Year-End Tax Planning Strategies for 2025

Why Year-End Planning Matters

The decisions you make before December 31st can significantly impact your tax bill. Once the new year begins, many tax-saving opportunities disappear. Now is the time to take action.

Income Timing Strategies

Defer Income When Possible

If you expect to be in a lower tax bracket next year:

Accelerate Income in Some Cases

If you expect higher income or tax rates next year:

Expense Timing Strategies

Accelerate Deductions

Consider making these expenditures before year-end:

Stock Up on Supplies

If you have the cash, buying a year's worth of supplies provides an immediate deduction.

Retirement Contributions

Maximize Your Contributions

For 2025, contribution limits are:

Consider a Roth Conversion

If you're in a lower tax bracket this year, converting traditional IRA funds to Roth can provide tax-free growth and withdrawals in retirement.

Business Structure Review

S-Corp Election

If you're a profitable sole proprietor, electing S-Corp status can provide significant self-employment tax savings.

Entity Restructuring

Review whether your current business structure still makes sense given your income level and goals.

Capital Gains Planning

Tax-Loss Harvesting

Sell investments at a loss to offset capital gains. Net losses up to $3,000 can offset ordinary income.

Long-Term vs. Short-Term

If possible, hold investments for over a year to qualify for lower long-term capital gains rates.

Health Savings Accounts (HSAs)

If you have an HSA-eligible health plan, contribute the maximum:

HSA contributions are triple tax-advantaged: tax-deductible, tax-free growth, and tax-free withdrawals for medical expenses.

Charitable Giving Strategies

Bunch Donations

If you're close to the standard deduction threshold, consider bunching multiple years of donations into one year to itemize.

Donate Appreciated Stock

Donating appreciated securities avoids capital gains tax while providing a full fair-market-value deduction.

Qualified Charitable Distributions

If over 70½, donate directly from your IRA to charity (up to $100,000) to satisfy RMDs without increasing taxable income.

Year-End Checklist

Conclusion

Year-end tax planning is one of the most impactful things you can do for your financial health. The strategies above can save thousands in taxes, but they require action before December 31st.

Need personalized year-end tax planning? Schedule a consultation with Tuesday AIA before the year ends.