End-of-Year Tax Planning for High-Net-Worth Individuals in Connecticut

The end of the year is coming quickly, offering a valuable window to make strategic tax moves before December 31. With economic shifts, ongoing market volatility, and evolving tax laws, waiting until the last minute can leave you scrambling and potentially missing out on meaningful tax savings.

Rather than reacting to surprises in the new year, proactive planning now can help position your wealth more efficiently. These final months are critical, whether you’re preparing for retirement, selling a business, or reassessing your portfolio.

This blog from Heritage Capital highlights key end-of-year strategies for high-net-worth families and individuals designed to align with sophisticated financial goals in Connecticut’s high-tax environment.

Key End-of-Year Tax Strategies for Connecticut Residents

Capital Gains & Loss Harvesting

One of the most direct ways to reduce your taxable income is by reviewing your portfolio for tax-loss harvesting opportunities. By selling underperforming assets to offset realized gains, you can reduce your overall capital gains tax liability.

However, keep in mind the “wash sale” rule, which disallows a loss if you purchase a substantially identical security within 30 days before or after the sale. All tax-loss harvesting transactions must be completed before December 31, 2025—not in early January—so timing is crucial.

Retirement Contributions

The final quarter of the year is an ideal time to fine‑tune your retirement planning in Connecticut. Be sure to maximize your contributions to 401(k)s, non‑qualified deferred compensation plans, SEP IRAs, and other retirement accounts before December 31. If you’re 50 or older, take advantage of catch-up contributions, which can significantly increase your deduction limits.

Roth Conversions

Consider whether a partial Roth conversion makes sense this year. Converting pre-tax assets to a Roth IRA during a lower-income year may help spread tax liability and reduce future Required Minimum Distributions (RMDs), while also creating a source of tax-free income in retirement.

RMDs and QCDs

If you’re age 73 or older, you must take your RMD from tax-deferred retirement accounts before year-end or face a 25% penalty on the amount not withdrawn. If you don’t need the income, you might consider a Qualified Charitable Distribution (QCD), which allows you to donate up to $108,000 directly from your IRA to a qualified charity. QCDs can satisfy your RMD and reduce your taxable income.

Charitable Giving

Donor-Advised Funds (DAFs) are a valuable tool if you’re interested in maximizing deductions in a single tax year while planning your giving over time. Gifting appreciated assets instead of cash can also be a smart strategy for donors to avoid capital gains taxes and may deduct the full fair market value if held for more than one year.

Also, consider the annual gift tax exclusion for 2025, which allows you to gift up to $19,000 per recipient, helping to reduce your taxable estate. This important estate planning tactic must be completed by December 31.

Stock Options and Bonuses

If you’re expecting a large year-end bonus or need to exercise stock options or restricted shares, review the impact on your AGI and tax bracket. Strategic timing may help reduce your marginal tax exposure.

Real Estate Planning

For investors with rental or commercial properties, reviewing depreciation schedules, passive activity limitations, and 1031 exchange deadlines before year-end can help optimize tax outcomes and plan for liquidity needs.

Health Savings Account (HSA)

HSA contributions offer triple tax advantages: pre-tax contributions, tax-deferred growth, and tax-free withdrawals for qualified medical expenses. While contributions can be made up until April 15, payroll-funded contributions or those used for immediate deductions may need to be completed before December 31.

Re‑Evaluating Your Advisory Team: A Crucial Year‑End Check‑Up

Tax efficiency is closely tied to the quality of your advisory relationship. As the year wraps up, it’s worth asking whether your current advisor is actively identifying tax-saving opportunities—or simply running your plan on autopilot.

Has your advisor discussed Roth conversions, charitable giving, tax-loss harvesting, or income timing strategies with you? If not, it’s time to reassess.

When To Consider a Change

Events like preparing for retirement, receiving an inheritance, or experiencing market volatility without clear guidance are signs you may benefit from a more hands-on relationship. If you’ve had difficulty getting answers or feel like you’re not being heard, don’t wait until tax season to make a change.

The Difference a Fiduciary Makes

Working with a fee‑only financial advisor in New Haven, CT, or the surrounding region, especially one like those with Heritage Capital who operate under a fiduciary standard, means you’ll receive objective, conflict-free advice. This can make a meaningful difference when it comes to retirement planning for high-net-worth individuals, who often face complex tax decisions, investment choices, and estate planning concerns.

Navigating the Transition

Switching financial advisors doesn’t have to be a disruptive process. With proper due diligence, a transition before year-end may actually enhance your tax position heading into 2026. Many investors find that coordinating the change in Q4 allows the new advisor to take a fresh approach to year-end strategies, offering a cleaner starting point for investment rebalancing, charitable planning, and income coordination.

As always, vet credentials carefully, ask about their investment philosophy and tax strategy expertise, and confirm they are legally bound to act in your best interest as a fiduciary.

Don’t Wait for the Next Tax Surprise: Heritage Capital Can Help

Effective end-of-year tax planning isn’t just a checklist; it’s part of a year-round mindset. October and early November are often the most effective windows for implementing strategic moves. Yet, many individuals wait too long and risk missing key deadlines from custodians, accountants, or the IRS.

At Heritage Capital, we don’t just react, we guide. Led by Paul Schatz, AIF®, our team combines decades of experience with a fiduciary-first approach designed to support your financial goals through every stage of life.

Here’s what you can expect when working with us:

• Personalized, in-house investment management—not outsourced.
• An active management approach that includes both offensive and defensive strategies.
• A commitment to listening first and tailoring every recommendation to your goals.
• A legal fiduciary relationship: your interests always come first.
• Clear communication and fast responses
• Transparent fees with no hidden costs.
• Ongoing education to help you feel confident and informed.

Whether you’re preparing for retirement, managing a complex portfolio, or considering switching financial advisors, we’re here to help.

Please feel free to contact us.