December 10, 2025 • 16 mins
There is still time to make some smart moves to reduce your 2025 taxes. You have to be proactive to take advantage of the latest changes in the One Big Beautiful Bill Act. But you better hurry – there is less than three weeks less in the year!
Bill Artzerounian is Director of Tax Services at Ritholtz Wealth Management, where he focuses on the very specific steps investors can take to better manage their taxes.
Each week, “At the Money” discusses an important topic in money management. From portfolio construction to taxes and cutting down on fees, join Barry Ritholtz to learn the best ways to put your money to work.
See omnystudio.com/listener for privacy information.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
They're billing mombs? What about schools are falling?
Speaker 3 (00:13):
Tell me what in the hell of pay taxes for?
Speaker 1 (00:17):
Well? What a little?
Speaker 2 (00:20):
Stop paying text? Stop, what a lit Stop paying taxes?
Speaker 1 (00:27):
Stop paying tax.
Speaker 3 (00:30):
It's that time of year. You still have Christmas gifts
left to buy, but you have to be aware that
April fifteenth is just around the corner. Consider this your
nudge that you have less than three weeks to make
whatever year end tax moves you're planning for the calendar
(00:50):
year twenty twenty five. I'm Barry Riddolts, and on today's
edition of At the Money, we're gonna discuss the moves
investors should be thinking about in order to reduce their
twenty twenty five taxes. To help us unpack all of
this and what it means for your money, let's bring
in Bill Artsmarnian Full disclosure. Arts Ronian is the director
(01:14):
of tax services at Richholt's Wealth Management and we've been
working with him for just about five years. So Bill,
let's start with a simple overview. You've said before tax
advice is financial advice. I want to unpack that. How
should investors be thinking about the role of tax planning
(01:36):
in their overall wealth strategy, especially here in December.
Speaker 1 (01:41):
Well, thanks Barry for having me. Let's just think about
a financial plan for a second. What part of a
financial plan does not touch on taxes? I mean think
about just space of cash flow planning. Taxes For our
investors are often the largest expense in their annual budget.
It's mortgage and taxes. Those are the largest costs. Life
insurance is thinking about a tax free inheritance for the
(02:02):
next generation or for your errors. State planning is all
about taxes. If there was no estate tax, we wouldn't
really have to think about estate planning. And then basic
portfolio management is purely you know, not purely tax centric.
But our investors are thinking about tax all the time.
Our clients would rather save one thousand dollars on taxes
than make six figures in a trading day. So it's
(02:23):
all connected. And the end of the year is like
the report card. Tax planning should be happening proactively for
twelve months, but we don't even stop there. We're not
thinking about taxes as a current year item or even
a lifetime item. We're thinking about this generationally. We're thinking
about how can we set up the next generation of
client children, client grandchildren for tax success.
Speaker 3 (02:44):
So we have a few weeks left in the year.
What are the big boxes that you think investors should
be checking and what important items do they ignore? What
are the big mistakes people make?
Speaker 1 (02:56):
I think one of the misunderstandings is on tax deferral
rather than tax avoidance. Many strategies can avoid taxes or
can defer taxes, but that bill will come do at
some point. You know, think about even just a four
oh one K a pre tax contribution, You're going to
recognize that income at some point. Things like accelerated depreciation
will come back to bite you on the recapture when
(03:17):
you sell the asset. Opportunity zones are a tax deferral mechanism.
These are all very useful because time value of money
says that a tax deduction today is worth more than
a tax deduction in the future, but eventually that there's
going to be a tax hit. So I think that's
a common misunderstanding. A few other mistakes is on capital
gain timing. We see clients not really understand or consider
(03:41):
the timing of when they recognize games. When we onboard folks,
we're often pushing gains from the fourth quarter of say
twenty twenty five, into the first quarter of twenty twenty six,
because that gives us a full twelve months to tax
lost harvest and create losses to offset any capital gains.
The flip side of that, of course, is even a
(04:01):
small movement in a stock price can cost more than
a tax bill just to sell it, so you have
to be pretty comfortable holding the position for a couple
weeks or even a couple months. And then the last
mistake is misunderstanding just basic payment obligations. There are safe
harbors to avoid estimated tax penalties. But on the flip
(04:22):
side of that is, if you pay too much, there's
opportunity cost. If you have a big refund in April,
that means you paid a little bit too much and
that money could have been better put to use.
Speaker 3 (04:30):
So Bloomberg has a fairly sophisticated audience of high earning professionals.
What are the three top moves you see for folks
like that, they have a portfolio, they have a pretty
decent income, and they can expect to continue that for
the foreseeable future.
Speaker 2 (04:49):
Let's start with charitable giving.
Speaker 1 (04:51):
We'll talk about it more throughout the show, but it's
often the most accessible lever to pull for tax savings.
The caveat being you need to be conscious of where
your total deductions fall. We see some clients give a
certain amount of charitable gifts and they don't even itemize
their deductions. So from a federal tax standpoint, maybe they
gave away ten k, but they're still taking that standard deduction.
(05:12):
They're not benefiting from that charitable gift. So that's where
bunching strategies and some other strategies with don'tant advice funds
can come into play. Number two is on the equity
comp side. Equity compensation for folks compensated through their company stock,
the timing of the income can often be flexible. Think
about stock options company stock options. We should be asking
(05:34):
the question, how much can we recognize in stock option
income before the end of the year before we bump
up against the next federal or.
Speaker 2 (05:41):
State tax bracket.
Speaker 1 (05:42):
How much if these are incentive stock options, how much
can we recognize without paying a MT alternative minimum tax.
These are questions we should all be asking if we're
paid through equity, or if we have clients that are
paid through equity and the last one is for small
business owners.
Speaker 2 (05:57):
There's a whole lot on the small business side of this.
Speaker 1 (06:00):
I'm focused a lot on qualified business income, which is
a twenty percent deduction for past through income, but there
are limitations, and those limitations can be on based on
how much you pay your employees or yourself in a wage.
If you don't meet a certain wage number, that QBI
benefit could be significantly reduced or even reduced down to
zero if you're really screwing this up. And then on
(06:23):
the small business side, we should be looking at are
we prepared to maximize retirement contributions? The max four one
K is seventy thousand dollars this year between employer and
employee contributions, and so you have to be ready to
have that cash available to fund those contributions. Say you're
a mom and pop shop to owners zero employees, maybe
you're structured as an es corp. You're gonna have to
(06:44):
come up with some cash to meet the four to
one K obligations either before the end of the year
before the tax filing.
Speaker 3 (06:49):
So I'm glad you brought up tax advantage accounts. Like
for a one k's there always seems to be a
last minute frenzy to maximize not only for A one
k's but IRA's health saving accounts five twenty nine. So
how have the rules changed around credits and ceilings for
this year and for twenty twenty six?
Speaker 1 (07:10):
Right at least once a year with our clients, we're
running through the quote unquote basics of all of these contributions.
Are you on track to hit each of these with
a four oh one K? We just talked about it
a little bit, but there's a seventy K limit. Now,
if you're a W two employee and you don't own
the company, you're going to make employee contributions, Maybe there's
a megabackdoor, a WROTH option in there for you. We
(07:32):
talk to folks all the time who have this eligible
or eligible in their plan, but they don't even know
about it. Nobody's talking to them about this when they
join the company, and that megabackdoor WROTH allows you to
put after tax dollars into the four to one K,
convert it to WROTH, and have a nice Roth tax
free bucket growing alongside the pre tax contributions that you
already made. I raise don't come up a lot in
(07:52):
our world for a few reasons. Number one is most
of our clients are employed with a retirement plan and
through their employer, and if that's the case, deductible IRA
contributions may be limited. However, there is a backdoor option
in the IRA. If you don't have any pre tax
money in any iras, you can make after tax contributions
(08:14):
and again convert to ROTH in the IRA just as
well as you can in the four to one K.
And then the HSA. I love tax owners love hsas.
You need to be on a high deductible plan, which
isn't for everybody. My colleague Bill Sweet and I we
ran an analysis on high deductible plans and we found
that there's a pretty there's a pretty attractive break even
(08:35):
on high deductible plans because the premiums are lower and
the long term benefit of investing deducting HSA contributions and
treating those as another retirement vehicle. Again, those are like
roths where they're tax free. Those those can compound very
very nicely. Where maybe you retire early and let's say
you retire sixty instead of sixty five, you have a
five year gap where you need to cover probably significant
(08:56):
healthcare premiums that HSA can be used in that case,
and it's nice tax free bucket to have.
Speaker 3 (09:02):
And what do the ceilings look like on all these
tacks of entergs accounts for twenty twenty six? How has
the recent legislation changed the max people can kick into those?
Speaker 1 (09:12):
The big change in twenty twenty six is that catchup
contributions for folks over age fifty are now forced to
be ROTH contributions again starting twenty twenty six. Historically, catchup contributions,
which are going to be seventy five hundred this year
seventy five hundred next year, Folks in their fifties are
often in their highest earning years. Therefore the pre tax
(09:33):
option is usually preferred. However, starting next year, the catchup
contributions that seventy five hundred are going to be required
to be WROTH contributions. My theory is, I don't mind
this at all. Nobody ever regrets a ROTH contribution. Nobody
ever really regrets a ROTH conversion because once you pay tax,
you don't really think about it. And so you know,
(09:54):
if we have investors in their fifties and sixties that
are forced to make a small ROTH contribution instead of
a pre tax contribution. That just gives them exceedingly more
flexibility down the line, because now they're going to have
different buckets of money to pull from in retirement.
Speaker 3 (10:07):
Sounds really interesting. You mentioned earlier tax loss harvesting. We've
been using Canvas as our direct indexing product, but it
seems like this has become ubiquitous. What are your thoughts
on tax loss harvesting. What does thoughtful harvesting look like?
Speaker 1 (10:25):
I think the term thoughtful there implies to me that
there should be an ongoing activity, not just a year
end item. Historically, taxpayers, sell DIY, investors and even advisors,
they'd look at the portfolio in December, they'd say, okay,
what's underwater. Let's book those losses through direct indexing. This
is now an ongoing activity, but you don't need a
(10:46):
direct indexing portfolio to look at your portfolio. Even if
you're not in a direct indexing setup, you can still
tax lost harvest throughout the year. Why just December? This
should happen with regularity. There's nothing saying we can only
book losses in December. Now a lot of this is
dictated by individual stock market volatility, but with an ultra
(11:06):
diversified bucket of stocks. Some will ultimately be losers, so
you sell those, you pick up tax losses, you invest
in a similar company, so you keep the fidelity of
the portfolio, and then you don't trigger wash sale rules.
The only caveat here is state by state stuff. New Jersey,
for example, does not allow tax loss carry forwards. So
we're doing in December, we're doing a bit of the
(11:28):
opposite with our New Jersey clients. We're actually we're looking
historically over the first eleven months, what did we realize
in losses. Let's go make a game's harvest. Instead of
realizing more losses, We're going to realize capital gains so
we can use them at the state level this year.
Speaker 3 (11:42):
That's really interesting. So I know the deductions have changed,
the standard deductions have become permanent. There are new floors,
There are new ceilings for that for itemized and chatterable gifts.
How should those people who are charitably inclined think about
you mentioned and bunching donations or donor advice funds. Give
(12:04):
us a little more detail about how people should be
using these vehicles.
Speaker 1 (12:07):
Yeah, we're doing a lot of this with our clients
throughout the year. But specifically at the end of the year.
We kind of tee up charitable planning. I'm like, hero,
let's think about what we want to accomplish, and then
let's take a look at the end of the year
and figure out how we're going to get this done
and if it's the right year to do it. What
we need to be conscious of is all the other deductions. Right,
Like I mentioned previously, you might have a hurdle rate
before you even start to deduct your charitable gifts. And
(12:29):
that's where you might want to consider bunching maybe three years,
maybe five years, maybe ten years worth of charitable gifts
into twenty twenty five. For example, twenty twenty five. Maybe
it's a high income year. Maybe you're paying down your mortgage,
so you're not getting that mortgage deduction anymore, and you
want to take advantage of an appreciated security that you
(12:49):
gift for charitable purposes.
Speaker 2 (12:52):
We do a lot of this.
Speaker 1 (12:53):
We take maybe a client comes to us, they've worked
at a tech company. The tech company, they've been compensated
well in that stock. They have charitable intent. We say, okay,
let's use that stock. Let's send it to a donor
advised fund. Let's bunch five years worth of gifting, and
now you have your own little charitable fund that you
can make grants out of over the next five years.
So we're gonna time the deduction, but we're not actually
(13:15):
going to change the way you're giving.
Speaker 3 (13:17):
Really really interesting. So I'm in New York, you're in Philly.
These are big salt regions. I know. The most recent
big beautiful bill changed all sorts of things. Where are
this is a question I hear all the time. Where
are we with salt deductions today? How has this changed?
I know we're not quite back the way we were,
(13:39):
but it seems to have improved for a lot of people.
Tell us what's going on with the state and local
tax deductions.
Speaker 1 (13:47):
Well, it's good news for most folks. For some folks,
it's not going to change the damn thing. It's gonna
what we have here is for since twenty seventeen, the
state and local tax deduction as part of your total
itemize ABOUTS was limited to ten thousand dollars for folks
bury in New York, California, New Jersey, Connecticut, Pennsylvania.
Speaker 2 (14:07):
Ten thousand dollars just wasn't cutting it. A lot of
you know, We see.
Speaker 1 (14:10):
Tax returns here every day where there are sometimes six
figures of state and local taxes between real estate and
income taxes. The new limit is forty thousand dollars. That
was maybe the most talked about provision of Trump two
point zero tax bill. It's an increase from ten k
to forty k, with caveats. If you're earning more than
(14:30):
five hundred thousand dollars of total income, you start to
get phased out. These are for both single filers and
married filers. Once you had six hundred thousand, you're all
the way back to ten k. So we have some
clients that are not going to see a change at all.
They make a million dollars a year. They're not going
to benefit from this whatsoever. We see other clients where
we're having tactical discussions on all kinds of income. Maybe
(14:53):
we'd defer a capital gain into next year because we
want to take full advantage of that salt deduction this year,
or maybe vice versa. There's a lot more planning to
do on all of these deductions. We talked about charitable
This is along the same lines.
Speaker 3 (15:06):
What else from the Big Beautiful Bill has changed the
way you think about year end planning. Do any of
these provisions show up as actual savings for clients.
Speaker 2 (15:16):
I think it's back to the charitable piece.
Speaker 1 (15:18):
There are some changes next year that are going to
impact charitable giving, which make twenty twenty five perhaps more
attractive from a charitable landscape. Next year, there's going to
be a quote unquote a floor on charitable gifts where
the first zero point five percent of your agi will
not be deductible for charitable purposes. So if you make
a million bucks, the first five k you give away
to charity provides zero federal tax benefit. The other change
(15:42):
for the highest earning folks, folks in the thirty seven
percent bracket, they are going to be limited on their
overall deductions. They'll be treated as thirty five percent taxpayers.
So that two percent delta can can really add up
when we're talking about when we're talking about big deductions.
So we're doing a lot of shifting of charitable deductions,
even mortgage even mortgage reductions. We're trying to get most
(16:04):
of that into twenty twenty five, especially for our highest
income tax paying clients.
Speaker 3 (16:08):
So to wrap up, there's still plenty of time before
the year ends. There are lots of moves individual investors
can make to not only reduce the taxes they're going
to owe for the twenty twenty five year, but also
to think about long term planning their estate, maximizing every opportunity.
The government gives us lots of ways to either reduce
(16:32):
or defer our current tacts. Bill, everybody should take full
advantage of what's on offer. I'm Barry Ridults. You're listening
to Bloomberg's at the Money, all right,
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
They're billing mombs? What about schools are falling?
Speaker 3 (00:13):
Tell me what in the hell of pay taxes for?
Speaker 1 (00:17):
Well? What a little?
Speaker 2 (00:20):
Stop paying text? Stop, what a lit Stop paying taxes?
Speaker 1 (00:27):
Stop paying tax.
Speaker 3 (00:30):
It's that time of year. You still have Christmas gifts
left to buy, but you have to be aware that
April fifteenth is just around the corner. Consider this your
nudge that you have less than three weeks to make
whatever year end tax moves you're planning for the calendar
(00:50):
year twenty twenty five. I'm Barry Riddolts, and on today's
edition of At the Money, we're gonna discuss the moves
investors should be thinking about in order to reduce their
twenty twenty five taxes. To help us unpack all of
this and what it means for your money, let's bring
in Bill Artsmarnian Full disclosure. Arts Ronian is the director
(01:14):
of tax services at Richholt's Wealth Management and we've been
working with him for just about five years. So Bill,
let's start with a simple overview. You've said before tax
advice is financial advice. I want to unpack that. How
should investors be thinking about the role of tax planning
(01:36):
in their overall wealth strategy, especially here in December.
Speaker 1 (01:41):
Well, thanks Barry for having me. Let's just think about
a financial plan for a second. What part of a
financial plan does not touch on taxes? I mean think
about just space of cash flow planning. Taxes For our
investors are often the largest expense in their annual budget.
It's mortgage and taxes. Those are the largest costs. Life
insurance is thinking about a tax free inheritance for the
(02:02):
next generation or for your errors. State planning is all
about taxes. If there was no estate tax, we wouldn't
really have to think about estate planning. And then basic
portfolio management is purely you know, not purely tax centric.
But our investors are thinking about tax all the time.
Our clients would rather save one thousand dollars on taxes
than make six figures in a trading day. So it's
(02:23):
all connected. And the end of the year is like
the report card. Tax planning should be happening proactively for
twelve months, but we don't even stop there. We're not
thinking about taxes as a current year item or even
a lifetime item. We're thinking about this generationally. We're thinking
about how can we set up the next generation of
client children, client grandchildren for tax success.
Speaker 3 (02:44):
So we have a few weeks left in the year.
What are the big boxes that you think investors should
be checking and what important items do they ignore? What
are the big mistakes people make?
Speaker 1 (02:56):
I think one of the misunderstandings is on tax deferral
rather than tax avoidance. Many strategies can avoid taxes or
can defer taxes, but that bill will come do at
some point. You know, think about even just a four
oh one K a pre tax contribution, You're going to
recognize that income at some point. Things like accelerated depreciation
will come back to bite you on the recapture when
(03:17):
you sell the asset. Opportunity zones are a tax deferral mechanism.
These are all very useful because time value of money
says that a tax deduction today is worth more than
a tax deduction in the future, but eventually that there's
going to be a tax hit. So I think that's
a common misunderstanding. A few other mistakes is on capital
gain timing. We see clients not really understand or consider
(03:41):
the timing of when they recognize games. When we onboard folks,
we're often pushing gains from the fourth quarter of say
twenty twenty five, into the first quarter of twenty twenty six,
because that gives us a full twelve months to tax
lost harvest and create losses to offset any capital gains.
The flip side of that, of course, is even a
(04:01):
small movement in a stock price can cost more than
a tax bill just to sell it, so you have
to be pretty comfortable holding the position for a couple
weeks or even a couple months. And then the last
mistake is misunderstanding just basic payment obligations. There are safe
harbors to avoid estimated tax penalties. But on the flip
(04:22):
side of that is, if you pay too much, there's
opportunity cost. If you have a big refund in April,
that means you paid a little bit too much and
that money could have been better put to use.
Speaker 3 (04:30):
So Bloomberg has a fairly sophisticated audience of high earning professionals.
What are the three top moves you see for folks
like that, they have a portfolio, they have a pretty
decent income, and they can expect to continue that for
the foreseeable future.
Speaker 2 (04:49):
Let's start with charitable giving.
Speaker 1 (04:51):
We'll talk about it more throughout the show, but it's
often the most accessible lever to pull for tax savings.
The caveat being you need to be conscious of where
your total deductions fall. We see some clients give a
certain amount of charitable gifts and they don't even itemize
their deductions. So from a federal tax standpoint, maybe they
gave away ten k, but they're still taking that standard deduction.
(05:12):
They're not benefiting from that charitable gift. So that's where
bunching strategies and some other strategies with don'tant advice funds
can come into play. Number two is on the equity
comp side. Equity compensation for folks compensated through their company stock,
the timing of the income can often be flexible. Think
about stock options company stock options. We should be asking
(05:34):
the question, how much can we recognize in stock option
income before the end of the year before we bump
up against the next federal or.
Speaker 2 (05:41):
State tax bracket.
Speaker 1 (05:42):
How much if these are incentive stock options, how much
can we recognize without paying a MT alternative minimum tax.
These are questions we should all be asking if we're
paid through equity, or if we have clients that are
paid through equity and the last one is for small
business owners.
Speaker 2 (05:57):
There's a whole lot on the small business side of this.
Speaker 1 (06:00):
I'm focused a lot on qualified business income, which is
a twenty percent deduction for past through income, but there
are limitations, and those limitations can be on based on
how much you pay your employees or yourself in a wage.
If you don't meet a certain wage number, that QBI
benefit could be significantly reduced or even reduced down to
zero if you're really screwing this up. And then on
(06:23):
the small business side, we should be looking at are
we prepared to maximize retirement contributions? The max four one
K is seventy thousand dollars this year between employer and
employee contributions, and so you have to be ready to
have that cash available to fund those contributions. Say you're
a mom and pop shop to owners zero employees, maybe
you're structured as an es corp. You're gonna have to
(06:44):
come up with some cash to meet the four to
one K obligations either before the end of the year
before the tax filing.
Speaker 3 (06:49):
So I'm glad you brought up tax advantage accounts. Like
for a one k's there always seems to be a
last minute frenzy to maximize not only for A one
k's but IRA's health saving accounts five twenty nine. So
how have the rules changed around credits and ceilings for
this year and for twenty twenty six?
Speaker 1 (07:10):
Right at least once a year with our clients, we're
running through the quote unquote basics of all of these contributions.
Are you on track to hit each of these with
a four oh one K? We just talked about it
a little bit, but there's a seventy K limit. Now,
if you're a W two employee and you don't own
the company, you're going to make employee contributions, Maybe there's
a megabackdoor, a WROTH option in there for you. We
(07:32):
talk to folks all the time who have this eligible
or eligible in their plan, but they don't even know
about it. Nobody's talking to them about this when they
join the company, and that megabackdoor WROTH allows you to
put after tax dollars into the four to one K,
convert it to WROTH, and have a nice Roth tax
free bucket growing alongside the pre tax contributions that you
already made. I raise don't come up a lot in
(07:52):
our world for a few reasons. Number one is most
of our clients are employed with a retirement plan and
through their employer, and if that's the case, deductible IRA
contributions may be limited. However, there is a backdoor option
in the IRA. If you don't have any pre tax
money in any iras, you can make after tax contributions
(08:14):
and again convert to ROTH in the IRA just as
well as you can in the four to one K.
And then the HSA. I love tax owners love hsas.
You need to be on a high deductible plan, which
isn't for everybody. My colleague Bill Sweet and I we
ran an analysis on high deductible plans and we found
that there's a pretty there's a pretty attractive break even
(08:35):
on high deductible plans because the premiums are lower and
the long term benefit of investing deducting HSA contributions and
treating those as another retirement vehicle. Again, those are like
roths where they're tax free. Those those can compound very
very nicely. Where maybe you retire early and let's say
you retire sixty instead of sixty five, you have a
five year gap where you need to cover probably significant
(08:56):
healthcare premiums that HSA can be used in that case,
and it's nice tax free bucket to have.
Speaker 3 (09:02):
And what do the ceilings look like on all these
tacks of entergs accounts for twenty twenty six? How has
the recent legislation changed the max people can kick into those?
Speaker 1 (09:12):
The big change in twenty twenty six is that catchup
contributions for folks over age fifty are now forced to
be ROTH contributions again starting twenty twenty six. Historically, catchup contributions,
which are going to be seventy five hundred this year
seventy five hundred next year, Folks in their fifties are
often in their highest earning years. Therefore the pre tax
(09:33):
option is usually preferred. However, starting next year, the catchup
contributions that seventy five hundred are going to be required
to be WROTH contributions. My theory is, I don't mind
this at all. Nobody ever regrets a ROTH contribution. Nobody
ever really regrets a ROTH conversion because once you pay tax,
you don't really think about it. And so you know,
(09:54):
if we have investors in their fifties and sixties that
are forced to make a small ROTH contribution instead of
a pre tax contribution. That just gives them exceedingly more
flexibility down the line, because now they're going to have
different buckets of money to pull from in retirement.
Speaker 3 (10:07):
Sounds really interesting. You mentioned earlier tax loss harvesting. We've
been using Canvas as our direct indexing product, but it
seems like this has become ubiquitous. What are your thoughts
on tax loss harvesting. What does thoughtful harvesting look like?
Speaker 1 (10:25):
I think the term thoughtful there implies to me that
there should be an ongoing activity, not just a year
end item. Historically, taxpayers, sell DIY, investors and even advisors,
they'd look at the portfolio in December, they'd say, okay,
what's underwater. Let's book those losses through direct indexing. This
is now an ongoing activity, but you don't need a
(10:46):
direct indexing portfolio to look at your portfolio. Even if
you're not in a direct indexing setup, you can still
tax lost harvest throughout the year. Why just December? This
should happen with regularity. There's nothing saying we can only
book losses in December. Now a lot of this is
dictated by individual stock market volatility, but with an ultra
(11:06):
diversified bucket of stocks. Some will ultimately be losers, so
you sell those, you pick up tax losses, you invest
in a similar company, so you keep the fidelity of
the portfolio, and then you don't trigger wash sale rules.
The only caveat here is state by state stuff. New Jersey,
for example, does not allow tax loss carry forwards. So
we're doing in December, we're doing a bit of the
(11:28):
opposite with our New Jersey clients. We're actually we're looking
historically over the first eleven months, what did we realize
in losses. Let's go make a game's harvest. Instead of
realizing more losses, We're going to realize capital gains so
we can use them at the state level this year.
Speaker 3 (11:42):
That's really interesting. So I know the deductions have changed,
the standard deductions have become permanent. There are new floors,
There are new ceilings for that for itemized and chatterable gifts.
How should those people who are charitably inclined think about
you mentioned and bunching donations or donor advice funds. Give
(12:04):
us a little more detail about how people should be
using these vehicles.
Speaker 1 (12:07):
Yeah, we're doing a lot of this with our clients
throughout the year. But specifically at the end of the year.
We kind of tee up charitable planning. I'm like, hero,
let's think about what we want to accomplish, and then
let's take a look at the end of the year
and figure out how we're going to get this done
and if it's the right year to do it. What
we need to be conscious of is all the other deductions. Right,
Like I mentioned previously, you might have a hurdle rate
before you even start to deduct your charitable gifts. And
(12:29):
that's where you might want to consider bunching maybe three years,
maybe five years, maybe ten years worth of charitable gifts
into twenty twenty five. For example, twenty twenty five. Maybe
it's a high income year. Maybe you're paying down your mortgage,
so you're not getting that mortgage deduction anymore, and you
want to take advantage of an appreciated security that you
(12:49):
gift for charitable purposes.
Speaker 2 (12:52):
We do a lot of this.
Speaker 1 (12:53):
We take maybe a client comes to us, they've worked
at a tech company. The tech company, they've been compensated
well in that stock. They have charitable intent. We say, okay,
let's use that stock. Let's send it to a donor
advised fund. Let's bunch five years worth of gifting, and
now you have your own little charitable fund that you
can make grants out of over the next five years.
So we're gonna time the deduction, but we're not actually
(13:15):
going to change the way you're giving.
Speaker 3 (13:17):
Really really interesting. So I'm in New York, you're in Philly.
These are big salt regions. I know. The most recent
big beautiful bill changed all sorts of things. Where are
this is a question I hear all the time. Where
are we with salt deductions today? How has this changed?
I know we're not quite back the way we were,
(13:39):
but it seems to have improved for a lot of people.
Tell us what's going on with the state and local
tax deductions.
Speaker 1 (13:47):
Well, it's good news for most folks. For some folks,
it's not going to change the damn thing. It's gonna
what we have here is for since twenty seventeen, the
state and local tax deduction as part of your total
itemize ABOUTS was limited to ten thousand dollars for folks
bury in New York, California, New Jersey, Connecticut, Pennsylvania.
Speaker 2 (14:07):
Ten thousand dollars just wasn't cutting it. A lot of
you know, We see.
Speaker 1 (14:10):
Tax returns here every day where there are sometimes six
figures of state and local taxes between real estate and
income taxes. The new limit is forty thousand dollars. That
was maybe the most talked about provision of Trump two
point zero tax bill. It's an increase from ten k
to forty k, with caveats. If you're earning more than
(14:30):
five hundred thousand dollars of total income, you start to
get phased out. These are for both single filers and
married filers. Once you had six hundred thousand, you're all
the way back to ten k. So we have some
clients that are not going to see a change at all.
They make a million dollars a year. They're not going
to benefit from this whatsoever. We see other clients where
we're having tactical discussions on all kinds of income. Maybe
(14:53):
we'd defer a capital gain into next year because we
want to take full advantage of that salt deduction this year,
or maybe vice versa. There's a lot more planning to
do on all of these deductions. We talked about charitable
This is along the same lines.
Speaker 3 (15:06):
What else from the Big Beautiful Bill has changed the
way you think about year end planning. Do any of
these provisions show up as actual savings for clients.
Speaker 2 (15:16):
I think it's back to the charitable piece.
Speaker 1 (15:18):
There are some changes next year that are going to
impact charitable giving, which make twenty twenty five perhaps more
attractive from a charitable landscape. Next year, there's going to
be a quote unquote a floor on charitable gifts where
the first zero point five percent of your agi will
not be deductible for charitable purposes. So if you make
a million bucks, the first five k you give away
to charity provides zero federal tax benefit. The other change
(15:42):
for the highest earning folks, folks in the thirty seven
percent bracket, they are going to be limited on their
overall deductions. They'll be treated as thirty five percent taxpayers.
So that two percent delta can can really add up
when we're talking about when we're talking about big deductions.
So we're doing a lot of shifting of charitable deductions,
even mortgage even mortgage reductions. We're trying to get most
(16:04):
of that into twenty twenty five, especially for our highest
income tax paying clients.
Speaker 3 (16:08):
So to wrap up, there's still plenty of time before
the year ends. There are lots of moves individual investors
can make to not only reduce the taxes they're going
to owe for the twenty twenty five year, but also
to think about long term planning their estate, maximizing every opportunity.
The government gives us lots of ways to either reduce
(16:32):
or defer our current tacts. Bill, everybody should take full
advantage of what's on offer. I'm Barry Ridults. You're listening
to Bloomberg's at the Money, all right,
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