2025 Year-End Tax Planning
Robert Bell, CPA, Partner
As 2025 draws to a close, taxpayers face a year-end planning environment unlike any in recent memory. The July passage of the One Big Beautiful Bill Act (OBBBA) fundamentally reshaped tax strategy by making permanent nearly all the provisions previously scheduled to sunset at the end of the year under the Tax Cuts and Jobs Act (TCJA). This extension includes lower individual income tax rates, the elimination of personal exemptions, and the enhanced standard deduction, among other provisions.
While last year’s planning focus centered on anticipating the TCJA sunset, the permanence created by OBBBA removes much of that uncertainty. Still, 2025 brings a mix of new deductions and traditional end-of-year planning opportunities. Below is an overview of the most important considerations for individuals and businesses.
Year-End Strategies for Individuals
- Income Tax Minimization Through Deferral
The cornerstone of individual year-end planning remains unchanged: defer income where possible and accelerate deductions when advantageous. Because OBBBA made no changes to individual tax brackets for 2026 beyond inflation adjustments, taxpayers can generally assume stability when assessing whether to push income into next year.
Inflation has remained somewhat resurgent throughout 2025, prompting significant upward adjustments to the 2026 tax brackets. This means that deferring income from 2025 into 2026 may allow more income to fall within lower tax brackets, producing a lower overall tax burden.
- Consider Capital Gains Timing
Capital gains continue to be taxed at 0%, 15%, or 20%, depending on income. Timing becomes crucial for taxpayers near bracket cutoffs. For example, someone near the top of the 15% bracket may benefit from deferring a sale until 2026 if expected income drops.
Tax-loss harvesting continues to be viable, though subject to wash-sale rules. The strategy remains most beneficial to high-income taxpayers.
- Maximizing Deductions in a Post-SALT-Cap Environment
One of the most consequential OBBBA changes is the increase of the SALT deduction cap from $10,000 to $40,000 beginning in 2025. This dramatically expands the number of taxpayers for whom itemizing may again become worthwhile.
- New Individual Deductions Under OBBBA
OBBBA introduced four new deductions available to all taxpayers, whether or not they itemize. All four apply for 2025:
- $6,000 Senior Deduction
• $10,000 Automobile Loan Interest Deduction
• Deduction for Qualified Tip Income
• Deduction for Qualified Overtime Income
These deductions generally require no proactive year-end action.
- Retirement Distributions and QCDs
Taxpayers turning 73 in 2025 enter their first required minimum distribution (RMD) year. Qualified charitable distributions (QCDs) remain a powerful tool for charitably inclined taxpayers aged 70½ or older, allowing up to $108,000 to be directed from an IRA to charity tax-free.
- Additional Individual Planning Opportunities
Other traditional strategies include prepaying tuition, maximizing 401(k) contributions, IRA contributions, and educator expense deductions.
Key Year-End Strategies for Businesses
- Take Advantage of Enhanced Depreciation and Expensing
OBBBA delivers immediate benefits to businesses:
- Section 179 limit increased to $2.5 million
• 100% bonus depreciation permanently reinstated
- Retirement Plan Opportunities Under SECURE 2.0
Businesses may adopt starter 401(k) or safe-harbor plans and can more easily amend plans mid-year.
- Work Opportunity Tax Credit Expires December 31
Employers must complete all steps for certification before year-end.
- Prepare for New OBBBA Reporting in 2026
Employers should prepare systems to track tip income, overtime income, and auto loan details.
Conclusion
The 2025 year-end planning landscape offers significant opportunities for taxpayers who take proactive steps now. Between new deductions and enhanced depreciation for businesses, careful planning can yield substantial tax savings.