There’s Still Time To Save 2025 Taxes

Just because it’s December doesn’t mean it’s too late to reduce your 2025  tax liability. Consider implementing one or more of these year-end tax saving ideas by December 31. 

Defer Income And Accelerate Deductions 

Pushing income into the new year will reduce this year’s taxable income. If  you’re expecting a bonus at work, for example, ask if your employer can  hold off on paying it until January. If you’re self-employed, you can delay  sending invoices so that they won’t be paid until January and thus  postpone the revenue to 2026. 

If you itemize deductions, remember that deductions generally are claimed  for the year of payment. So, if you make your January 2026 mortgage  payment in December, you can deduct the interest portion on your 2025 tax  return. Similarly, if you’ve received your 2026 property tax assessment and  pay it by December 31, you can claim it on your 2025 return (provided your  total state and local taxes don’t exceed the applicable limit). 

But don’t follow this approach if you expect to be in a higher tax bracket  next year. Also, if you’re eligible for the qualified business income  deduction for pass-through entities, consider how this approach might  affect it. 

Harvest Investment Losses 

An investment loss has a bit of an upside — it gives you the opportunity to  offset taxable gains. If you sell investments at a loss before the end of the  year, you can offset gains realized this year on a dollar-for-dollar basis. 

If you have more losses than gains, you generally can apply up to $3,000  of the excess to reduce your ordinary income ($1,500 if you’re married and  filing separately). Any remaining losses are carried forward to future tax  years. 

Donate Appreciated Stock To Charity

If you want to give to charity, you can simply write a check or use a credit  card. Or you can donate from your taxable investment portfolio, which  sometimes saves more tax. 

By donating appreciated publicly traded stock, you can claim a charitable  deduction (assuming you itemize deductions) equal to the current market  value of the shares at the time of the gift. Plus, you escape any capital  gains taxes you’d owe if you sold those shares. 

But don’t donate stock worth less than it cost. Instead, sell the shares so  you can claim a capital loss, which can reduce your taxes now or in the  future as discussed above. Then, give the sales proceeds to a charity and  claim a charitable deduction. 

Maximize Retirement Contributions 

Making pretax or tax-deductible contributions to traditional retirement  accounts — such as a 401(k) plan, Savings Incentive Match Plan for  Employees (SIMPLE), IRA and Simplified Employee Pension (SEP) plan — can be a significant tax saver. 

For 2025, taxpayers can contribute pretax as much as $23,500 to a 401(k)  or $16,500 to a SIMPLE. The IRA contribution limit is $7,000, though your  deduction may be reduced or eliminated if you or your spouse also  contributes to an employer-sponsored plan. Self-employed individuals can  contribute up to 25% of net income (but no more than $70,000) to a SEP  IRA. 

Taxpayers age 50 or older by December 31 can also make “catch-up”  contributions of up to $7,500 to a 401(k) or $3,500 to a SIMPLE and $1,000  to a traditional IRA. Those age 60, 61, 62 or 63 can make an additional  catch-up contribution of up to $3,750 to a 401(k) or $1,750 to a SIMPLE. 

The deadline for making 2025 401(k) and SIMPLE contributions is  generally December 31, 2025. (And if you want to increase the amount  that’s deferred from your paycheck, you’ll need to check with your plan on  whether increases for the year are still allowed.) But you might be able to  make deductible 2025 IRA contributions as late as April 15, 2026, and  deductible 2025 SEP contributions as late as the extended 2025 filing  deadline of October 15, 2026.

Act Soon 

Most of the ideas discussed here must be implemented by December 31 to reduce your 2025 taxes. So act soon. Contact us at taxinsights@nksfb.com if you have questions or are looking for more last-minute tax-saving strategies.

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