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How are we already in October?! The month of September flew by, capped off for me with a trip to Austin to speak at a conference and visit a few clients in real life! Now that we’ve hit October, that means we’re embarking on two things: Fall Review Meetings and my wife, Lainie’s homemade chocolate chip, pumpkin muffins. 

Over the next six weeks, I plan to meet with clients for a financial check-in and to discuss planning opportunities ahead of year-end. For this newsletter, I wanted to share a few topics to have on your radar as well.

First, let’s highlight a few time sensitive deadlines to be aware of before year-end.

  • Flexible Spending Accounts – If you elected to contribute to either a medical or dependent care FSA, make sure to reimburse yourself for these expenses before December 31st. You may be able to carry-forward a small balance to next year, but these plans are often “use it or lose it” on a calendar year basis.

  • Inherited IRAs – If you previously inherited an IRA from someone other than your spouse, you may need to take a required minimum distribution before year-end. The amount & timing of distributions depends on when you inherited the account and if the original owner was actively taking distributions from the account.

  • Annual Exclusion Gifts – For 2025, any individual can give $19,000 to an unlimited number of beneficiaries without any tax implications for either the donor or recipient. This amount is doubled to $38,000 for married couples. While many of you are in the accumulation phase of life, this could be attractive to share with generous family members who desire to either 1) make contributions for your child’s education via a 529 plan or 2) assist with a down-payment. 

    • Note: For anyone with young children, a gift to your kid’s 529 plan in lieu of more toys can make for a great alternative to share with relatives on a holiday wish list. 🙂

One agenda topic for all Fall Review Meetings is year-end tax planning. Tax planning is a core piece of my approach and something that I believe should be a year-round activity. That said, the benefit of focusing on tax planning during a Fall Review Meeting is that your annual income is much more predictable now, which helps me to hone in on what your tax exposure will be for the year and which strategies are most appropriate to pursue to drive down your tax balance. 

When it comes to tax planning, one of my guiding principles is that an effective tax strategy is focused on paying lower taxes over the course of your lifetime. This involves understanding both your current income / tax situation AND thinking about your future income / tax situation.

For example, if you expect to vest a large RSU grant next year upon your company’s IPO, then your taxable income will likely be significantly higher than it is this year. That said, delaying a large charitable donation until next year when you are in a higher tax bracket and will receive a “bigger bang for your buck” by itemizing your deductions could be an optimal decision. Conversely, some of you have taken some time away from work this year and your income is considerably lower than it will be when you’re earning income throughout the full year. In this case, converting funds from a pre-tax retirement account to a Roth IRA while you’re in a low tax bracket can reduce your lifetime tax exposure.

In high income and tax years, deferrals & deductions are your friend. You can defer tax on your income by maximizing pre-tax 401k, Health Savings Accounts, and Flexible Spending Accounts. Additionally, “clumping” multiple years worth of charitable donations into one tax year via a Donor Advised Fund can help increase your itemized deductions & lower your taxable income.

Beyond these foundational principles of tax planning, I also want to share two tax law changes that were passed this summer that are most relevant to a majority of the people I serve.

  1. State & Local Tax (SALT) Threshold Increased – Previously, all tax payers were limited to $10,000 as the deductible portion of their state income and property taxes. As a result, a majority of individuals claimed the Standard Deduction as opposed to itemizing their deductions. With the new tax bill, the threshold for deductible state and local taxes has increased to $40,000. This increase is especially beneficial for individuals with high state income & property taxes. However, there’s a catch… The $40,000 begins to phase out when your household income exceeds $500,000 and is reduced to $10,000 for households who exceed $600,000 of income.

    • Planning Corner: If your expected household income is on the verge of exceeding $600,000, then reducing your adjusted gross income (within reason) will enable you to claim a larger deduction for state & local taxes. A few ways to drive down your AGI include:

      1. Maximizing all pre-tax employer benefits (401k’s, HSAs, & FSAs)

      2. Tax Loss Harvesting within your Individual / Joint Investment Accounts

      3. Shifting investment income producing assets (i.e. dividend stocks, bond ETFs, and real estate holdings) into your retirement accounts

      4. Deferring a year-end bonus to be paid in January

  2. Charitable Donation Floor – Historically, if you itemized your deductions, then any & all charitable donations helped to further reduce your taxable income. Starting in 2026, there will be a new “floor” of 0.5% of your adjusted gross income (AGI) before you receive a tax benefit for your charitable donations. For example, if your AGI is $600,000, then you would need to donate more than $3,000 to charity next year before you receive any tax benefit for these donations. Additionally, the new tax law caps the tax benefit of itemized deductions to 35% for households in the highest tax bracket (37%).

    • Planning Corner: If you expect your income to be at a similar level next year and you desire to donate to charity, then “pre-funding” future year donations in 2025 via a Donor Advised Fund will enable you to receive a larger tax benefit in 2025 vs. waiting until 2026 to make donations. As an added bonus, you can transfer stock / ETFs directly to a Donor Advised Fund and receive a tax deduction for the current value of the investment donated and avoid paying capital gains tax on the sale of shares.

This post isn’t an exhaustive list of tax planning opportunities, but rather it is meant to put a few ideas on your radar that could be beneficial for your situation. If you are thinking about any of these topics and would like to further discuss with me before year-end, send me a message and I’d be happy to connect.