With December 31, 2025, quickly approaching, both individuals and small businesses have valuable opportunities to improve their tax position and strengthen their financial outlook. Implementing strategic year-end tax planning can help you reduce your tax bill, increase savings, and set the stage for a successful new year. Below are key 2025 tax strategies to consider before year-end.

1.       Max Out Retirement Contributions

Boost your retirement savings while lowering taxable income.

·       Contribute up to IRS annual limits for 401(k)s, IRAs, and other retirement plans

·       For 2025, catch-up contributions for individuals age 50+ are $7,500 for 401(k) plans and $1,000 for IRAs

·       Business owners should review SEP IRAs, SIMPLE IRAs, or solo 401 (k) options to maximize deductions.

2.       Use Tax-Loss Harvesting to Offset Gains

If you have taxable investment accounts, consider selling losing positions to offset capital gains.

·       This can lower your taxable income for the year.

·       Watch the IRS wash-sale rule, which disallows a loss if you buy a substantially identical investment within 30 days before or after the sale.

3.       Optimize Year-End Charitable Giving

Charitable contributions made before December 31 may qualify for a tax deduction.

·       Keep receipts and documentation for all donations.

·       Consider donating appreciated assets for potentially larger tax advantages.

4.       Review and Adjust Tax Withholdings

Double-check your paycheck withholdings before the year ends.

·       Adjustments now can help avoid owing taxes or overpaying next year.

·       The IRS provides a free online tax-withholding estimator to help you plan accurately.

5.       Pay Down High-Interest Debt

Focus on credit cards and other high-interest balances.

·       Reducing these debts decreases long-term interest costs and frees up cash flow for future goals.

6.       Update Insurance Coverage and Beneficiaries

As life changes, so should your policies.

·       Review insurance coverage and update beneficiaries on retirement accounts, bank accounts, and life insurance to match your current needs.

7.       Schedule a Financial Review

Before year-end, revisit major financial areas such as:

·       Retirement planning

·       College savings strategies

·       Estate planning documents

This helps ensure your financial strategy still aligns with your long-term goals.

8.       Reevaluate Your Budget and Financial Goals

Look back at how you earned, spent, and saved throughout the year.

·       Use this reflection to build a stronger financial plan for the year-end.

9.       Review Your Business Structure

Business owners should revisit their entity type and tax strategy.

·       Discuss with a CPA whether changing your W-2 versus K-1 ratio or electing S-Corp status could improve your tax efficiency

10.  Tax Advantage of Pass-Through Entity (PTE) Tax Workarounds

If your state allows it, paying state income taxes at the entity level may unlock an additional deferral tax deduction.

·       This can help offset the limitation on the state and local tax (SALT) deduction.

Implementing these 2025 year-end tax strategies can help minimize taxes, grow your savings, and start the new year with greater financial confidence. Consider consulting a tax professional or financial advisor to tailor these strategies to your situation.