As the holiday season approaches and 2025 winds down, it’s not just time for festive cheer—it’s also the perfect moment to wrap up your financial year with smart tax planning. With recent legislative updates, including permanent extensions of key Tax Cuts and Jobs Act (TCJA) provisions and new rules from the 2025 OBBB Act, now is the time to review your financial situation and take advantage of opportunities to reduce your tax liability.
Whether you’re trimming the tree or trimming your tax bill, here are ten timely tips for individuals and businesses to consider before the year ends.
For Individuals: Year-End Tax Tips
1. Maximize Retirement Contributions
Give yourself the gift of future financial security. Contributing to IRAs and 401(k)s reduces taxable income and grows your investments tax-deferred. For 2025, IRA limits are $7,000 ($8,000 if 50+), and 401(k) limits are $23,500 ($31,000 with catch-up).
2. Harvest Losses, Manage Gains
Offset capital gains by selling underperforming investments. You can deduct up to $3,000 in net losses against ordinary income, with excess carried forward. High earners should also factor in the 3.8% Net Investment Income Tax.
3. Bunch Itemized Deductions
With the standard deduction now $31,500 (joint), $23,625 (head of household), and $15,750 (single), fewer taxpayers itemize. Consider “bunching” deductions—like charitable gifts, state/local tax payments and medical expenses—into one year to exceed the threshold.
4. Utilize the Senior Deduction
Taxpayers 65 or older can claim an extra $6,000 ($12,000 for qualifying couples), subject to income limits. This deduction is available through 2028.
5. Maximize the SALT Deduction
The state and local tax (SALT) cap is temporarily raised to $40,000 for 2025. Strategically time payments to make the most of this deduction, especially if you’re in a high-tax state.
6. Deduct Auto Loan Interest
Starting in 2025, interest on new car loans is deductible -up to $10,000. To qualify, the vehicle must be newly purchased, meet U.S. assembly and weight requirements, and the deduction phases out based on adjustable gross income.
7. Gift Strategically
Spread some holiday generosity with tax-smart gifting. The annual gift exclusion is $19,000 per recipient ($38,000 per couple).
8. Plan for the Alternative Minimum Tax (AMT)
High-income earners should assess their exposure to the Alternative Minimum Tax. Avoid prepaying state and local taxes if you’re subject to AMT and consider timing income and deductions carefully.
9. Maximize Deferral Opportunities
Contribute to HSAs and FSAs to reduce taxable income. You can also defer income or accelerate deductions depending on your expected future tax bracket.
10. Review Family Credits and Filing Status
The Child Tax Credit is $2,200 per child, and credits for other dependents are now permanent. Review eligibility for education credits, the Saver’s Credit, and the Child and Dependent Care Credit.
For Businesses: Year-End Tax Tips
1. Accelerate Deductible Expenses
For “cash basis” taxpayers, consider prepaying eligible expenses like supplies to boost deductions in 2025. It’s a smart way to lower taxable income before ringing in the new year.
2. Use Section 179 and Bonus Depreciation
Place qualifying property into service before year-end to take advantage of immediate expensing and bonus depreciation.
3. Claim Expiring Credits
Energy-efficient upgrades and clean vehicle purchases may qualify for credits that expire after 2025.
4. Defer Income
If you use the cash method, consider delaying invoices or collections to push income into 2026, deferring tax liability.
5. Maximize the QBI Deduction
Review your eligibility for the 20% Qualified Business Income deduction. Consider strategies like increasing wages or retirement contributions to maximize the benefit.
6. Fund Retirement Plans
Contributing to SEP, SIMPLE, or 401(k) plans before year-end not only helps employees but also secures valuable deductions for your business.
7. Reevaluate Entity Structure
The holidays are a great time to reflect—on your business structure. Consider whether your current setup is still optimal for tax purposes, especially with QBI and self-employment tax implications.
8. Use Loss and Credit Carryforwards
Review any net operating losses or unused tax credits. Use them before they expire to reduce your 2025 tax burden.
9. Adjust Estimated Payments
Avoid penalties by reviewing your estimated tax payments and year-end withholding. Make adjustments, if needed.
10. Contribute to HSAs
If eligible, make HSA contributions for an above-the-line deduction and tax-free growth for qualified medical expenses.
Wrap Up the Year with Confidence
As you prepare for the holidays, don’t forget to prepare for tax season. These tips can help you make the most of current laws and set yourself up for a financially healthy new year. Every situation is unique, so be sure to consult your CPA or tax advisor before making decisions.
DKSS can help navigate the season with clarity and confidence. Whether you’re planning for growth or simply looking to reduce your tax bill, our team is ready to support your success—now and into the future.
Ursula Scroggs, CPA, is managing director at DKSS CPAs + Advisors, with offices in Troy and St. Clair Shores, Michigan. Jean Stenger, CPA, is director of operations for DKSS.
