Year-end can be an important time to review your taxes. It can help you discover tax saving opportunities you can still take advantage of this year and set you up to meet your goals for next year as well.
Year End Tax Planning Tips
With the end of the year fast approaching, you have just a little more time to make any changes that could lower your tax burden for the year. Here are a few common things we recommend you look into for potential tax savings.
Get Organized
While this in and of itself probably won’t reduce your tax bill, it will make it easier when it’s time to file and for you to spot ways you can save. The One Big Beautiful Bill Act (OBBBA) made a lot of changes to U.S. tax policy, some of which take effect already in 2025. Review the bill and see how it could affect you. Now’s also a great time for a little end of year housekeeping. Review your financial records, organize your receipts, review your withholdings, update your W-4 form and make sure you have everything you need to file year end payroll reports, W-2 forms and 1099-MISC forms for any independent contractors you worked with this year.
Review Entity Structure & Accounting Methods
When you first formed your business, you selected a business structure and accounting method. These determine how your business is treated for tax purposes. With high interest rates and changes introduced by OBBBA, you may want to look into your options with a tax professional to consider if changes to your business structure or accounting method could be beneficial to your business.
Defer Income or Accelerate Expenses
Accelerating expenses and/or deferring income can both be used to reduce your taxes in the current year. You can do this by purchasing goods and services that you would normally do at the start of the year in December to increase this year’s deductible business expenses. Or by delaying billings and other payments owed to you until late December, you can reduce this year’s taxable income. Of course, you’ll only want to consider this option if you think you will be in the same or a lower tax bracket next year. There are a few other factors to consider before trying this tactic such as your accounting method, legal structure, profit (loss) for the year and projections for next year, so it’s important to check with your accountant or financial advisor first.
Charitable Donations
Well-timed charitable donations are an excellent way to receive a tax deduction while also helping others. Donating money, clothing, household items and used office equipment before the end of the year can be claimed as a deduction on this year’s taxes. Just be sure to get a receipt and keep it with your tax records.
Retirement Contributions
Contributing to a tax-deductible retirement plan such as a 401(k), 403(b) or an IRA could potentially lower your taxable income for the year as well as help you plan for a secure financial future. If you are financially able, it is generally advisable to contribute the maximum annual contribution each year.
For 2025 those amounts are as follows:
- 401(k)s/403(b)s—$23,500. (Those 50 and older can contribute up to $31,000.) Taxpayers who turned, or will turn, age 60, 61, 62 or 63 during 2025 can contribute up to $34,750
- IRAs—$7,000. (For those 50 years of age or older, it’s $8,000.)
Loss Harvesting
This is a common investment strategy where you sell investments, such as stocks and mutual funds, at a loss to offset any taxable gains you’ve realized during the year. If your losses exceed your gains, you can use up to $3,000 of the remaining losses to offset ordinary taxable income. The rules and risks involved with this strategy can be a bit complex, so it’s best to consult with a financial advisor.
Meet with a Tax Professional
There are many ways to strengthen your financial health and lower your tax burden before the end of the year but to find the ones that will work best for you and your unique situation, you should speak with a tax advisor. Arsenault CPA Firm can help you safely maximize your annual return with trusted personal and business accounting and tax preparation services. We’ll work with you to identify actional tax-saving strategies that are best suited for your current circumstances and your long-term financial goals. Contact us today for a free consultation.