Even though 2025 isn’t over yet and you may just be catching your breath after tax-season, now is the time to start thinking ahead. For high-net-worth individuals and business owners whose income tends to come from multiple sources, proactive tax planning is especially important because tax exposure tends to be higher.
However, there’s also more opportunity to control how and when income is received, whether through business distributions, investment sales, or retirement account withdrawals. While each of these could affect your tax liability, planning early gives you more options to manage your income efficiently and potentially reduce what you owe.
Here are five smart moves you can make now to help ensure your 2026 tax season runs smoothly and helps keep your wealth plan aligned with your long-term goals.
Reflect on the Past Year, Forecast the New
Look back on things you faced in the 2024 tax season while it’s still fresh in your mind and bring those concerns to your advisor so you can get ahead of them rather than being reactive. Also talk to them about any anticipated changes large and small for this year. For example, do you plan on selling any real estate or purchasing any rental properties? Do you plan on exiting your business? Is your grandchild going off to college? These are important things to bring up now so your wealth manager can adjust your Bucket Plan accordingly and keep you on track for your goals.
Revisit Withholding and Estimated Tax Payments
High-income earners often fall into underpayment traps when distributions or one-time events—bonuses, liquidity events, stock sales—aren’t paired with adjusted estimated payments. If you’ve had a windfall, large capital gain, or major business transition this year, here’s what you can do now to help avoid penalties and reduce tax-time surprises:
- Review YTD income and realized gains
- Calculate any projected shortfalls
- Consider a fourth-quarter estimated payment before the deadline
Optimize Income Timing and Business Expenses
Year-end planning is especially important for business owners, who often have more control—and more complexity—when it comes to income and expenses. Depending on your business structure and cash flow, this may be a good time to accelerate or defer income or time large purchases or capital expenditures. It is also key to review your retirement plan contributions for things like your Solo 401(k), Simplified Employee Pension (SEP), or defined benefit plan. And don’t forget to seize opportunities such as the Section 199A pass-through deduction, also known as the Qualified Business Income (QBI) deduction, as it provides a significant tax benefit for eligible business owners by allowing them to deduct up to 20% of their qualified business income.
Consider Strategic Roth Conversions and Gifting
If your taxable income is lower than usual this year due to a business sale, early retirement, strategic deferral, or other reason, consider taking the following steps to reduce future tax liability, shift wealth efficiently, and build in legacy-focused planning:
- Convert IRA assets to Roth IRAs within your target tax bracket
- Make annual exclusion gifts ($18,000 per recipient in 2024)
- Fund a family trust or donor-advised fund before year-end
Build Tax Management Into Your Bigger Picture
Effective tax management goes beyond reducing this year’s bill—it helps improve cash flow, preserve investment gains, and support longer-term goals like business growth, charitable giving, or retirement income planning. When thoughtfully integrated into your overall financial plan, tax strategy can become a critical lever for building, preserving, and transferring wealth.
At The CP Welde Group, we don’t approach tax season as a standalone event, but a piece in a larger puzzle of the longevity of your wealth. Our proactive tax method, the Tax Management Journey®, is an integrated, forward-thinking roadmap that integrates comprehensive tax planning and management into every holistic wealth plan we build with The Bucket Plan®. Whether you’re focused on structuring tax-smart income in retirement or preparing for a financially sound business exit, we’re here to help you stay ahead of what’s next.
Book Your Tax and Wealth Consultation Now
Looking for more targeted support before the year wraps up? We’re here for you. Let’s talk about how we can help you close out 2025 on solid footing and start the 2026 tax season off strong—book your complimentary tax review session today.