As the year winds down and we approach the final quarter of 2025, there's still time to make strategic moves that could save you time and money when tax season arrives next April. Rather than scrambling then, or worse, realizing that you didn’t take advantage of what you could have before year end and now cannot, acting now puts you in better control of your tax situation later, while also helping to build long-term wealth.

Here are seven practical strategies worth considering before December 31:

1. Boost your RRSP contributions for inflation and income growth

The 2026 RRSP contribution limit has increased to $33,810, reflecting both inflation and rising income levels across Canada. If you received a salary increase, and if your 2026 RRSP contribution room (based on 2025 earned income) will be higher than previous years – taking advantage of the increase as early as possible can help you save more in taxes and build your wealth faster.

Consider setting up automatic contribution increases that align with your salary growth. Your Investment Advisor can make it nearly effortless to increase your contribution amount to keep pace with inflation and income growth. Even dedicating half of your next raise to RRSP contributions can significantly impact your retirement savings without drastically affecting your current lifestyle.

Tip: Contributing early in the year, rather than waiting until the deadline, gives your money up to 14 months of additional tax-deferred growth.

2. Turn investment losses into tax savings

Review your non-registered investment portfolio for underperforming investments. Selling investments at a loss before year-end can offset capital gains realized in 2025, or can generate a net capital loss to be carried back three years or forward indefinitely.

Key timing: If you plan to sell publicly traded securities (note: those eligible for one-day settlement), you should place your trades by Tuesday, December 30, 2025, to ensure the transaction settles in this calendar year.

Tip: Be mindful of the "superficial loss" rule, which can prevent you from claiming a loss if you or an affiliated person repurchases the same or identical security within 30 days after the sale. Plan your trades carefully to avoid this violation.

3. Make your charitable donations go further

Making charitable donations by December 31 can provide valuable tax credits, while helping to make a real impact on the charities and the causes they serve directly.

Tip: Consider donating publicly traded securities with unrealized gains directly to charity - this can eliminate capital gains tax on the donated securities, while providing a tax receipt for their fair market value.

4. Open a First Home Savings Account

If you're a prospective and eligible first-time home buyer, consider opening and contributing to a FHSA before December 31, since, unlike an RRSP, contributions to a FHSA must be made in the calendar year to provide a current year deduction.

FHSA contributions are tax-deductible and withdrawals for qualifying home purchases are tax free - combining the best features of RRSPs and TFSAs.

5. Bunch your medical expenses

In 2025, you can claim medical expenses exceeding the lesser of 3 per cent of your net income or $2,834 (for Federal income tax purposes). If you're close to this threshold, consider scheduling necessary medical treatments or purchasing needed medical items before year-end to ensure you can claim and maximize the credit.

6. Withdraw from your TFSA before year-end

The TFSA contribution limit will again be $7,000 in 2026, and any unused room from previous years carries forward indefinitely. If you've been 18 or older and a resident of Canada since TFSAs launched in 2009 and never contributed, you could have up to $109,000 in available contribution room for 2026.

Tip: If you need cash and plan to pull it from your TFSA, consider doing so before December 31. The full amount you withdraw is added back to your contribution room on January 1 of the new year. This allows you to access your money without losing that valuable contribution space for as much as a year if you pull the money out at the beginning of 2026 instead.

7. Maximize education grants for your family

Contributing to a RESP by December 31 ensures you receive the Canada Education Savings Grant for the current year (note: the government matches 20 per cent of contributions up to $500 annually on a $2,500 contribution). The grant is essentially free money for your child's or grandchild's education.
 

Bonus tip! Before December 15… Make your final instalment payment to the Canada Revenue Agency (CRA) on or before December 15 to avoid interest charges and late payment penalties. Missed an earlier instalment payment deadline? Consider making a larger payment before December 15 to reduce interest charges.

 

Act now…or regret the tax pain later

The key to successful tax planning is taking action before you need to, not after. These strategies work best when implemented thoughtfully and as part of your overall financial plan.

While this article provides a foundation for year-end planning, every financial situation is unique. Tax legislation can be complex, and what works for one person may not be optimal for another.

Please contact your Investment Advisor to discuss how these strategies might apply to your specific situation – and help minimize any "tax regret" come next April.

Sources: All information sourced from the Canada Revenue Agency and RBC Financial Planning.

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This document has been prepared for use by the RBC Wealth Management member companies, RBC Dominion Securities Inc.*, RBC Phillips, Hager & North Investment Counsel Inc., RBC Global Asset Management Inc. Royal Trust Corporation of Canada and The Royal Trust Company (collectively, the “Companies”) and their affiliate, Royal Mutual Funds Inc. (RMFI). *Member – Canada Investor Protection Fund. Each of the Companies, RMFI and Royal Bank of Canada are separate corporate entities which are affiliated. “RBC advisor” refers to Private Bankers who are employees of Royal Bank of Canada and licensed representatives of RMFI, Investment Counsellors who are employees of RBC Phillips, Hager & North Investment Counsel Inc., Portfolio Managers who are employees of RBC Global Asset Management Inc., Senior Trust Advisors and Trust Officers who are employees of The Royal Trust Company or Royal Trust Corporation of Canada, or Investment Advisors who are employees of RBC Dominion Securities Inc. In Quebec, financial planning services are provided by RMFI which is licensed as a financial services firm in that province. In the rest of Canada, financial planning services are available through RMFI or RBC Dominion Securities Inc. Estate and trust services are provided by Royal Trust Corporation of Canada and The Royal Trust Company. If specific products or services are not offered by one of the Companies, clients may request a referral to another RBC partner. The strategies, advice and technical content in this publication are provided for the general guidance and benefit of our clients, based on information believed to be accurate and complete, but neither the Companies, RMFI, nor Royal Bank of Canada, nor any of its affiliates nor any other person can guarantee accuracy or completeness. This publication is not intended as nor does it constitute tax or legal advice. Readers should consult a qualified legal, tax or other professional advisor when planning to implement a strategy. This will ensure that their individual circumstances have been considered properly and that action is taken on the latest available information. Interest rates, market conditions, tax rules, and other investment factors are subject to change. This information is not investment advice and should only be used in conjunction with a discussion with your RBC advisor. None of the Companies, RMFI, Royal Bank of Canada nor any of its affiliates nor any other person accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. In certain branch locations, one or more of the Companies may carry on business from premises shared with other Royal Bank of Canada affiliates. Notwithstanding this fact, each of the Companies is a separate business and personal information and confidential information relating to client accounts can only be disclosed to other RBC affiliates if required to service your needs, by law or with your consent. Under the RBC Code of Conduct, RBC Privacy Principles and RBC Conflict of Interest Policy confidential information may not be shared between RBC affiliates without a valid reason. ® / ™ Trademark(s) of Royal Bank of Canada. Used under licence. © Royal Bank of Canada. (2025). All rights reserved.