As financial advisors, delivering comprehensive tax planning strategies is one of the most powerful ways we can add value to our client relationships. By taking a proactive approach to tax planning, you can help your clients minimize their tax liability while positioning yourself as an indispensable partner in their financial success.
This article provides you with actionable strategies to implement with your clients throughout 2025, while also creating opportunities to collaborate with their other trusted advisors, such as tax preparers and estate-planning attorneys.
In today’s complex tax environment, your role in guiding clients through potential changes and opportunities is more crucial than ever. Here are 10 key strategies to discuss with your clients in the New Year:
1. Tax diversification
Guide your clients in diversifying their investments across various account types, including pre-tax, taxable and Roth accounts. While this diversification can be accomplished through Roth conversions later in life, help your clients understand that strategic allocation during the accumulation phase often proves more effective for reducing their lifetime tax burden. Creating a strong foundation of tax diversification among various tax types early on saves everyone time and expense in the future.
2. Roth conversions
For 2025, there is a unique opportunity to discuss Roth conversions with your clients. With the Tax Cuts and Jobs Act (TCJA) set to expire at the end of 2025, this year might be their last chance to take advantage of current favorable tax rates before potential increases in 2026. Even with the Republicans in power vowing to keep tax rates low for now, Roth conversions remain a powerful tool to combat future tax increases. Work with your clients to evaluate partial or full Roth conversions as part of their long-term wealth maximization strategy.
3. Capital gains and loss management
Help your clients navigate 2025’s tax brackets for optimal capital gains and loss management. Educate them on the opportunities: joint filers with taxable income below $96,700 can benefit from the 0% long-term capital gains rate, while those below $600,050 qualify for the 15% rate. The 20% rate only applies to income exceeding $600,050 which is still a preferred rate. Use this knowledge to create systematic selling strategies for clients with appreciated positions or concentrated holdings, and don’t forget to use tax-loss trading and capital loss carryforwards to offset those gains. Coordination is key.
4. Employee benefits review
Review your clients’ employee benefit plans, particularly during fourth-quarter enrollment periods and early in the year. Look beyond traditional benefits like 401(k) plans to identify overlooked opportunities, such as student loan payoffs, employee stock purchase plans, and “after-tax” accounts. Many employers now offer Roth conversion features in after-tax accounts that your clients might not be aware of or are fully utilizing. For your high-earning clients, explore deferred compensation plans that could provide significant tax advantages
5. Maximizing retirement contributions
Make sure your clients maximize their 2025 retirement contributions. With the combined employer and employee contribution limit at $70,000 for 2025 plus an additional $7,500 catch-up contribution for those 50 and older, there is a significant opportunity for tax-advantaged savings. It is important to note that there is also an increased catch-up contribution limit of $11,250 for those aged 60–63 starting in 2025 (courtesy of SECURE Act 2.0).
Also work with clients to evaluate their current contribution strategies and consider adjustments for the remainder of the year. For some clients, switching to Roth 401(k) contributions might make sense, particularly in lower tax years.
Also, be sure to discuss with clients how to maximize employer matches and utilize all available contribution types, including Roth 401(k)s. For business owner clients, explore retirement plan options that maximize their ability to contribute and still make sense for their business.
6. Triple tax-free Health Savings Accounts
For clients with qualifying high-deductible health plans, emphasize the triple tax advantages of Health Savings Accounts in 2025. Individual contributions are capped at $4,300 ($8,550 for families) in 2025 (with an additional $1,000 contribution for those age 55+), and these accounts offer unique benefits that many clients underutilize.
Develop a comprehensive HSA strategy for eligible clients that addresses current medical expenses and long-term health care planning. Help them understand how these accounts can serve as a powerful retirement planning tool through tax-free contributions, tax-deferred growth, and tax-free qualified withdrawals.
7. Advanced distribution planning is more important than ever
With clients sitting on huge traditional retirement accounts due to the recent market run-up, withdrawal strategies are more important than ever. Leverage distribution planning software to create optimal withdrawal strategies for your clients. These strategies can save clients millions in lifetime taxes. Platforms like Income Lab or Income Solver can help you develop and present lifetime distribution strategies (drawing down IRAs and/or Roth conversions), that minimize lifetime taxes.
8. Consider annuities
With interest rates likely to continue decreasing in 2025, now is the time to discuss annuity strategies with your clients. Review existing annuity contracts for potential section 1031 exchange opportunities and evaluate whether Qualified Longevity Annuity Contracts (QLACs) might benefit clients with substantial tax-deferred assets.
The $200,000 lifetime maximum for QLACs provides three key benefits to discuss with clients:
- No RMDs on the amount dedicated to the QLAC
- Ability to defer RMDs until age 85
- Reduced RMD calculations on remaining tax-deferred assets
9. Smart charitable giving
With the 2025 standard deduction at $30,000 for joint filers, and 90% of clients taking the standard deduction, help your charitably inclined clients obtain the largest deduction with their dollars. Consider recommending gifting of appreciated securities (limited to 50% of AGI for securities, 60% for cash), and Donor Advised Funds to better leverage charitable dollars. For clients over 70.5, discuss Qualified Charitable Distributions up to $108,000 as a tax-efficient giving strategy that can also help decrease RMDs.
10. Consider estate planning
Help clients plan their estates and take care of loved ones. Start with simple strategies like annual exclusion gifts, which increased to $19,000 per person ($38,000 for married couples) for 2025. The lifetime exclusion is $13.99 million per person in 2025, and could stay at this elevated level. Regardless, clients should not put off this work. For more complex situations, consider recommending these sophisticated strategies:
- Qualified Personal Residence Trust (QPRT): Particularly valuable in today’s high-interest-rate environment, help clients understand that they can transfer their first home and a second home into a QPRT.
- Spousal Lifetime Access Trust (SLAT): SLATs are a great way to move assets out of your estate while maintaining flexibility and access to assets.
- Charitable Remainder Trust: Recommend for high-net-worth clients looking to balance lifetime income with charitable impact.
- Grantor Retained Annuity Trust (GRAT): Consider for clients interested in transferring assets that are due to appreciate significantly, such as real estate and investments.
Although tax planning is a year-round activity, now is the time to get ready for a 2025 filled with a robust schedule of value-added services. By taking a proactive approach to tax planning, you not only help clients optimize their financial outcomes but also position yourself as their trusted advisor for all aspects of their financial lives.