As 2025 winds down, taxpayers face one of the most important year-end planning seasons in recent memory. With significant changes from the One Big Beautiful Bill Act (OBBBA)—including a higher $40,000 SALT deduction, expanded retirement contribution rules, and tax-free treatment for qualified tips and overtime—your decisions between now and December 31 can meaningfully impact your 2025 tax bill.
Our Alloy Silverstein advisors compiled the most important year-end tax actions to consider now so you can reduce your taxable income, avoid surprises, and take full advantage of the new tax law before the year closes.
Maximize your retirement savings while reducing your taxable income. There is still time to make contributions to employer retirement plans like a 401(k). Remember each year has a contribution limit and if you don’t take advantage of it, it is lost. And with law changes it is important to note:
Don’t forget to leverage the new $40,000 tax limit for itemized deductions. This is up from $10,000. It may impact how you treat itemizing your tax return this year. (see our prior posts on this subject!)
Fund your final charitable donations before December 31st. Remember, your strategy here may change with new law changes, including the ability to deduct more of your taxes this year. Include in this review:
Review your investment portfolio for capital gain and loss planning. In addition to the ideas already mentioned, remember you can net gains against losses AND you can use up to $3,000 in net capital losses to offset ordinary income.
Take steps to maximize the kiddie tax threshold and gift rules. $2,700 of unearned income can be taxed at your child’s lower tax rate and you can gift up to $19,000 per tax payer this year.
Review any medical funding accounts. Remember contributions to an Health Saving Account (HSAs), if you have this plan available to you, effectively saves money on all your qualified medical, dental and vision spending. Plus unused balances carry over from year to year. So maximize the annual contribution while there is still time. While Flexible Spending Accounts (FSAs) or Medical Savings Accounts (MSAs) do not have the same flexibility, it is good to review the rules now and take advantage of any plan available to you to ensure you do not lose this tax-free funding opportunity.
Prepare now for tax-free tips and overtime pay. If you have not already done so, review the approved occupations for qualified tips and confirm the amount of this benefit long before you receive documentation from your employer. The same holds true for overtime pay. Employers are not required to issue W-2s or 1099s with this breakout in 2025, so you will need to ensure the reporting you do receive is accurate.
Has the new tax law affected your tax liability for this coming tax season? Review early in case you need to make any final estimated tax payments. Note the impact of:
Check to see if you should rollover any tax-deferred retirement accounts into Roth accounts.
Last step, get prepared for tax filing. This includes:
Should you have any questions on these year-end tax planning ideas and strategies, ask for help. In many cases, the requirements and documentation needed are important to ensure you receive the full tax savings benefit. Your Alloy Silverstein accounting and advisory team is here to assist!
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