1. Maximize Retirement Contributions

Contributing to retirement accounts like 401(k)s and IRAs not only secures your future but also offers immediate tax benefits. For 2025, the contribution limits are $23,500 (plus a $7,500 catch-up if over 50) for 401(k) plans and $7,000 for IRAs, with an additional $1,000 catch-up contribution if you're over 50. These contributions can reduce your taxable income, leading to potential tax savings.

2. Utilize Health Savings Accounts (HSAs)

If you're enrolled in a high-deductible health plan, consider contributing to an HSA. HSAs offer a triple tax advantage: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free. For 2025, the contribution limits are $4,300 for individuals and $8,550 for families. This strategy not only lowers your taxable income but also helps in managing healthcare costs.

3. Implement an Accountable Plan for Your S-Corporation

If you own an S-Corporation, establishing an accountable plan allows the business to reimburse you for business-related expenses, such as home office use or mileage, without those reimbursements being considered taxable income. This reduces the corporation's taxable income and avoids payroll taxes on the reimbursements. For detailed guidance, refer to our article on Understanding Accountable Plans: A Guide for S-Corp Owners.

4. Donate Appreciated Stocks to Charity

Instead of donating cash, consider donating appreciated stocks held for more than a year. This allows you to avoid paying capital gains tax on the appreciation and claim a charitable deduction for the fair market value of the stock. It's a tax-efficient way to support causes you care about.

5. Review Your Tax Withholdings

Ensure that your tax withholdings align with your expected tax liability. Adjusting your W-4 form can help avoid underpayment penalties or a large tax bill. Take a peek at your current paystub, generally your withholding should be around 10% of your Federal Taxable wages, For higher income earners your withholding should be a higher %. 

6. Donor Advised Fund

If you have inherited some cash or had a very financially beneficial year and would like to donate a certain percentage but do not have the charity in mind, you can donate to a Donor Advised Fund (via your Financial Advisor most times). The amount you put into the account counts as a charitable donation even though you have not transferred the money to a charity yet. The money can be invested until you eventually pick the charities to support. For higher income earners, the One Big Beautiful Bill reduces your charitable contribution starting in 2026 by small percentage based on your income. So if you are contemplating large donation do it this year.

7. QCD (Qualified Charitable Distribution) - if you are over 70 1/2 and regularly donate to charities, strongly consider the QCD route. It reduces your taxable income and results in better tax result than itemizing the deduction. Work with your financial advisor or brokerage to set up prior to 12/31.

8. Earned Overtime? Be prepared to supply details to earn deduction.

The new tax bill has provision for tax deduction for overtime earned. Keep in mind its the "half" portion of the overtime. Also, you must make less than $150K for singler filers and $300K for married. Because the rule was implemented half way through the year, payroll companies are not setup to properly report. Make sure you have access to your final 2025 paystub and other overtime records so we can properly report the deduction.

9. Earned tipped income? Be prepared to report the amount

The new tax bill has provision for tip income deduction. Your W2 should have the reportable amount. Make sure you have access to your 2025 final paystub so we can verify the tip amount. If you are self employed, be sure you have detailed records of your tips received. If you receive cash tip income and "don't" report it, then you will not get tip deduction. Reminder you should report all income.

10. Self employed Folks make your Tax Estimates

If you are self employed be sure to send in your final tax estimate by Jan 15, 2026. If you have missed sending in amounts this year, send in what you can now to reduce any penalty or interest.

11. Check your records that your RMD was taken by 12/31

If you are subject to Required Minimum Distributions be sure the RMD occurred this year to avoid any sort of IRS penalty. If you are age 73 for most cases, an RMD is required for tax deferred accounts.

12. Annual Gift

For those of you who are gifting amounts to lower your final Estate figures to avoid Inheritance Tax, the amount is $19,000 for 2025 ($38,000 for married couple). Send the gift by 12/31.

13. Business depreciation

If your business has had good profitable year, consider investing in depreciable asset from which you can take depreciation deduction. The One Big Beautiful Bill has restored 100$ bonus depreciation for certain types of assets (think equipment, not real estate).

Call me at 717-346-0050 to discuss any of these items are other financial matters which you are concerned about for 2025 leading to your income tax preparation.  Of course in advance have  a Merry Christmas!