Our tax expert Tabitha Regan, CPA/PFS, CFP® has compiled the most important and relevant year-end tax tips for individuals.
New in 2025: Increased SALT Deduction
The OBBBA of 2025 raises the cap on the state and local tax (SALT) deduction for taxpayers that itemize from $10,000 to $40,000 for taxpayers with $500,000 or less adjusted gross income. Taxes that qualify for this deduction include state income taxes, real estate taxes (including for personal residence, vacation home, investment property, etc.), and personal property taxes (e.g. vehicle ad valorem).
To maximize the tax benefits of the SALT deduction, income management may be more important if the taxpayer’s income is close to $500,000. To maximize the deduction, make sure tax payments are paid before 12/31 to claim the deduction. State fourth quarter estimated taxes paid in January, 2026 will not qualify for the 2025 deduction.
Charitable Giving
Charitable giving is one of the most powerful and rewarding year-end tax strategies available to individual taxpayers. Whether making routine donations or planning a large one-time gift, thoughtful charitable planning can help maximize your impact while saving taxes.
If you itemize deductions, you can claim charitable contributions (cash and non-cash donations) as part of your deductions. You should keep a written acknowledgement of all donations of $250 or more. Donations of non-cash goods (such as clothing/household items) should be well documented with a receipt and description of all items donated, including their condition.
Investors should consider donating appreciated securities to qualified charities instead of cash. By doing so, you can potentially avoid paying capital gains tax on the appreciation while receiving a charitable deduction for the fair market value of the donated assets. Only certain securities apply.
Optimize Itemized Deductions vs. Standard Deduction
Taxpayers should review whether itemizing or taking the standard deduction yields better results. With the increased SALT deduction in 2025 for qualifying taxpayers, a new planning opportunity exists to maximize itemized deductions in 2025.
The OBBBA of 2025 also made permanent the increased standard deductions. In years when itemized deductions fall just below the standard deduction threshold, “deduction bunching” which strategically times expenses like charitable contributions or medical payments into a single year, can help push total deductions high enough to make itemizing worthwhile.
Capital Loss Harvesting
If you have more capital losses than gains, you can deduct the first $3,000 of capital loss carry-over against your ordinary income. Before year-end, review your investment portfolio with your investment advisor and discuss capital loss harvesting that may be available to you. Capital losses can be used to offset capital gains and the unused capital losses are carried over indefinitely. Be mindful of the wash-sale rule, which restricts repurchasing the same or substantially identical securities within 30 days.
Maximize Retirement Contributions
If you have access to an employer-sponsored retirement plan, such as a 401(k) or 403(b), consider maximizing your contributions before the year-end. These contributions are tax-deductible, and by increasing your contributions, you can reduce your taxable income for the current year.
If you do not have access to an employer plan, you may be able to contribute to a Traditional IRA or Roth IRA. Traditional IRA contributions may be tax-deductible, while Roth IRA contributions are made with after-tax dollars but offer tax-free withdrawals in retirement.
