As 2025 draws to a close, the clock is ticking on powerful tax-saving opportunities. With the One Big Beautiful Bill Act (OBBBA) bringing exciting changes like no tax on tips and overtime (for qualifying workers), a boosted SALT deduction cap, and enhanced benefits for seniors, there’s never been a better time to act.
But some classic year-end strategies remain gold – especially those that let you reduce your 2025 taxable income before the ball drops on New Year’s Eve. Procrastinate now, and you could be leaving thousands on the table when you file in 2026.
In this guide, we’ll break down five proven last-minute moves that can slash your tax bill. These are actionable before December 31, 2025, and tailored to the current rules (including OBBBA updates). Let’s dive in – your wallet will thank you.
1. Max Out Your Retirement Contributions: Lock in Deductions and Grow Tax-Free
One of the smartest (and easiest) ways to lower your 2025 taxes is by contributing to retirement accounts. These contributions reduce your taxable income dollar-for-dollar while building your nest egg.
• 401(k) or 403(b) Plans: The 2025 limit is $23,500 (plus catch-up contributions if you’re eligible: $7,500 standard for age 50+, or up to $11,250 enhanced for ages 60-63 if your plan allows). If you haven’t hit the max yet, increase your payroll deferrals ASAP – contributions must be made by December 31.
• Traditional IRA: You can contribute up to $7,000 ($8,000 if age 50+). While the deadline is April 15, 2026, making it now ensures it counts for 2025. Deductibility depends on income and workplace plan coverage, but it’s often fully deductible.
• Self-Employed Options: If you’re a business owner, consider a SEP-IRA (up to 25% of compensation) or solo 401(k) – these can be funded until your tax filing deadline, but get started now for maximum impact.
Potential Savings: A $23,500 401(k) contribution in the 24% bracket could save you over $5,600 in taxes – plus employer matches if available!
2. Bunch Charitable Donations: Supercharge Your Deductions in a High Standard Deduction World
The 2025 standard deduction is generous thanks to OBBBA: $15,750 for singles, $31,500 for married filing jointly (plus extra for seniors). This means fewer people itemize – but “bunching” lets you push donations into 2025 to exceed the standard and itemize big.
• Donate cash, stocks, or goods to qualified charities before midnight on December 31.
• Appreciated stocks? Donate them directly to avoid capital gains tax while getting a deduction for fair market value.
• Use a Donor-Advised Fund (DAF) to bunch multiple years’ worth of giving into one tax year.
With OBBBA making many TCJA provisions permanent, itemizing can still pay off if you have high mortgage interest, medical expenses, or state taxes (see #4).
Pro Tip: Track receipts meticulously – the IRS requires substantiation for donations over $250.
3. Harvest Tax Losses in Your Investment Portfolio: Offset Gains and Income
If your investments have losers this year, sell them to realize losses that offset capital gains – or even up to $3,000 of ordinary income.
• Review your taxable brokerage accounts (not retirement accounts).
• Sell underperforming stocks, bonds, or funds by December 31 to lock in 2025 losses.
• Watch the wash-sale rule: Don’t repurchase the same security within 30 days.
This strategy is especially powerful if you’ve had big gains from selling winners earlier in the year. Carry forward excess losses to future years indefinitely.
In a volatile market, tax-loss harvesting isn’t just about saving on taxes – it’s a disciplined way to rebalance your portfolio. Could this move save you thousands while positioning you better for 2026?
4. Prepay Deductible Expenses: Shift Them into 2025 for Immediate Benefit
If you’re leaning toward itemizing (or bunching to make it worthwhile), accelerate deductions:
• State and Local Taxes (SALT): Prepay 2026 property taxes or estimated state income taxes before year-end. OBBBA raised the SALT cap to $40,000 (phasing out over $500K income) – a huge win for high-tax state residents!
• Mortgage Interest: Pay your January 2026 mortgage payment in December 2025.
• Medical Expenses: If over the 7.5% AGI threshold, schedule procedures or pay bills now.
These prepayments must be due in 2026 to qualify – but the deduction hits your 2025 return.
5. Leverage New OBBBA Perks: No Tax on Tips/Overtime and Senior Bonuses
While not strictly “last-minute” actions, ensure you’re positioned:
• Tips and Overtime Workers: Track qualifying tips (up to limits) and overtime – these are now tax-free for 2025-2028 under OBBBA.
• Seniors (65+): Claim the new temporary $6,000 extra deduction (on top of standard) when filing.
If eligible, review pay stubs and adjust withholding if needed.
Year-End Tax Planning Checklist: Your Quick Action Plan
• Review retirement contributions and max out by 12/31.
• Calculate potential itemized vs. standard deduction.
• Sell losing investments for tax-loss harvesting.
• Make charitable gifts and prepay eligible expenses.
• Consult records for OBBBA benefits (tips, overtime, senior deduction).
These moves aren’t just about saving taxes – they’re about smart financial habits. What’s your biggest year-end tax worry? Drop it in the comments below – I’d love to hear and help!
This isn’t personalized advice; consult a tax professional for your situation. Stay tuned to Tax Guide Daily for more 2025 updates and 2026 prep tips.
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What’s your top year-end move this year? Let me know below! 🚀
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