2025 Last minute year end tax strategies for your stock portfolio

Some basic idea behind our tax-savings strategies for your portfolio:

Avoid the high taxes (up to 40.8 percent) on short-term capital gains and ordinary income.
Lower the taxes to zero- or if you can’t do that, lower them to 23.8 percent or less by making the profits subject to long-term capital gains taxes.

If you are paying taxes at a 71.4 percent higher rate when you pay at 40.8 percent rather than the tax favored 23.8 percent.

If you can avoid that higher rate with some easy adjustments in your stock portfolio, doesn’t it make sense to do that now?

Big picture

Check out these seven basic tax rules you need to know to find the tax savings you desire in your stock portfolio:

On your short-term capital gains and ordinary income, you pay federal income taxes at rates of up to 40.8 percent. The 40.8 percent comes with the top income tax rate of 37 percent plus the 3.8 percent Affordable Care Act tax on net investment income.
You pay taxes on your long-term capital gains at rate from 0 percent to 23.8 percent, depending on your income level.
You pay taxes on your stock dividends at rates from 0 percent to 23.8 percent, depending on your income level.
If your capital losses exceed your personal capital gains, the tax code limits your capital loss deductions to $3,000 and allows you to carry over losses above the $3,000 to future years until realized.
You first offset long-term gains and losses before you offset short-term gains and losses.
If you itemize deductions, you deduct the fair market value of appreciated stock you donate to your church or other Section 501(c)(3) charity.
If you itemize deductions, you also deduct the fair market value of depreciated stock you donate to your church or other Section 501(c)(3) charity.

Strategy 1: Property offset gains and losses

Check your portfolio for stocks you want to unload, and make sales where you offset short-term gains subject to a high tax rate, such as 40.8 percent, with long-term losses upto 23.8 percent.

Make the higher taxes disappear by offsetting them with low-taxed losses and pocket the difference.

Strategy 2: Properly use long-term losses

Use long-term losses to create the $3,000 deductions allowed against ordinary income. Again, you are trying to use the 23.8 percent loss to kill a 40.8 percent tax.

Strategy 3: Avoid the wash-sale rule

As an individual investor, you should avoid the wash-sale loss rule.

Under that rule, if you sell a stock or some other security and then purchase substantially identical stock or securities within 30 days before or after the date of sale, you don’t recognize your loss on that sale. Instead, the tax code makes you add the loss amount to the basis of your new stock.

If you want to use the loss in 2025, you will have to sell the stock and sit on your hands for more than 30 days before repurchasing it.

Strategy 4: Make use of lower tax brackets

If you are giving money to your parents to aid their living expenses or retirement or giving money to your kids, then this one is for you.

Consider giving appreciated stock to your parents and your non-kiddie-tax children. Here is why? If your parents or children are in a lower tax bracket than you are, you get a bigger bang for your buck by

Giving them stock
Having them sell the stock
Having them pay taxes on the stock sale at their lower tax rates.

Enjoy a similar family benefit if your parents or children hold the stock for the dividends and then pay taxes on those dividends at their lower tax rate.

The 2025 dividend and individual capital gain tax rates grouped by taxable income are shown in the table below.

Rate	Single	Married, filing jointly	Head of household
0 percent	$0 to $48,350	$0 to $96,700	$0 to $64,750
15 percent	$48,351 to $533,400	$96,701 to $600,050	$64,751 to $566,700
20 percent	$533,401 and above	$600,051 and above	$566,701 and above

In addition, don’t forget to consider the 3.8 per cent additional NIIT if you are subject to it.

Strategy 5: Donate appreciated stock to charity

If you are going to donate to a charity, consider donating appreciated stock rather than cash, as it offers more tax benefits.

Here are the benefits:

Benefit 1: You deduct the fair market value of the stock as a charitable donation.
Benefit 2: You don’t pay any of the taxes you would have had to pay if you sold the stock.

Example: You bought a publicly traded stock for $1,000, and it’s now worth $11,000. If you give it to a 501(c)(3) charity, the following happens:

You get a tax deduction for $11,000
You pay no taxes on the $10,000 profit

Three rules to know

Your deductions for donating appreciated stocks to 501(c )(3) organizations are not allowed to exceed 30 percent of your adjusted gross income.
If your publicly traded stock donation exceeds 30 percent, no problem. Tax law allows you to carry forward the excess untied used for up to 5 years.
You get these benefits only if you itemize your deductions.

Strategy 6: Don’t donate stock losses to charity

If you could sell a publicly traded stock at a loss, do not give that loss-deduction stock to a 501(c)(3) charity. Why? If you sell the stock, you have a tax loss that you can deduct. If you give the stock to a charity, you get no deduction for the loss- in other words, you can just kiss that tax-reducing loss goodbye.

Solution: Sell the stock first to create your tax-deductible loss. Then give the charity the cash realized from your sale of the stock to create your deduction for the charitable contribution.

Example: You bought a stock for $13,000, and now it is worth $2,000. If you give the stock to charity, here is what happens:

You deduct $2,000
The charity receives $2,000
You miss out on your $11,000

Instead, do this:

Sell the stock
Collect $2,000 in cash from the stock sale
Give the $2,000 to the charity
Deduct the $2,000 charitable donation
Deduct the $11,000 stock loss

FAQs

How do I avoid the wash-sale rule when selling for a tax loss?
If you sell a stock at a loss and buy a “substantially identical” security within 30 days before or after the sale, the IRS will disallow that loss (wash-sale rule). To capture your loss and stay invested, purchase a similar – but not identical – security, or wait until the 31st day to repurchase.
Should I defer gains or accelerate losses at year-end?
If you expect to be in a lower tax bracket next year or anticipate a higher income in 2026, consider delaying the sale of high-gain stocks; conversely, sell loss-makers now to offset gains and reduce 2025 tax exposure.
What is tax-loss harvesting, and how can it save me money?
Tax-loss harvesting involves selling underperforming or loss-making stocks before year-end to offset realized capital gains from winners in your portfolio. You can use up to $3,000 of net capital losses to offset ordinary income. Any unused losses can be carried forward to future years.

BergerCPAFirst, with over 30+ years of experience, offers comprehensive tax preparation services for individuals and businesses nationwide. Our commitment is to provide personalized attention while ensuring compliance and maximizing tax benefits. If you have any questions or would like to schedule a consultation, please call (201) 587-9200 or send us an inquiry.