Year End Tax Planning Opportunities 2025

This week we kicked off the year-end tax planning season with a webinar highlighting some of our key strategies for 2025.  Since the “One Big Beautiful Budget Bill” or “OBBBA” passed in July, there is little uncertainty over tax law.  Also, the “OBBBA” was generally favorable for taxpayers, making the existing tax brackets permanent and creating a few new tax breaks such as the senior deduction.  As a result, most taxpayers will have a lower tax bill in 2025 when compared to the same income in 2024.

Of course, there is still value in year-end tax planning.  One of our favorite strategies is to make the best use of the tax brackets. Usually this involves shifting income from a high income (a high tax bracket) year to a lower income (and lower bracket year).  A classic example of this is retirement deferrals. If you have high income, as in your later working years, deferring your income through 401k contributions can give you a significant tax break and shift recognition of that income to your retirement years when your income (and your tax rate) is likely to be lower.  Of course, if your income is lower this year, due to job transition or a decline in your business, you may want to consider strategies that take advantage of this year’s low tax bracket.

Here are a few of our favorite strategies to decrease taxable income if your income is high this year:

• Increase Charitable Contributions

• Make a multi-year charitable donation in the current year (i.e. concentrated giving)

• Donate Appreciated Stock

• Maximize retirement plan contributions

• Advance deductible expenses (e.g. tax payments, business expenses, or rental property expenses)

Here are a few of our favorite strategies increase taxable income if your income is low this year:

• Harvest Capital Gains in your after-tax portfolio

• Complete a Roth Conversion

• Advance business income if possible (e.g. incentivize customers to pay early)

• Defer deductible expenses (e.g. tax payments, business expenses, or rental property expenses)

If you would like to learn more please check out our recent year-end tax planning webinar here: Event Archive | Cedarstone Advisors

As always, we encourage you to consider your full picture. Be aware that the OBBBA introduced several phase outs that complicate the analysis. If you would like to discuss the details of your situation, please give us a call.