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Mid-Year Tax Planning: Smart Moves to Consider Before 2025 Ends

We’re just past the halfway mark of 2025—and that means now is a great time to check in on your financial picture and start planning your strategy for year-end. If you’re already retired, this is especially important, as your income sources may be more flexible—and tax planning can have a bigger impact than you might think.

At Lucia Capital Group, we believe proactive tax management is one of the most overlooked yet powerful tools in retirement planning. The good news is, you don’t have to wait until April to do something about your taxes. In fact, mid-year is often the best time to act.

Here are a few tax-smart strategies you may want to consider in the months ahead.

1. Reduce Taxation on Your Social Security Benefits

Many retirees are surprised to learn that their Social Security benefits may be taxable, depending on their Modified Adjusted Gross Income (MAGI). If your MAGI is too high, up to 85% of your Social Security could be taxed at ordinary income rates.

But here’s the silver lining: you may be able to manipulate your MAGI by adjusting where your retirement income comes from.

For example, pulling from a Roth IRA or non-taxable account instead of a traditional IRA could lower your MAGI, which in turn reduces the taxable portion of your Social Security. If your MAGI is close to the threshold, even a small change could make a big difference.

This strategy takes planning and coordination, which is why it helps to work with a knowledgeable advisor who can evaluate your cash flow sources and make adjustments where needed.

2. Manage Your Tax Bracket (Before RMDs Begin)

Next, take a close look at where you currently fall within your income tax bracket. Knowing this gives you the power to manage your income streams and potentially stay in a lower bracket—not just this year, but in the future as well.

This matters even more if you’re nearing age 73 or 75, when Required Minimum Distributions (RMDs) begin. RMDs can suddenly force additional taxable income, pushing you into a higher bracket and increasing your tax burden.

A few mid-year strategies to consider:

• Accelerate income into this year to “fill up” your current bracket—especially if you expect to be in a higher one later

• Delay income when it makes sense to avoid crossing into the next bracket

• Convert traditional IRA funds to Roth to reduce future RMDs and create a tax-free income source

The goal here is control. By thoughtfully managing how and when income shows up on your tax return, you gain more flexibility and potentially reduce lifetime taxes.

3. Be Strategic About Which Investments You Sell

If you need to sell investments to generate income, be mindful of the basis of those assets. Basis is simply what you originally paid for an investment (plus adjustments). When you sell, the difference between your sale price and the basis is what’s taxed as a capital gain.

Here’s how to think about it:

• If you’re in the zero percent long-term capital gains bracket, it may make sense to sell low-basis stock first and capture those gains while they’re tax-free

• But if you’re near the top of the bracket, selling high-basis stock could help avoid pushing you into a higher tax rate

It all depends on where you are in the bracket and how much “room” you have left. That’s why coordinating your investment sales with your tax bracket is so important.

Your financial advisor can help analyze your portfolio and choose the most tax-efficient assets to sell.

4. Harvest Gains and Losses Intentionally

Another mid-year move worth considering is tax-loss harvesting—selling investments at a loss to offset other income.

Many people use losses to offset capital gains, which is helpful. But if you’re in the zero percent capital gains bracket, offsetting gains doesn’t save you any taxes. In that case, using losses to offset ordinary income might be a better use of those deductions.

Why? Because:

• You can deduct up to $3,000 of capital losses each year against ordinary income

• Lowering ordinary income may help reduce your MAGI, which could reduce how much of your Social Security is taxed

Even if the savings seem small, they can add up—especially when it comes to Social Security taxation thresholds.

This kind of targeted tax-loss harvesting can also reduce your Medicare IRMAA surcharges, making it a useful tool across multiple planning dimensions.

Bonus: The Roth Conversion Window Is Still Open

If you’ve been considering a Roth conversion, mid-year is the perfect time to revisit that plan.

By converting now—rather than waiting until December—you have more visibility into your income, tax bracket, and market performance for the year. Plus, any growth that occurs after the conversion happens inside the Roth, where it can grow tax-free.

Just remember:

• Conversions are taxed as ordinary income

• You’ll want to plan around your current and future tax brackets

• RMDs must be satisfied before converting (if you’re subject to them)

Why Mid-Year Is the Right Time

The truth is, waiting until the end of the year to make tax moves often means rushing or missing opportunities. Mid-year gives you time to:

• Evaluate your current income and bracket

• Strategically adjust your cash flow

• Take action while there’s still time to plan—not just react

Tax planning is about positioning yourself for the long term, not just minimizing this year’s bill. And the best way to do that is with foresight and flexibility.

We Do This Every Day at Lucia Capital Group

Tax management isn’t just something we mention once a year—it’s an ongoing part of the planning process. At Lucia Capital Group, we help our clients:

• Build strategies for Social Security taxation

• Optimize Roth conversions

• Coordinate income from multiple account types

• Reduce future RMD exposure

• Use tax brackets to their full advantage

If you’re looking to take more control over your 2025 taxes—and beyond—we’re here to help.

Just give us a call. Let’s make the second half of this year work in your favor.

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