2025 Year-End Tax Tips: New Rules, Fresh Strategies
As 2025 winds down, it is more important than ever to revisit your tax strategy. The One Big Beautiful Bill Act (OBBBA), signed into law earlier this year, brought a sweeping overhaul to the tax code. With many changes already in effect and others taking hold in 2026, now is the time to review your options, lock in deductions, and plan ahead before the calendar turns.
Here are key actions and updated strategies to consider before December 31, 2025:
- Tax-Loss Harvesting
Selling underperforming investments to offset capital gains remains a solid strategy. With market volatility continuing, now is a good time to identify losses that can reduce taxable income.
- Take Required Minimum Distributions (RMDs)
If you are age 73 or older, or you have inherited an IRA, remember to take your RMDs before year-end. Failing to do so can result in steep penalties.
- Consider a Roth Conversion
If your income or portfolio has dipped in 2025, it may be an opportune year to convert traditional IRA funds to a Roth IRA. You will pay tax now, but future qualified withdrawals could be tax-free.
- Leverage the New Above-the-Line Charitable Deduction
Starting in 2026, a limited charitable deduction will be available even if you do not itemize. But for 2025, you must still itemize to deduct contributions. Consider bunching donations to exceed the new 0.5% AGI floor for itemizers. If you plan to give, doing it before year-end may increase your benefit.
- Use the New Car Loan Interest Deduction
New for 2025, taxpayers may deduct up to $10,000 in personal car loan interest if the vehicle was assembled in the U.S. and purchased this year. The deduction phases out above certain income thresholds, so review eligibility now.
- Maximize Retirement Contributions
IRA and HSA contributions can be made up until the tax filing deadline, but early contributions help compound growth. Review how recent changes to income thresholds and contribution limits might affect your plan.
- Consider Gifting Strategies
The annual gift exclusion for 2025 allows you to gift up to $19,000 per person without triggering gift tax or affecting your lifetime exemption. This can be a great way to transfer wealth tax-efficiently.
- Pay Attention to Itemized Deduction Changes
The OBBBA expanded the SALT cap through 2029, added new income-based limits for charitable deductions, and repealed miscellaneous itemized deductions permanently. Review whether itemizing or taking the standard deduction will benefit you most this year.
- Review Your Withholding and Estimated Payments
With new tax brackets and credit phaseouts now in play, your 2025 tax liability may look different from past years. This is a good time to check in on withholding, safe harbor thresholds, and fourth-quarter estimated payments.
- Schedule a Year-End Tax Planning Meeting
Tax planning in 2025 is not business as usual. Between expanded deductions, temporary provisions, and new income limits, proactive planning is critical. Reach out to your ShindelRock team to review opportunities before the year closes.