As the end of 2025 approaches, now is the ideal time for investors to review their portfolios and make strategic moves that could significantly reduce their tax bill. With capital gains tax rates ranging from 0% to as high as 40.8%, the difference between smart planning and missed opportunities can be substantial. Fortunately, a few intentional steps can help you keep more of your investment gains and send less to the IRS.
Below, we break down the most effective year-end tax strategies for your stock portfolio—and how to put them to work before December 31.
Understanding the Tax Landscape
Before diving into planning strategies, it’s important to understand the tax rules that apply to
investment income:
Short-term capital gains and ordinary investment income can be taxed up to 40.8% (37% top income tax rate + 3.8% NIIT).
Long-term capital gains and qualified dividends are taxed at 0%, 15%, or 20%, plus potential NIIT depending on income.
Capital losses can offset gains, but only $3,000 of net losses can offset ordinary income each year (additional losses carry forward indefinitely).
The tax code requires you to offset long-term gains and losses first, then short-term.
Donations of stock to charity can produce significant tax advantages—but only when done correctly.
With these rules in mind, here are six planning opportunities to consider before year-end.
1. Offset Gains and Losses Strategically
Realizing gains and losses intentionally—also called tax-loss harvesting—is one of the simplest and most reliable ways to minimize taxes.
If you have short-term gains taxed up to 40.8%, offseting them with long-term losses taxed at 23.8% or less can create substantial savings. It’s one of the few areas where the tax code hands investors a genuine opportunity to reduce taxes with minimal complexity.
2. Use Long-Term Losses to Reduce Ordinary Income
If you have more capital losses than gains, up to $3,000 may be used to offset ordinary income.
A long-term capital loss—normally taxed at a lower rate—can effectively reduce high-rate ordinary income, amplifying your tax benefit.
3. Avoid the Wash-Sale Rule
If you sell a stock at a loss and buy the same (or substantially identical) stock within 30 days before or after the sale, the IRS disallows your loss. Instead, it gets added to the basis of the new stock. If you want to use the loss this year, you must avoid repurchasing that stock for over 30 days.
4. Shift Gains to Lower-Bracket Family Members
If you financially support parents or adult children not subject to the kiddie tax, consider gifting them appreciated stock instead of cash.
Why?
They may be in a lower tax bracket—and when they sell the stock, the gain is taxed at their rate.
2025 long-term capital gain rates apply as follows:
Rate Single Married Filing Jointly Head of Household
0% $0–$48,350 $0–$96,700 $0–$64,750
15% $48,351–$533,400 $96,701–$600,050 $64,751–$566,700
20% $533,401+ $600,051+ $566,701+
Pair this with potential dividend income at lower rates, and the family-wide tax savings can be
significant.
5. Donate Appreciated Stock to Charity
If you’re planning charitable contributions, donating appreciated stock can produce a double tax
benefit:
1. Deduct the stock’s full fair market value.
2. Avoid paying capital gains tax on the appreciation.
Example:
You bought stock for $1,000, and it’s now worth $11,000. Donating it yields an $11,000
deduction—plus no tax on the $10,000 gain.
Keep in mind:
Deductions for appreciated stock are limited to 30% of AGI, with a five-year
carry forward allowed.
You must itemize to claim these benefits.
6. Don’t Donate Stock That Has Lost Value
Donating depreciated stock is a common mistake. You lose the opportunity to deduct the capital loss.
Instead:
1. Sell the stock to capture the loss.
2. Donate the cash to the charity.
This way, you keep both deductions—the capital loss and the charitable donation.
Final Thoughts: Act Before Year-End
Portfolio tax planning is a powerful way to reduce your 2025 tax liability, but timing matters.
Trades must settle before year-end, so don’t wait until the final week of December.
Completing your planning by December 19, 2025, is a practical target.
Thoughtful year-end portfolio moves can keep more money in your pocket—through reduced taxes, smarter charitable planning, and better family wealth strategies. If you’d like help applying these strategies to your unique tax situation, our CPA team is here to guide you.
