4 Last-Minute Ways to Lower Your 2025 Tax Bill

As the year winds down, many people assume it’s too late to make a meaningful impact on their tax liability. The good news is that’s not the case. With a bit of strategic planning, you can still make several moves before December 31 to lower your 2025 tax bill.

This post will walk you through four effective, last-minute strategies that can help you save money and end the year on a strong financial note. From adjusting your income and deductions to making smart investment and charitable choices, you have more control over your tax outcome than you might think. Let's get started.

Defer Income & Accelerate Deductions

One of the most straightforward tax-saving strategies is to manage the timing of your income and expenses. By pushing income into the next year and pulling deductions into the current one, you can reduce this year's taxable income.

For example, if you are expecting a year-end bonus, you could ask your employer to pay it in January 2026 instead of December 2025. If you're self-employed, you can delay sending out final invoices to ensure you receive payment in the new year, effectively postponing that revenue to your 2026 tax return.

On the flip side, if you itemize deductions, you can accelerate them. You could make your January 2026 mortgage payment in December 2025, allowing you to deduct the interest portion this year. Similarly, paying your 2026 property tax assessment before December 31 allows you to claim it on your 2025 return, as long as your total state and local tax deductions don't exceed the limit.

Keep in mind, this strategy might not be for everyone. If you anticipate being in a higher tax bracket next year, you may want to do the opposite.

Harvest Your Investment Losses

While no one enjoys seeing their investments lose value, these losses can provide a valuable tax-saving opportunity through a process known as tax-loss harvesting. By selling investments at a loss before the end of the year, you can offset any capital gains you realized.

If your losses exceed your gains, you can apply up to $3,000 of the excess loss ($1,500 if married filing separately) to reduce your ordinary income for the year. Any remaining losses can be carried forward to offset gains in future tax years. This makes it a powerful tool for managing your overall tax liability from your investment portfolio.

Make a Strategic Charitable Donation

Giving back to charity is a great way to support causes you care about, and it can also provide a significant tax benefit. While you can always write a check, donating appreciated stock from your taxable investment portfolio can be an even smarter move.

When you donate publicly traded stock that has increased in value, you can typically claim a charitable deduction for the full market value of the shares at the time of the gift (assuming you itemize). Plus, you avoid paying capital gains taxes on the appreciation.

However, if you have stock that's worth less than what you paid for it, don't donate it directly. Instead, sell the shares first. This allows you to claim a capital loss on your tax return. You can then donate the cash proceeds to charity and still claim a charitable deduction for your gift.

Maximize Retirement Contributions

Contributing to tax-advantaged retirement accounts is one of the most effective ways to lower your taxable income while building long-term wealth.

For 2025, you can contribute up to $23,500 to a 401(k) or $16,500 to a SIMPLE IRA. The contribution limit for a traditional IRA is $7,000, though the deduction might be limited if you or your spouse has an employer-sponsored plan. If you're self-employed, you can contribute up to 25% of your net income (up to a maximum of $70,000) to a SEP IRA.

Those age 50 or older can make additional "catch-up" contributions:

• 401(k): Up to $7,500
• SIMPLE IRA: Up to $3,500
• Traditional IRA: Up to $1,000

There's also an extra catch-up for those aged 60-63, allowing an additional contribution of up to $3,750 to a 401(k) or $1,750 to a SIMPLE IRA. While the deadline for 401(k) and SIMPLE contributions is generally December 31, 2025, you have until April 15, 2026, to make 2025 contributions to a traditional IRA.

Let's Finalize Your 2025 Tax Plan

The clock is ticking, but there's still time to make a positive impact on your 2025 taxes. Most of these strategies need to be implemented by December 31, so it’s important to act quickly.

Running a business means wearing many hats, and tax strategist shouldn't have to be one of them. At SD Mayer & Associates, we go beyond the numbers to provide customized solutions that align with your goals. If you have questions or want to explore more personalized tax-saving strategies, contact our team today. Let's work together to end your year on a high note.