End-Of-Year Tax Saving Tips

RMDs (required minimum distributions) are due by December 31

Remember that beginning at age 73, you must start withdrawing money from your taxable accounts, like non-Roth 401(k)s and IRAs, based on strict rules and calculated amounts, and you must do so by midnight of December 31^st each year. If you need help, please reach out as early as possible! There is no grace period to tax day, and penalties can apply if you don’t take the withdrawals, don’t withdraw the right amounts from the right accounts, or you are late in taking the distributions.

Consider tax loss harvesting opportunities

If you have sold stocks that performed especially well in the past year, potentially costing you in terms of capital gains, you might consider offsetting those capital gains with capital losses you’ve experienced elsewhere in your portfolio. We can help you look at your situation in conjunction with your CPA and tax professional.

Deduction limit raised for 2025 through 2029 for SALT (State and Local Income Tax)

Before 2018, there was no limit on the amount that could be deducted for state and local income taxes. Then the 2017 TCJA imposed a cap of $10,000 for married couples filing jointly from 2018 through 2025. Per the OBBBA, signed into law July 4, 2025, the cap on the itemized deduction for state and local taxes is increased to $40,000 for the 2025 tax year, and increases by 1% through 2029, subject to a phaseout for taxpayers with incomes above $500,000. In 2030, the cap reduces back down to $10,000.

A temporary income tax deduction was created for seniors for the 2025 – 2028 tax years

Mistakenly referred to as a Social Security tax cut, the OBBBA established a temporary income tax deduction for people age 65 or older. For tax years 2025 through 2028, $6,000 can be deducted per eligible filer—provided their modified adjusted gross income (MAGI) does not exceed $75,000 for single filers, or $150,000 for those married filing jointly.

Higher standard deductions were made permanent

Now is the time to think about whether you want to claim the standard deduction, or itemize on your taxes. The TCJA of 2017 increased the standard deduction for people who don’t itemize; and the OBBBA made higher standard deductions permanent. Starting in 2025 the standard deduction amount will be $31,500 for joint filers and $15,750 for single filers. The standard deduction amount will be adjusted for inflation in subsequent tax years.

The tax rates which were in effect since 2017 by the passage of the Tax Cuts and Jobs Act (TCJA) were made permanent in the OBBBA. There are seven rates which vary by filing status per the IRS.

• For the 2025 tax year, the top tax rate remains 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly).
• 35% for incomes over $250,525 ($501,050 for married couples filing jointly).
• 32% for incomes over $197,300 ($394,600 for married couples filing jointly).
• 24% for incomes over $103,350 ($206,700 for married couples filing jointly).
• 22% for incomes over $48,475 ($96,950 for married couples filing jointly).
• 12% for incomes over $11,925 ($23,850 for married couples filing jointly).
• 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).

Charitable giving changes

If you give regularly and itemize your tax returns, you may want to make extra contributions for 2025. Per the OBBBA, starting in 2026, those using the standard deduction will be able to claim up to $1,000 for individuals ($2,000 for married couples filing jointly) for cash gifts directed to a public charity. By contrast, those who itemize will have to contribute at least 0.5% of their “contribution base” (essentially their AGI) before claiming charitable deductions next year. Additionally, charitable gifts will be slightly reduced for taxpayers in the top tax bracket (estimated to be about $640,000 for individuals and $770,000 for couples).

Temporary income tax deductions (2025-2028 tax years) for tips, overtime

For the tax years 2025 through 2028, up to $25,000 of tips may be deducted from federal taxable income for those who work in industries where tips are customary, with the deduction phasing out by $100 for each $1,000 when adjusted gross income exceeds $150,000 for single filers and $300,000 for joint filers. While the deduction applies to “cash” tips only, the OBBBA broadly defines “cash” tips to include tips paid in cash or charged, as well as tips received by an employee under a tip-sharing arrangement. It excludes tips that are “non-cash.”

Per the OBBBA, for the tax years 2025 through 2028, up to $25,000 of overtime compensation for married filers and $12,500 for single filers may be deducted from federal taxable income. The deduction phases out when adjusted gross income exceeds $150,000 for single filers and $300,000 for joint filers.

Temporary income tax deduction for car loan interest

For the tax years 2025 through 2028, auto loan interest is made income tax deductible for new autos with final assembly in the United States. The deduction is limited to $10,000 and phases out when income exceeds $100,000 for single filers and $200,000 for joint filers.