Make the Most of 2025: Smart Tax Tips for the Remaining Days + Get Ready for 2026
End 2025 Strong: Smart Tax Moves & Prep for 2026
As we approach the final days of 2025, there’s still time to make strategic tax moves that can significantly benefit your financial picture now and in the future. Here are a few quick, actionable tips to focus on before December 31st:
1. Optimize Deductions and Credits
Review Itemized Deductions: If you plan to itemize, ensure you maximize key deductions, such as medical expenses (if they exceed the AGI threshold) and charitable contributions. Crucially, remember that the SALT deduction (State and Local Taxes) is limited to $10,000 for most taxpayers through 2025.
Claim Available Tax Credits: Don’t leave money on the table. Verify that you have claimed any applicable credits, such as the Child Tax Credit, Earned Income Credit, or various education credits.
Roth IRA Conversions: Consider converting part of a Traditional IRA to a Roth IRA. While this conversion is a taxable event in 2025, it allows for all future growth to be tax-free, setting you up for greater long-term efficiency in 2026 and beyond.
Manage Capital Gains: Review your investment portfolio. Consider selling underperforming investments to realize capital losses, which can offset any capital gains realized earlier this year.
2. Maximize Retirement Contributions
The end of the year is the perfect time to ensure you’ve contributed the maximum allowable amount to your tax-advantaged retirement accounts (401(k), IRA, SEP-IRA, etc.).
For the 2025 tax year, the limits are estimated to be around $23,000 for individuals under 50, plus an additional $7,500 catch-up contribution ($30,500 total) for those 50 or older. By contributing more now, you reduce your 2025 taxable income while aggressively building your future wealth.
3. Finalize Business Expenses (For Business Owners)
Account for All Deductions: Ensure all potential business deductions are accounted for before the year ends. Consider purchasing necessary equipment or technology that may qualify for a Section 179 deduction.
Year-End Employee Bonuses: Paying out accrued employee bonuses before December 31st allows you to claim the deduction for those expenses in the 2025 tax year.
Get Ready for 2026: Forward-Thinking Tax Goals
It’s never too early to start laying the groundwork for a successful 2026 tax year.
1. Establish a Tax-Efficient Investment Strategy
Tax Location: Consider placing assets that generate high current income (like bonds) in tax-advantaged accounts (like a 401(k) or IRA) and placing growth-focused assets in taxable accounts to manage future capital gains liability.
Diversify: Ensure your investment diversification extends beyond asset type to include tax diversification—using a mix of taxable, tax-deferred (Traditional), and tax-free (Roth) accounts.
2. Fund Tax-Advantaged Accounts Early
Health Savings Account (HSA): If eligible, prioritize contributing to your HSA. These accounts offer a triple tax advantage (contributions are deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free) and are an excellent way to prepare for future medical costs.
3. Review Your Tax Withholding
Adjusting your W-4 or estimated tax payments now can prevent a large surprise—or a large, interest-free loan to the government—when you file in 2026. Review your income and deductions to strike the right balance.
📢 A Word from Johanknecht CPA & Associates
As we wrap up 2025, Johanknecht CPA & Associates is ready to help you take decisive action now and plan for the future. Whether you need to optimize your year-end strategies or set yourself up for a successful 2026, we have the expertise to guide you.
Contact Us Today to Schedule a Tax Review!
Email: [email protected]
Phone: (920) 696-5496
Don't wait—let’s make sure your taxes are in great shape for the upcoming year!
