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Tax Corner — Reviewing Your Investment Portfolio for Tax Efficiency

December 2, 2025 | Weekly Commentary

The end of the year is the perfect time to give your portfolio a tax check-up. While your investments should be built for the long term, small, strategic adjustments can lower your tax bill and keep more money in your pocket. Here is how to do it:

  1. Sell Losing Investments to Reduce Taxes
    If you have investments that are worth less than what you paid, you might want to consider selling them to realize the loss. This “tax-loss harvesting” lets you offset capital gains elsewhere in your portfolio. If your losses exceed your gains, you can use up to $3,000 to reduce your regular income taxes. Any additional losses will carry over to be deducted on your return next year. Just be sure not to buy the same or substantially identical security back within 30 days before or after the sale, or the IRS will disallow the loss.
  2. Watch Out for Surprise Income from Mutual Funds
    Some mutual funds pay out gains in December, which can mean a tax bill even if you did not sell anything. Check your accounts for these capital gain distributions so you are not caught off guard.
  3. Rebalancing with taxes in mind
    Year-end is a natural time to rebalance your portfolio but do so strategically. Selling in taxable accounts can create capital gains. When possible, use tax-advantaged accounts, such as IRAs or 401(k)s, for rebalancing moves, or utilize new contributions to adjust your allocation without triggering taxable events.

A quick year-end portfolio review with your financial advisor can reveal opportunities to improve tax efficiency without sacrificing your investment goals.