Year-End Updates - What You Need to Consider
December 23, 2025 | By Raphael and Raphael LLP
Essential Year-End Tax Moves to Maximize Your 2025 Deductions
As 2025 draws to a close, there are several strategic tax moves you can make before December 31st to potentially reduce your tax liability. With the One Big Beautiful Bill Act (OBBBA) enacted this year, the tax landscape has shifted significantly and has created new opportunities for tax savings.
Pay Your Q4 Estimated Taxes Early for Maximum SALT Benefit
While your fourth quarter 2025 estimated tax payment isn't due until January 15, 2026, paying it before December 31, 2025 can provide substantial tax advantages under the new state and local tax (SALT) rules. The OBBBA increased the SALT deduction cap from $10,000 to $40,000, making early estimated tax payments more valuable. This deduction begins to phase-out at $500,000 for single and joint filers ($250,000 for married filing separately), so it's important to keep in mind your projected income for 2025 when planning your payments.
Income-Based Strategy Planning:
- Income below thresholds: Full $40,000 SALT deduction available. Accelerating estimated payments provides maximum benefit.
- Income in phase-out range: Partial SALT benefitbenefits available. Timing of income and deductions becomes critical.
- Income above phase-out: Back to $10,000 limit. Consider available state passthrough entity tax elections and other advanced strategies.
If you are nearing or over the phase-out range, consult with us about available strategies to maximize your SALT deduction benefit. Even small adjustments can result in thousands of dollars in tax savings.
Important: The IRS now requires estimated tax payments to be made electronically. You can pay securely through IRS Direct Pay directly from your bank account.
Other Critical Year-End Tax Strategies
Retirement Account Contributions
Maximize your 2025 retirement savings by contributing to:
- 401(k) plans: Up to $23,000 for 2025 ($30,500 if age 50+)
- Traditional IRAs: Up to $7,000 for 2025 ($8,000 if age 50+)
- SEP-IRAs and Solo 401(k)s: Higher limits for self-employed individuals (up to $69,000)
- Backdoor Roth conversions: For high-income earners above IRA income limits
Standard and Enhanced Catch-Up Contribution Limits for 2025 and 2026 Age Group (by year-end) Annual Standard Limit (Employee) Catch-Up Contribution Total Employee Contribution 2025 Limits 50-59 or 64+ $23,500 $7,500 $31,000 60-63 $23,500 $11,250 $34,750 2026 Limits 50-59 or 64+ $24,500 $8,000 $32,500 60-63 $24,500 $11,250 $35,750
Consider Tax-Loss Harvesting
Make charitable contributions before December 31st to claim the deduction on your 2025 return. Starting in 2026, only charitable contributions in excess of 0.5% of adjusted income will be deductible if you itemize. Advanced strategies include:
- Donor-advised funds: Bundle multiple years of charitable giving into 2025 to maximize your deductions while retaining the ability to space out your gifts over future years
- Donating appreciated securities: Avoid capital gains taxes while claiming full fair market value deduction
- Qualified charitable distributions: Direct IRA-to-charity transfers for those over age 70½
Health Savings Account (HSA) Contributions
If you have an HSA-eligible health plan, maximize your 2025 contributions:
- Individual coverage: $4,300
- Family coverage: $8,550
- Additional catch-up (age 55+): $1,000
Navigate the New Legislative Landscape
The OBBBA changes create new planning opportunities but also add complexity, particularly for high-income taxpayers. Business owners should consider the impact of the permanent 100% bonus depreciation and doubled Section 179 limits for managing their 2025 income.
Don't Wait - Act Before December 31st
Most year-end tax strategies must be completed by December 31, 2025 to affect your 2025 tax return. Time-sensitive action items include:
- Accelerating state and local tax payments (if beneficial under phase-out rules)
- Discussing tax-loss harvesting transactions with your investment advisor
- Making charitable contributions and establishing donor-advised funds
- Reaching out to a CPA to discuss your personal tax strategy
With the SALT cap changes under OBBBA, tax planning has become both more beneficial and more complex. Every taxpayer's situation is unique, and the strategies that work best for you depend on your individual circumstances, income level, and state tax situation.
Given the complexity of these new rules and their interaction with your unique financial situation, we strongly recommend scheduling a comprehensive year-end tax planning consultation. Contact our office today to discuss how the new SALT rules and other year-end strategies can benefit your specific situation. With the enhanced deduction limits and new phase-out provisions, there may be significant opportunities you haven't considered.
Prepare for the 2026 Filing Season
Make your tax season easier by taking the following preemptive steps:
- Setting up or accessing your IRS online account
- Organizing tax records and gathering essential forms, including investment statements and K-1s
- Understanding how OBBBA changes affect your specific situation
- Considering identity protection measures