Top 5 Financial Items for Tech Employees Prior to EOY

2025 is nearly over (yikes)! Ignoring the fact that each year psychologically seems to go faster -- with December rapidly approaching you now only have a handful of weeks to do a few things to put your finances and/or tax bill in a much healthier spot -- and set you up for success in 2026. For tech professionals with equity compensation, these are the top five most impactful items you should review before year-end:

1. Review Your ISO Position Relative to AMT

If you have ISOs, pay close attention, as this gets messed up way...too...often. As a quick reminder, Alternative Minimum Tax (AMT) is a parallel tax system—every year, two tax calculations are done (standard income tax and AMT), and you pay whichever is higher.

When you exercise Incentive Stock Options (ISO's), the "bargain element" (the difference between your strike price and the fair market value) is counted as income for AMT purposes but not for standard tax purposes, which is why exercising ISOs can trigger AMT.

First and foremost -- do NOT make any decisions strictly for tax reasons. Deciding to exercise or not is a complex decision, and as always the biggest focus should be on making good decisions for your investment portfolio. Tax management is important, but always secondary to the investment implications.

But once you've thought through whether exercising is the right choice for you, deciding on when (e.g., Dec 2025 vs next year) can be very helpful for your tax bill. Figure out where you stand, and consider the below for any additional exercise behavior this year:

1. If you're already going to owe AMT no matter what because you've exceeded the exemption amount, exercising more ISOs means you'll need to prepare for an even larger tax bill than you're already facing.

2. If you're further from triggering AMT, you likely have a "free window" in which you can exercise some ISOs without trigger an AMT bill.

3. If you're borderline, be careful and make sure you run the numbers. Exercising may, or may not, be the right choice for your. But it should always be done with as much knowledge as possible of the full cost (to buy, and AMT).

Note: Remember that when you do pay AMT, you generate an AMT credit that can be recouped in future years—work with a CPA who understands AMT to track this properly.

2. Tax-Loss Harvesting

If you've sold stocks or had other investments gains this year, you have an opportunity to reduce your tax bill by selling investments that are currently at a loss by Dec 31. Capital losses offset capital gains dollar-for-dollar, so if there are investments that are down and you’re comfortable selling, this can be an extremely powerful strategy.

Bonus: if you can recognize more than $3,000 of losses beyond what's needed to offset your gains, it can be deducted from your earned income. It’s likely a modest impact to your tax bill, but depending on how your year has gone, it can be very useful.

FLAG: Be aware of the wash sale rule—if you sell a security at a loss and buy the same or substantially identical security within 30 days before or after the sale, the loss is disallowed.

3. Strategize For Charitable Giving

If you're having a high-income year, charitable giving is one of the most powerful ways to reduce your tax bill. It still needs to be done with altruistic intent (obviously) -- as doing so will NOT increase your net worth.

But....smart charitable giving can save a lot on taxes and amplify the amount you can give if you're charitably inclined!

Here's how. When you make a charitable contribution, you get a tax deduction (if you itemize) in the year you donate, which directly offsets your taxable income (up to a limit; e.g. 60% of your AGI for cash donations and up to 30% for appreciated asset donations). To amplify your charitable giving:

• Donate highly appreciated stock. If you've held it for more than one year, you get to deduct the full fair market value you donate and avoid paying capital gains tax on the appreciation—this provides significantly more tax benefit than selling the stock and donating cash.

• Stacking strategy. If this is an abnormally high-income year for you, consider "stacking" multiple years of charitable contributions into one year by using a Donor-Advised Fund (DAF). This allows you to make a large contribution now, receive the tax deduction this year, and then recommend grants to specific charities over time (months, decades, whenever you like).

4. Confirm Your 401(k) Contributions

For 2025, the 401(k) employee contribution limit is $23,500. If you're planning to max out your 401(k), check your most recent paystub to verify you're on pace to hit that limit by year-end. If you're not on track and want to increase contributions, make sure you update this ASAP, as there can be a delay sometimes.

5. 2026 Benefits Selection

Health insurance: HMO vs. EPO vs. PPO? And what about HSAs? We analyze these for clients and the differences can be many thousands per year.

HSA account. If you have one, make sure you are contributing up to the max (presuming you desire to) prior to year end.

Beneficiaries: If you got married, divorced, had a child -- it's possible you haven't updated your beneficiaries for important accounts. While you don't HAVE to do this prior to EOY, it's a good reminder to ensure it's on your radar.

Bonus: Prepare for Material Changes in 2026

As you close out 2025, consider any material items, changes, or new developments coming in 2026 that could impact your financial planning. Are you expecting a job change or promotion? New equity grant? Company liquidity (going public; tender offer) likely? Family changes on the horizon? Planning to buy a home or relocate to a different state?

Each of these events has significant financial and tax implications. I know--I'm a PLANNER -- so it's no surprise that I'm recommending you plan now for these events. But seriously, I know approximately 0 people who said "I wish I had planned less for <insert major life event>...."

Last: Happy Holidays!

From the team 30/40 Wealth Partners, we hope you and yours have an amazing holiday season!