Masters in Business – Year-End Tax Planning Moves

Host: Barry Ritholtz, Bloomberg
Guest: Bill Arts Ronian, Director of Tax Services, Ritholtz Wealth Management
Date: December 11, 2025

Overview: Purpose and Main Theme

This episode is a comprehensive guide to year-end tax planning aimed at investors, professionals, and business owners wanting to make the most of available strategies before the tax year closes. Barry Ritholtz and guest Bill Arts Ronian delve into practical moves for reducing 2025 tax liability, discuss the implications of recent legislative changes, and provide actionable advice for using tax-advantaged accounts, charitable giving, and strategic planning. Drawing on his extensive tax experience, Bill breaks down misconceptions, highlights common mistakes, and demystifies new tax rules—ensuring listeners are equipped to optimize their financial decisions and plan intergenerationally.

Key Discussion Points and Insights

The Central Role of Tax Planning in Wealth Strategy

[03:34] Bill Arts Ronian:

• Nearly every element of a financial plan—including cash flow, estate planning, portfolio management, and life insurance—has tax implications.
• Quote: “Our clients would rather save $1,000 on taxes than make six figures in a trading day. So it's all connected.”
• Tax planning should be proactive, ongoing, and multigenerational—not just something to consider at the end of the year.

Misunderstandings and Common Mistakes in Tax Planning

[04:49] Bill Arts Ronian:

• Confusing tax deferral with tax avoidance; most strategies defer rather than eliminate taxes.
  • Example: 401(k) pretax contributions lower immediate taxes but generate taxable events upon distribution.
• Poor timing of capital gains recognition; strategic deferral (e.g., pushing gains from Q4 into Q1) can give more loss-harvesting opportunities.
• Misunderstanding safe harbor payment obligations; large refunds indicate opportunity cost—money could be better invested throughout the year.

Top Year-End Moves for High-Earning Professionals

[06:42] Bill Arts Ronian:

1. Charitable Giving
   • Accessible lever for tax savings but only if you itemize—otherwise, gifts don’t deliver a federal tax benefit.
   • Strategies: "Bunching" donations (giving multiple years’ worth at once) and using donor-advised funds.
2. Managing Equity Compensation
   • Timing the recognition of stock option income to optimize tax brackets or avoid AMT.
   • Quote: “How much can we recognize in stock option income before the end of the year before we bump up against the next federal or state tax bracket?”
3. Maximizing Small Business Benefits
   • Qualified Business Income (QBI) deduction rules: dependent on wage levels.
   • Consider maximizing 401(k) contributions before year-end for both retirement savings and deduction benefits.

Updates on Tax-Advantaged Accounts for 2025-2026

[09:03] Barry Ritholtz and Bill Arts Ronian:

• 401(k): Limit increased to $70,000 with potential for "mega backdoor Roth" for those with eligible plans.

• IRAs: Deductibility affected by employer coverage, but backdoor Roth conversions still available.

• HSAs: Praised as “tax nerds’ favorite,” offering deductible contributions, tax-free growth, and tax-free withdrawals if used for qualified medical expenses.

• [11:06] Roth Catch-Up Contributions: Starting 2026, catch-up contributions for those over 50 (now $7,500) are required to be Roth—good for future flexibility.

  • Quote: “Nobody ever regrets a Roth contribution… once you pay the tax, you don’t really think about it.” — Bill Arts Ronian [11:24]

Best Practices: Tax Loss Harvesting

[12:18] Bill Arts Ronian:

• Should be an ongoing, year-round activity—not limited to December.

• Even those not using direct indexing can routinely tax-loss harvest.

• Important to be aware of wash sale rules; buying similar (but not substantially identical) securities can maintain exposure.

  • State-specific issues, e.g., New Jersey doesn’t allow tax-loss carryforwards, flipping the strategy to realize gains instead at year-end.

Charitable Giving Strategy in a Changing Legislative Landscape

[13:35; 17:11] Bill Arts Ronian:

• With high standard deductions, "bunching" several years’ donations or using donor-advised funds can optimize deductibility.

• Example: Use appreciated stock to fund a donor-advised fund, consolidating multiple years of donations in one tax year for a larger deduction.

  • Quote: “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.” [14:01]

• In 2026, new rules add a floor: the first 0.5% of AGI given to charity isn’t deductible; high earners see deduction benefits capped to the 35% bracket.

State and Local Tax (SALT) Deductions

[15:40] Bill Arts Ronian:

• Since 2017, SALT deduction was capped at $10,000—problematic for residents in high-tax states (NY, NJ, CA, CT, PA).

• New legislation increases the cap to $40,000, but phases out entirely for those earning $600,000+.

• Strategic planning may involve timing of income/real estate deductions to maximize benefits.

  • Quote: “We see 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 $40,000…” [15:45]

Legislative Changes from the “Big Beautiful Bill”

[17:11] Bill Arts Ronian:

• Important shifts ahead:
  • 0.5% AGI charitable deduction floor starting 2026.
  • For highest earners, itemized deductions are capped at 35% (down from 37%).
  • Urgency to “pull forward” (bunch) SALT, mortgage, and charitable deductions into 2025.

Final Takeaways

[18:02] Barry Ritholtz (Summary):

• There is still time for investors to reduce their 2025 taxes and plan for the future.
• Strategies include reducing or deferring taxes, optimizing giving, utilizing tax-advantaged accounts, and thinking multigenerationally.
• Listeners are encouraged to take “full advantage of what’s on offer.”

Notable Quotes & Memorable Moments

• “Tax advice is financial advice.” – Barry Ritholtz [03:07]
• “Our clients would rather save $1,000 on taxes than make six figures in a trading day.” – Bill Arts Ronian [03:54]
• “Many strategies can avoid taxes or can defer taxes, but that bill will come due at some point.” – Bill Arts Ronian [04:52]
• “Nobody ever regrets a Roth contribution… once you pay the tax, you don’t really think about it.” – Bill Arts Ronian [11:24]
• “We see 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 $40,000…” – Bill Arts Ronian [15:45]
• “Let’s use that stock, let’s send it to a donor advised fund. Let’s bunch five years worth of gifting.” – Bill Arts Ronian [14:01]

Timestamps for Important Segments

• [03:34] – The foundational role of taxes in financial planning
• [04:49] – Common tax planning misconceptions and mistakes
• [06:42] – Top year-end moves for professionals
• [09:03] – Maxing tax-advantaged accounts; new rules for 2026 and Roth catch-ups
• [12:18] – Tax loss harvesting: best practices and state specifics
• [13:35] – Charitable giving strategies; bunching and donor-advised funds explained
• [15:40] – State and Local Tax (SALT) deduction changes
• [17:11] – Legislative changes ahead: deduction floors and caps

Summary Table: Year-End Tax Planning Checklist

| Area | Key Takeaways | New for 2025/2026 | |----------------------------|------------------------------------------------------------|----------------------------------------------| | Charitable Giving | Consider bunching and donor-advised funds for max leverage | 0.5% AGI floor/no deduction in 2026 | | Equity Compensation | Strategically time stock option income | N/A | | Small Business Planning | Max QBI deductions, plan for $70k 401(k) contributions | N/A | | Tax-Advantaged Accounts | Check for mega backdoor Roth in 401(k); use HSAs | Over-50 catch-up must be Roth in 2026 | | Tax Loss Harvesting | Practice actively, not just at year-end | Varies by state (e.g., NJ) | | SALT Deductions | New $40k cap, watch for income phase-out | Phase outs for high-earners, plan accordingly |

This episode offers a packed toolkit for those heading into year-end tax season, combining actionable advice with strategic foresight and legislative updates. Whether you’re a high-net-worth individual, business owner, or charitably inclined professional, Bill and Barry outline how to move thoughtfully now for long-term benefit.