As 2025 comes to a close, it’s a great time to take a closer look at your tax situation. A few smart moves before December 31 can have a big impact when you file next spring.
At Taylor & Associates Financial Services, we help individuals, families, and small business owners make sense of the changing tax landscape. This year brings more change than usual. The recently passed One Big Beautiful Bill Act (OBBBA) introduces several major updates that take effect in 2026, which makes this a particularly important time to plan ahead.
Key Filing Dates for 2026
S-Corporation and Partnership returns are due March 16, 2026. Individual and C-Corporation returns are due April 15, 2026. If you file for an extension, you’ll have until October 15, 2026, but remember that any balance due must still be paid by April 15.
Three Ways to Approach Year-End Planning
1. Timing Your Income
If you expect to be in a lower tax bracket next year, it can make sense to defer income into 2026. You might ask your employer to hold a year-end bonus until January or, if you run a small business, delay sending some invoices until after December 31. Retirees who have already met their required minimum distributions might also consider waiting until January to take any additional withdrawals.
On the other hand, if you expect your income to rise in 2026, you may want to bring more income into 2025 while you’re in a lower bracket. The key is to look ahead at your income and tax rate expectations and time your income accordingly.
2. Managing Your Deductions and Expenses
Accelerating deductible expenses before year-end can reduce your taxable income for 2025. This might include prepaying property taxes, mortgage interest, charitable donations, medical expenses, or business costs such as rent and subscriptions.
Thanks to OBBBA, the cap on state and local tax (SALT) deductions has increased from $10,000 to $40,000 for many households, subject to income limits. That makes these deductions more valuable than they’ve been in recent years.
It’s worth noting that you shouldn’t spend money simply to claim a deduction. Focus on legitimate expenses that align with your financial goals and business needs.
3. Understanding the OBBBA Changes
The One Big Beautiful Bill Act brings a wide range of tax updates, many of which start in 2026. Here are some of the most relevant changes as you plan for year-end 2025.
The SALT deduction cap has been temporarily raised to $40,000, which restores a valuable tax break for many homeowners. Charitable deductions are also changing next year. Beginning in 2026, taxpayers who don’t itemize will be able to deduct up to $1,000 in charitable giving ($2,000 if married filing jointly). For those who do itemize, only charitable contributions that exceed 0.5% of adjusted gross income will be deductible, and high earners will see a limit on the value of that deduction. If you regularly give to charity, 2025 may be your best opportunity to make larger gifts under the current rules.
The standard deduction in 2025 is $29,200 for married couples and $14,600 for single filers. Seniors aged 65 and older will also receive a new $6,000 bonus deduction beginning in 2026.
Retirement plan limits have increased as well. Employees can contribute up to $23,500 to their 401(k) or 403(b) plan, plus an additional $7,500 if age 50 or older. Those between 60 and 63 can contribute an even higher catch-up amount of $11,250. The IRA contribution limit is $7,000 with a $1,000 catch-up for those over 50, and the HSA limit is $4,300 for individuals and $8,550 for families. Self-employed individuals with Solo 401(k)s can contribute a combined total of up to $70,000.
OBBBA also made the higher estate and gift tax exemption permanent, raising it to $15 million per person, indexed for inflation. Bonus depreciation for businesses was extended through at least 2026, allowing qualifying purchases to be fully expensed in the year they are made.
Finally, the law introduces new deductions in 2026 for certain tip income, overtime pay, and vehicle loan interest. These provisions could open up new planning opportunities for working families.
Seven Smart Year-End Tax Moves
1. Maximize Your Retirement Contributions
Review your 401(k) or 403(b) contributions to see if you can increase them before year-end. These contributions directly reduce your taxable income and are one of the most effective tax-saving strategies available. If you’re self-employed, consider establishing a Solo 401(k) before December 31 to take advantage of both employee and employer contributions.
You can make IRA and HSA contributions up until April 15, 2026, but an HSA must be opened by December 31, 2025, to qualify.
2. Make Charitable Gifts Before the Rules Change
Because of the new charitable deduction limits beginning in 2026, it may make sense to make larger donations this year. Donor-advised funds allow you to contribute a lump sum now and distribute gifts over time, while retirees over age 70½ can use qualified charitable distributions (QCDs) to donate directly from their IRA without increasing taxable income.
3. Pay Deductible Expenses Early
Paying your property taxes or January mortgage payment before December 31 allows you to claim those deductions on your 2025 return. With the higher SALT cap in place, these payments may provide a meaningful tax benefit.
4. Complete Any Planned Large Purchases
If you’re already planning to buy a major item such as a car or boat, completing the purchase before year-end may allow you to include the sales tax in your deductions. However, only make these purchases if they align with your broader financial plan.
5. Prepay Business Expenses
Business owners may want to prepay certain expenses like rent, insurance, or annual subscriptions to lock in deductions for 2025. With full bonus depreciation extended, purchasing necessary business equipment before year-end can also create significant tax savings.
6. Delay Invoicing if You Use the Cash Method
If you operate on a cash basis and expect lower income next year, holding certain invoices until January can defer income to 2026. Be sure, however, that delaying collections won’t create a cash flow problem.
7. Open and Fund a Solo 401(k)
Self-employed individuals can open a Solo 401(k) by December 31 to secure the option to fund it later. Contributions can generally be made up until the filing deadline (including extensions), allowing flexibility in how and when funds are contributed.
Planning for 2026 and Beyond
The tax environment is shifting. With new deductions, changing charitable rules, and extended business incentives, 2025 is an opportunity to take advantage of provisions that won’t last forever. We recommend reviewing your income, deductions, and investment plans now so you can enter the new year with a clear strategy.
How We Can Help
Our team at Taylor & Associates Financial Services specializes in proactive tax planning for individuals and small business owners. We can help you evaluate whether to defer or accelerate income, identify deductions available under OBBBA, and ensure you’re prepared for the new rules coming in 2026.
If you’d like a personalized year-end review, contact our office to schedule a planning session. We’ll help you finish 2025 strong and set yourself up for success in 2026.