With just weeks left in 2025, savvy high-net-worth families are making strategic moves to optimize their tax situations before the calendar flips. Tax efficient investing isn't just about picking the right stocks: it's about timing, strategy, and understanding how legislative changes impact your wealth. The One Big Beautiful Bill Act (OBBBA) has introduced meaningful planning opportunities worth reviewing before year-end, particularly as several provisions take effect in 2026.
Table of Contents
- 1. Accelerate Charitable Giving Before 2026 Restrictions
- 2. Maximize the $15 Million Estate Tax Exemption
- 3. Deploy Strategic Trust Structures
- 4. Harvest Capital Gains at 0% Tax Rate
- 5. Max Out Enhanced Retirement Contributions
- 6. Execute Smart Tax-Loss Harvesting
- 7. Leverage Annual Gift Tax Exclusions
1. Accelerate Charitable Giving Before 2026 Restrictions {#accelerate-charitable-giving}
One of the most consequential charitable giving changes in recent history is taking effect on January 1, 2026. Right now in 2025, you can deduct up to 60% of your adjusted gross income for cash gifts and 30% for noncash assets. Starting January 1, 2026, the OBBBA limits these deductions to amounts exceeding just 0.5% of your AGI, with benefits capped at 35% for top earners.
For a family with $2 million in AGI, this means the difference between deducting $1.2 million in charitable gifts this year versus a substantially reduced benefit next year. Families who have planned multi-year giving programs may find it advantageous to front-load contributions into 2025.
Consider donor-advised funds as a tax efficient investment strategy: you get the full deduction this year while maintaining control over when the funds actually reach your chosen charities. This approach lets you maximize the current generous limits while spreading your actual charitable impact over several years.
2. Maximize the $15 Million Estate Tax Exemption {#maximize-estate-exemption}
The OBBBA permanently increased the estate, gift, and generation-skipping transfer tax exemption to $15 million per person ($30 million for couples) starting in 2026, with inflation indexing resuming in 2027 using 2025 as the base year. For reference, the 2025 exemption is $13.99 million per person (historically, the 2024 exemption was $13.61 million). This permanent change provides long-term planning clarity for high-net-worth families.
With the exemption now permanently established at these elevated levels, families can plan wealth transfers with confidence, knowing the exemption will not revert to lower amounts. For families with estates approaching or exceeding these thresholds, the investment strategy involves transferring appreciating assets now at current valuations, then capturing future growth outside the taxable estate.
According to the IRS, proper estate planning becomes even more critical as these exemptions increase, creating opportunities for sophisticated wealth transfer strategies.
3. Deploy Strategic Trust Structures {#deploy-trust-structures}
Irrevocable trusts have become the Swiss Army knife of tax efficient investing for high-net-worth families. These structures remove assets from your taxable estate while providing multiple tax benefits:
- Shifting income-producing assets to beneficiaries in lower tax brackets
- Avoiding state income taxes in high-tax states like California and New York
- Multiplying the SALT deduction cap through multiple non-grantor trusts
- Stacking the $15 million capital gains exclusion for qualified small business stock
Grantor Retained Annuity Trusts (GRATs) and Spousal Lifetime Access Trusts (SLATs) are particularly powerful right now. A GRAT lets you transfer future appreciation to heirs while retaining an income stream, while a SLAT provides your spouse access to trust assets while removing them from your estate.
Reviewing these structures before year-end allows families to capture current asset valuations and begin the wealth transfer process under favorable tax rules.
4. Harvest Capital Gains at 0% Tax Rate {#harvest-capital-gains}
Here's a strategy many families overlook: harvesting capital gains at 0% federal tax rates. The OBBBA's enhanced standard deductions create a sweet spot where married couples can realize significant gains without federal tax consequences.
For 2025, couples can harvest capital gains up to their standard deduction ($31,500) plus additional amounts for seniors ($3,200 for couples 65+, plus a temporary $12,000 senior bonus). This means some couples could realize over $46,700 in capital gains at 0% federal tax while resetting their cost basis.
Over the four-year window from 2025-2028, couples could potentially harvest over $300,000 in capital gains tax-free. This strategy becomes much less valuable after 2028 when the senior bonus expires, making the next several years a particularly favorable period to evaluate this approach.
5. Max Out Enhanced Retirement Contributions {#max-retirement-contributions}
The retirement contribution landscape has never been more favorable for high earners, especially older family members. For 2026, the 401(k) contribution limit is $24,500, with catch-up contributions adding another $8,000 for those 50 and older.
But here's where it gets interesting: workers aged 60-63 can make "supersize" catch-up contributions of up to $11,250, bringing their total potential contribution to $34,750. That's a meaningful current-year tax deduction while turbocharging retirement savings.
For business owners, consider maximizing both employee and employer contributions to defined benefit plans, which can allow contributions well over $100,000 annually depending on compensation levels and plan design.
These contributions represent some of the most straightforward tax efficient investing moves available, providing immediate tax reduction while building long-term wealth.
6. Execute Smart Tax-Loss Harvesting {#execute-tax-loss-harvesting}
Tax-loss harvesting remains a cornerstone of tax efficient investing, particularly valuable for families with concentrated stock positions or investments that have declined this year. By selling depreciated securities, you can offset capital gains dollar-for-dollar, plus reduce ordinary income by up to $3,000.
The strategy becomes more powerful when combined with asset location planning: holding tax-inefficient investments in tax-advantaged accounts while keeping tax-efficient investments in taxable accounts. This approach can save thousands in annual taxes while maintaining your desired asset allocation.
Remember the wash sale rule: you can't buy substantially identical securities within 30 days of the sale. But you can purchase similar (not identical) investments to maintain market exposure while capturing the tax benefit.
For more sophisticated strategies and insights, check out discussions on the Davies Wealth Management podcast at www.1715tcf.com, where we regularly explore advanced tax planning techniques.
7. Leverage Annual Gift Tax Exclusions {#leverage-gift-exclusions}
The 2025 annual gift tax exclusion allows $19,000 per recipient ($38,000 for married couples), creating opportunities for tax-free wealth transfer. For families with multiple beneficiaries: children, grandchildren, and their spouses: this can add up quickly.
A couple with three married children and six grandchildren could transfer $684,000 annually without gift tax consequences ($38,000 × 18 recipients). Over multiple years, this represents millions in estate reduction while providing liquidity to younger generations.
Consider combining annual exclusion gifts with 529 education funding, where you can front-load five years of contributions ($95,000 per beneficiary for individuals, $190,000 for couples) in a single year. This strategy removes future growth from your estate while funding education goals.
The key is systematizing these gifts to ensure maximum benefit. Many families set up automatic transfers in December to capture the full year's exclusion while reducing administrative burden.
Making Tax Efficient Investing Work for Your Family
These seven strategies work best when integrated into a comprehensive wealth management approach. Several legislative changes taking effect in 2026 create year-end planning considerations worth addressing before December 31st.
Your specific situation: income levels, estate size, family structure, and risk tolerance: determines which strategies provide the greatest benefit. Consider working with experienced professionals who understand the nuances of high-net-worth tax planning and can help coordinate these moves within your broader financial plan.
At Davies Wealth Management, we help Florida families navigate these complex decisions while building long-term wealth. The next few weeks represent a practical opportunity to review your tax position for 2026 and beyond.
Year-end is a natural time to evaluate whether these planning strategies align with your family's goals. When you plan to retire, having tax-efficient strategies in place can make a significant difference in how much wealth you ultimately preserve.
This content is for educational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Advisory services offered through Davies Wealth Management, a Registered Investment Adviser. Please consult a qualified financial, tax, or legal professional regarding your specific situation.
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