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December has a way of feeling full—full calendars, full carts, full inboxes, and let’s be honest, often full of stress. Amid all the holiday hustle, it’s easy to push “money stuff” to the sidelines, especially anything that sounds like paperwork or planning. But here’s the thing: December is the month to take a few smart, strategic steps that could significantly lower your tax bill or boost your financial confidence come spring.

This isn’t about complicated tax loopholes or financial wizardry. It’s about simple, practical moves you can make right now—moves that don’t require a tax degree but still make a real difference.

Whether you’re self-employed, salaried, a side hustler, or just someone who wants to make better money moves before the year wraps up, these five December tax strategies are designed to be accessible, actionable, and yes—totally doable.

1. Max Out Your Tax-Advantaged Accounts (While You Still Can)

One of the smartest ways to reduce your taxable income is to contribute to tax-advantaged accounts before the calendar flips to January. The clock is ticking, but you’ve still got time to make some power moves.

What You Can Do Now:

Contribute to your 401(k): Contributions to a traditional 401(k) lower your taxable income for the year. For 2024, the annual limit is $23,000 (plus an extra $7,500 if you’re over 50). Your employer’s payroll team may be able to help you increase your final paycheck contributions if you ask before mid-December.
Check your HSA (Health Savings Account): If you have a high-deductible health plan, contributions to an HSA are triple tax-advantaged. You may still be able to top it off. The 2024 limits are $4,150 for individuals and $8,300 for families.
Use your FSA (Flexible Spending Account): FSAs are “use-it-or-lose-it” accounts in most cases. Some employers offer a grace period into the new year, but many require funds to be spent by December 31. If you’ve got money sitting in there, now’s the time to book that eye exam, refill prescriptions, or stock up on eligible medical essentials.

According to the IRS, the majority of 401(k) contributions must be made by December 31 to count for the current tax year. IRAs, on the other hand, usually allow contributions up until Tax Day in April—but for employer-sponsored plans, year-end really means year-end.

A Quick Tip:

If you’re not sure how close you are to the limit, log in to your benefits portal or ask HR. Even adding a few hundred more dollars before the deadline can reduce your taxable income and increase your future nest egg.

2. Review Your Withholding and Adjust for Next Year

Let’s be honest: most people don’t look at their tax withholding until after they get a surprise at tax time. But December is the perfect moment to check in—while there’s still time to act.

If you got a big tax bill last year, or a massive refund, it might be a sign your withholding is off. And while a refund feels great, it’s essentially just the IRS giving back your own money—interest-free. Wouldn’t it be better to keep more of it during the year?

What You Can Do:

Check your latest pay stub or use the IRS Tax Withholding Estimator to see if you’re on track.
Compare your year-to-date income with your expected tax liability. If there’s a mismatch, you may want to adjust your W-4 form with your employer for next year.

Even though changing your withholding now won’t fix this tax year, knowing where you stand can help you plan smarter for next year—especially if your income, dependents, or deductions changed.

Personal Note:

One year, I went freelance part-time and didn’t adjust my withholding from my main job. The surprise tax bill in April was not a fun time. Since then, I check every December to make sure I’m not accidentally underpaying (or giving the IRS an interest-free loan). A 10-minute check can save hours of stress.

3. Make Charitable Donations (and Get the Tax Break)

December is the most charitable month of the year—and for good reason. Giving to causes you care about feels good, and if done properly, it could also lower your taxable income.

Here’s How It Works:

Itemized Deductions: If you itemize, charitable donations to qualified 501(c)(3) nonprofits may be tax-deductible. Cash, checks, and even certain non-cash donations can count—as long as you keep a proper receipt or documentation.
Donor-Advised Funds (DAFs): If you want to make a large charitable contribution this year but spread the giving over time, a DAF lets you get the deduction now and give later.
Qualified Charitable Distributions (QCDs): For those over 70½ with IRAs, a QCD allows you to donate directly to a charity without counting the distribution as income, which may also satisfy your Required Minimum Distribution (RMD).

A Few Friendly Reminders:

The donation must be made by December 31 to count for the current tax year.
Keep written records, especially for donations over $250.
Not all organizations qualify for a tax break. Use the IRS’s Tax Exempt Organization Search tool to confirm eligibility.

According to Giving USA, Americans donated over $499 billion in 2023, with individual contributions making up about 64% of that amount. So you're definitely not alone in using charitable giving as both a value-driven and financially savvy move.

4. Take Advantage of Tax-Loss Harvesting (If You Have Investments)

This one might sound a little more advanced, but don’t worry—it’s more approachable than it seems.

Tax-loss harvesting is when you sell off an investment that has lost value to offset capital gains you’ve realized elsewhere in your portfolio. Essentially, you’re turning a loss into a tax-saving opportunity.

Why It Matters:

You can use capital losses to offset capital gains, reducing the taxes you owe.
If your losses exceed your gains, you can deduct up to $3,000 against your regular income (or $1,500 if married filing separately).
Unused losses can be carried forward to future tax years.

What to Consider:

This only applies to taxable investment accounts (not retirement accounts like IRAs or 401(k)s).
Be mindful of the wash-sale rule—you can’t repurchase the same or “substantially identical” investment within 30 days before or after selling it, or the loss won’t count for tax purposes.
This strategy may work well if you had gains from other investments or sold a property this year.

If you’re not sure where to start, talk to a financial advisor or use your brokerage’s built-in tools. Many platforms now offer automated harvesting options or year-end summaries.

5. Make Last-Minute Business Purchases or Contributions (If You're Self-Employed)

If you freelance, run a small business, or have a side hustle, December can be a golden opportunity to optimize your taxes through thoughtful year-end expenses.

Many business-related costs are deductible in the year they’re paid—so making necessary purchases or contributions before December 31 can lower your taxable income for this year.

What This Could Include:

Buying equipment, office supplies, or software for your business
Pre-paying for advertising, education, or professional services
Contributing to a SEP IRA or Solo 401(k) (some contributions can be made up to the tax deadline, but others require setup before year-end)

Things to Keep in Mind:

Only spend if the expense is truly useful and necessary for your business—not just to grab a deduction.
Keep detailed records and receipts. If audited, the IRS will want clear proof the expense was legitimate.
If you're close to a new tax bracket, this could be the strategy that helps you stay in a lower one.

Many small business owners overlook these opportunities or push them off until January, but the December deadline can be a strategic chance to end the year strong—financially and operationally.

The Money Notes

Top off your 401(k) or HSA by December 31 to shrink your taxable income before the year ends.
Use up any leftover FSA funds now or risk losing them entirely.
Make charitable donations with proper documentation to lower your tax bill and support a cause you care about.
Offset gains by selling underperforming investments (tax-loss harvesting) and potentially reduce your capital gains taxes.
Freelancers and side hustlers can deduct eligible business expenses made before December 31, helping reduce their taxable income.

Final Thoughts

Taxes don’t have to feel like a mystery. And year-end tax planning doesn’t require spreadsheets, calculators, or late-night stress. Sometimes it’s just a few intentional decisions in December that can make April a whole lot smoother.

Think of this as your money check-in before the ball drops. You still have time to make choices that give you more flexibility, more confidence, and maybe even a lower tax bill.

So pull up your calendar. Block out 30–60 minutes. Pick 1 or 2 of these strategies and take action before December 31. Your future self won’t just thank you—they might actually high-five you.