Looking Ahead, In the Moment
Planning for additional holiday expenses now is worthwhile, especially if party-hosting and gift-giving are part of your tradition. It helps to determine an overall figure you want to spend and specify amounts for gifts, travel, and food. Be intentional, as it can be easy to go beyond your initial spending plan.
This is also an opportunity to fine-tune your annual budget for the coming year. You may want to reallocate funds from one category to another if your actual costs in one have increased or decreased. Perhaps a new grandbaby has arrived on the scene, so travel expenses will be higher, or you can increase savings because you’ve recently paid off your mortgage. It’s important to be aware of where your funds are going so that you don’t simply increase overall spending from year to year.
Opportunity for Reflection
There are various opportunities to take advantage of before the calendar flips to a new year, and our list is certainly not exhaustive. Since the strategies we’ve discussed above can affect an individual’s tax situation in different ways, tax professionals and financial advisors should be consulted before making these moves.
At North Berkeley, our advisors regularly help clients with questions about year-end planning. If there are meaningful actions you can take to make progress on your financial goals, then doing so now can help you close out the year with more clarity and peace of mind. We’re here to support you along the way.
Resources:
[1] IRS “Topic no. 506, Charitable contributions”
[2] Impact of New Laws on Tax Planning
[3] Estate and Gift Tax
[4] 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500
[5] Retirement Topic – Catch Up Contributions
