Tax Smart: Keeping More of Your Hard-Earned Money

In today’s complex financial world, it’s easy to feel overwhelmed by fluctuating rules and deadlines. Yet with clear guidance, you can transform confusion into confidence and gain control over your taxes.

Whether you’re filing as an individual, part of a married couple, or operating a business, these insights help you make informed decisions andmaximize your after-tax wealth.

Key Tax Law Changes for 2025

The One Big Beautiful Bill Act has fundamentally altered the tax landscape by making many provisions permanent that were set to expire at the end of 2025. These changes create both new opportunities and constraints for proactive tax planning. Understanding these shifts is essential for individuals and business owners alike.

For 2025, the standard deduction for 2025 has risen to $30,000 for married couples filing jointly (up $800) and $15,000 for single filers (up $400). Inflation adjustments have also widened tax brackets, potentially lowering the tax burden for many households.

The State and Local Tax deduction cap has been significant: the SALT deduction is now temporarily raised to $40,000 per household, with annual inflation adjustments over the next four years. Pass-through business owners can leverage a workaround to deduct state and local taxes through their company, effectively bypassing the cap.

Strategic Charitable Giving

Charitable contributions remain a powerful way to support causes you care about while reducing taxable income. In 2025, itemizers can deduct up to 60% of AGI for cash gifts and 30% for noncash assets. With looming limits on deductions from 2026, accelerated giving this year offers a unique advantage.

• Qualified Charitable Distributions (QCDs): Individuals subject to required minimum distributions can donate up to $108,000 directly from an IRA, excluding that amount from taxable income.
• Donor Advised Funds (DAFs): Contribute now for an immediate deduction and distribute grants over time to maximize flexibility.
• Appreciated Asset Donations: Gift assets held for over a year to bypass capital gains tax and deduct fair market value.
• Bunching Strategy: Concentrate multiple years of charitable donations into 2025 to surpass the standard deduction threshold for itemizing.

Retirement Account Optimization

Retirement accounts offer powerful tax advantages. Traditional IRA contributions for 2025 are capped at $7,000, plus a $1,000 catch-up for those 50 and older. Be mindful that deductions phase out if you or your spouse participate in an employer retirement plan. Contributions remain available until Tax Day for the 2025 year.

Roth IRAs, funded with after-tax dollars, don’t reduce current taxable income but provide tax-free withdrawals in retirement once you’re 59½ and have held the account for five years. They also avoid required minimum distributions, potentially lowering future tax liability.

Consider a Roth conversion before year-end to lock in lower tax rates now, especially if you anticipate higher income in later years. Health Savings Accounts are another retirement vehicle with triple tax benefits. For 2025, you can contribute up to $4,300 individually ($5,300 if 55 or older) and $8,550 for families, with higher limits for older participants.

Investment Tax Strategies

Harvesting losses near year-end allows you to offset realized capital gains with losses, reducing taxable income. If your losses exceed gains, you can apply up to $3,000 against ordinary income and carry over the remainder.

Keep the wash-sale rule in mind: avoid buying identical or substantially similar securities within 30 days before or after selling at a loss. Investment interest deductions also provide opportunities to deduct interest on funds borrowed for investing, up to your net investment income.

If you hold nonqualified stock options, plan exercises carefully. Exercising options gradually before year-end can maintain you within lower tax brackets, preventing a single large exercise from pushing you into a higher rate.

Estate Planning and Gifting

Transferring wealth strategically can deliver long-term tax benefits. In 2025, the annual gift tax exclusion allows $19,000 per person ($38,000 if married), enabling you to shift assets out of your estate tax-free. Though gifts aren’t deductible, they reduce future estate tax exposure.

For larger transfers, consider lifetime giving while monitoring your lifetime exemption. Coordinating gifts with investment gains and losses can achieve a balance between current tax obligations and legacy planning.

Above-the-Line Deductions

Above-the-line deductions reduce your AGI regardless of whether you itemize, making them doubly valuable. Common deductions include:

• Health savings account contributions
• Deductible self-employment tax portion
• Self-employed health insurance premiums
• Eligible IRA contributions
• Student loan interest
• Up to $10,000 in vehicle interest for qualifying purchases

Business and Year-End Strategies

For business owners and proactive taxpayers, year-end moves can lock in deductions and optimize income reporting. Key actions include:

• Accelerate depreciation: Acquire and place assets in service before December 31 to qualify for Section 179 expensing or bonus depreciation.
• Structure compensation: Plan bonuses, profit-sharing, or retirement contributions to secure deductions this year.
• Create a pro forma tax return: Work with your advisor to model scenarios and identify opportunities before deadlines.
• Review year-to-date financial activity: Analyze account summaries to ensure your strategies align with current results.
• Finalize Retirement Contributions: Max out IRA, HSA, and employer plan contributions by the applicable deadlines.

Taking Control Before December 31

The clock is ticking. Most impactful tax strategies must be implemented by year-end, though certain contributions carry through Tax Day. Starting early provides breathing room to adjust and verify your plans.

Engage with financial and tax professionals now, gather documentation, and map out a clear timeline. Detailed preparation transforms complex rules into actionable strategies, helping you hold onto more of your earnings.

Conclusion

Mastering the nuances of today’s tax environment requires awareness, timing, and disciplined execution. By leveraging the latest law changes, optimizing charitable giving, retirement accounts, investment moves, and business tactics, you can significantly reduce your tax burden. Begin your planning now and approach year-end with confidence, knowing each decision moves you closer to retaining more of your hard-earned money.

Embrace these strategies as a roadmap to financial resilience. With thoughtful planning and timely action,you can fortify your future financial stability and secure lasting benefits for you and your loved ones.