You’ve got about three weeks left in 2025, which means there’s still time for some last-minute, tax planning. Here are ten ideas to consider before December 31:
1. Accelerate deductible business payments (cash-basis taxpayers)
If you own or operate a cash-basis business, think about paying outstanding invoices before December 31 so the deductions land in 2025. While you’re at it, request any needed W-9s now so you’re ready to issue 1099s in January.
2. Max out retirement contributions
Retirement contributions are one of the cleanest ways to reduce taxable income. For 2025, the combined annual limit for traditional and Roth IRAs is $7,000, plus an extra $1,000 if you’re 50 or older.
If you have an SEP-IRA, you may be able to contribute up to $70,000 for 2025.
Important timing note: IRA contributions for the 2025 tax year can be made up to April 15, 2026, as long as you designate them for 2025.
3. Make charitable gifts
Charitable contributions count for 2025 as long as they’re made (or the check is mailed) by December 31. If you have items in good condition you no longer need, donating them can also create a deduction.
You generally only benefit if you itemize deductions, so this is most helpful for taxpayers whose itemized deductions exceed the 2025 standard deduction ($15,750 single; $31,500 married filing jointly).
Keep written acknowledgments for any single donation of $250 or more. Also note that a non-itemizer charitable deduction is scheduled to return in 2026, so timing can matter if you’re close to the line.
4. Think about bonus timing
If you’re an executive at a corporation expecting a sale in 2026, taking a bonus in 2025 may increase your “base amount” for Section 280G (golden parachute) purposes. For many other taxpayers, the opposite goal is typical: deferring income into 2026.
5. Use the annual gift exclusion
Want to help a child, grandchild, or someone else you care about? In 2025 you can gift up to $19,000 per recipient ($38,000 if you and your spouse split gifts) without triggering gift tax or using lifetime exemption.
6. Spend down flexible spending accounts
If you have a use-it-or-lose-it health FSA, check your remaining balance and spend it before year-end (or before your plan’s deadline). Eligible expenses can include things like prescriptions, dental and vision costs, glasses, and prescription sports/sky goggles.
7. Finish HSA contributions
If you’re covered by an HSA-eligible high-deductible health plan, make sure you’ve hit your 2025 maximum contribution: $4,300 for self-only coverage and $8,550 for family coverage, plus a $1,000 catch-up if you’re 55 or older.
8. Fund a 529 plan
529 contributions are after-tax, but growth is tax-deferred and qualified withdrawals for education are tax-free. They can be used for K-12 tuition and college-level costs. Some states also offer state tax deductions or credits for contributions to their in-state plans, so you might get a benefit on the way in as well.
9. Consider where you live (if a move is already in the cards)
A full relocation for taxes alone is a big step, but if you’re already thinking about moving, shifting from a high-tax state to a low- or no-income-tax state can materially reduce your 2026 tax bill.
10. Harvest capital losses
If you’re holding investments at a loss, selling before year-end can generate losses to offset 2025 capital gains. If losses exceed gains, you can use up to $3,000 to offset ordinary income, with the rest carrying forward indefinitely.
Mike Baker frequently advises with respect to tax planning. He possesses a breadth and depth of experience in tax and employee benefits & compensation law that spans multiple decades. For additional information, please contact mike@mbakertaxlaw.com.