As the end of the year approaches, the clock is ticking for important choices that could help lower your tax bill for 2025. With additional deductions and credits from the new tax act starting this year and next, you may want to plan for every tax break you can now. Here are a dozen tax tips to consider before year-end to help trim your 2025 tax bill—and set you up for success in the years ahead.
1. Contribute to tax-advantaged accounts
While you have until the tax filing deadline of April 15, 2026, to contribute to an IRA for the 2025 tax year, you must make your final contributions to most workplace retirement plans, such as a 401(k) or 403(b) by December 31, 2025. You can contribute up to $23,500 in total combined traditional and Roth contributions. If you're 50 or over, you can make additional catch-up contributions of $7,500. If you’re between the ages of 60 and 63 and your employer’s plan allows it, you can contribute up to $11,250 in catch-up contributions in place of the standard $7,500 catch-up. If you choose to make traditional contributions, they will reduce your taxable income dollar for dollar. And don't forget about health savings accounts (HSAs) if you have a high-deductible health plan.
While you also have until the April tax filing deadline to contribute, you can put away up to $4,300 for self-only coverage and $8,550 for family coverage. Contributions can help to lower your taxable income, any earnings grow tax-free, and distributions are tax-free if they are used for qualified medical expenses.1 Unlike flexible spending accounts (FSAs), HSA assets are also not subject to the “use it or lose it” rule. Unused funds may be used to pay for future qualified medical expenses, so if you don’t reimburse yourself this year, hold onto your receipts. You may be able to reimburse yourself in future years. Note: Contributions can be made outside of payroll until April 15, 2026, for the 2025 tax year, similar to IRAs. However, if contributing outside of payroll, you won’t get the same tax benefit as contributing through payroll.
2. Turn investment losses into tax gains
Even with market gains in 2025, it’s possible you lost money on some investments this year. But you can take some of the sting out of those losses by tax-loss harvesting. This strategy generally allows you to sell investments that are down, replace them with reasonably similar investments, and then use those losses to offset realized investment gains. Any remaining losses can be used to offset realized gains in future years and up to $3,000 ($1,500 if married filing separate) of ordinary income each year. The end result is that less of your money goes to taxes and more may stay invested and working for you. Also, unused losses carry over to subsequent years.
But this strategy can be complicated. Wash sale rules may apply, meaning you can't sell most investments for a loss and reinvest in the same, or a substantially identical one, 30 days prior to or after the sale, or you'll lose the tax break. An exception: Wash sale rules currently do not apply to cryptocurrencies, as they are not regulated as securities. That means you can sell coins whose value has declined, and buy them back immediately at the same price, potentially realizing the loss while still holding the asset. Cryptocurrency regulations could change, however, so be sure to work with a tax professional to stay on top of changes.
Turn market losses into potential tax savings
3. Consider a Roth conversion
A Roth conversion involves transferring money in a traditional IRA or workplace plan to a Roth IRA. You'll pay taxes on the converted amount, but then the money can be withdrawn tax-free2 and it isn't subject to required minimum distributions for the life of the owner. Keep in mind, though, that Roth IRA conversions generate a tax bill based on the amount of pretax money you convert. It could benefit you to start thinking about, and planning for, a Roth IRA conversion now if 2026 brings a return of market volatility. If you do a conversion when there’s a pullback and stock prices are lower, you could potentially convert more shares at a lower price.
4. Consider itemizing
There are 5 main categories of itemizable deductions, subject to various limitations, and if these categories add up to more than the standard deduction, you may want to itemize. For 2025, married couples have a standard deduction of $31,500 and single filers a standard deduction of $15,750. Generally speaking, you can deduct medical expenses, home mortgage interest, state and local taxes, charitable contributions, and theft and casualty losses due to a federally declared disaster. Many deductions have limits, however. For example, you cannot deduct health care costs that are less than 7.5% of your adjusted gross income (AGI).3 Deductible expenses may include unreimbursed fees for doctor and hospital visits, dentists, chiropractors, mental health care, medical plan premiums for which you are not claiming a credit or deduction, and much more. If you are close to 7.5% of AGI, consider getting treatments and paying other medical bills before year-end, particularly if you were planning to do so early in the new year.
Additionally, the new tax legislation passed in July 2025 raises the state and local tax (SALT) deduction cap to $40,000 from $10,000 for single and joint filers—but with several caveats: The full deduction phases out for filers with modified adjusted gross income above $500,000 ($250,000 in the case of a married individual filing separately), and reverts to $10,000 for incomes of $600,000 and above. While the deduction and the phase-out levels will increase by 1% a year, these changes are in effect through 2029, after which point the cap reverts to $10,000. For married couples who file separately, the deduction increases to $20,000 and returns to its previous level of $5,000 in 2030.
Good to know: Starting in 2026, the value of itemized deductions for those in the 37% tax bracket will be capped at 35%, or approximately 35 cents for every dollar they deduct.5. Trim college costs with education breaks
The American Opportunity Tax Credit provides a dollar-for-dollar credit on a portion of qualified education expenses paid for an eligible student for the first 4 years of higher education. The full $2,500-per-student credit requires $4,000 in qualified spending, and is available to people whose modified AGI is less than $80,000 for single filers and less than $160,000 for joint filers. “To make the most of this break, you might want to consider prepaying the first semester of 2026 this year,” says David Peterson, Fidelity's head of wealth planning.
Additionally, some states may provide a state income tax deduction on a portion of contributions made to a 529 college savings account. Please check the 529 program description for specific details on any available state tax benefits associated with a state’s 529 plan offering. Although 529 plans have a maximum contribution limit, you may gift up to $19,000 (in 2025) a year per 529 account beneficiary with no other gifts to the beneficiary in that year without a potential federal gift tax impact. However, for any 529 account beneficiary, you can contribute up to 5 times the federal gift tax exclusion per individual at one time without triggering the federal gift tax so long as you file IRS Form 709 with your federal tax returns for the year the contribution was made and make no other taxable gifts to the 529 account beneficiary during that year or the next 4 calendar years.4
6. Defer some income
If you have freelance or other gig income, you might consider delaying billing for your services until early next year, thereby limiting your taxable income this year. Be sure to work with your accountant to create the best plan.
7. Charitable contributions and bunching
Bunching means concentrating charitable deductions in a single year and skipping charitable deductions the following year or even several years. If you follow this strategy, you wouldn’t likely claim itemized charitable deductions in the following year or the next few years, but you'd still qualify for the standard deduction. Starting in 2026, making minor charitable gifts would also qualify for the newly available charitable deduction for non-itemizers (see more below). When bunching for the purpose of itemizing, note that if you put your contributions into a donor-advised fund, you can take the charitable deduction in the current year but spread your giving out over many years. If you want to itemize, this strategy can help.
Note, however, that deducting charitable contributions may be subject to AGI limits depending on the receiving charity and what you donated. Additionally for itemizers, starting in 2026, there will be a 0.5% floor on charitable contributions, generally based on AGI. For filers in the top tax bracket, there is also a 35% cap on the value of itemized deductions. Accordingly, for taxpayers who itemize, a charitable gift made in 2025 will be worth more than a charitable gift made in 2026 and subsequent years. To get the most out of the charitable deduction, itemizers could consider using the bunching strategy in 2025.
Good to know: Beginning in the 2026 tax year, a reinstated deduction allows non-itemizers to deduct cash donations to charity—up to $1,000 for single filers or $2,000 for married couples filing jointly. This provision is permanent and is not indexed for future inflation. Further, some types of donations are ineligible for the deduction, including those to donor-advised funds or private non-operating foundations.
Find out more about new rules for charitable giving in Viewpoints: 3 big changes to charitable giving8. Donate appreciated assets
Generally, itemizers can also donate appreciated assets held longer than one year to a qualified public charity and deduct the fair market value of the asset without paying capital gains tax. There are some exceptions, so itemizers should consult with their tax professional for details. A tax professional can also flag relevant deduction limits and available carryovers.9. Don't forget contributions of cash and unappreciated property
Itemizers can deduct contributions of cash and of unappreciated property (for example, the used clothing and furniture you donated to Goodwill). In addition to determining fair market value of donated property items, the IRS requires different types of documentation based on the size of the donation. Again, a tax professional can identify relevant deduction limits and available carryovers as well as documentation requirements.10. Consider gifting to loved ones
You can gift up to $19,000 per recipient to as many people as you like in 2025. This amount (the “annual gift tax exclusion”) remains at $19,000 in 2026. So if you have 4 children, you can give $19,000 to each one in 2025. If you're married, each person in the couple can gift this amount to each child. While you don't get an income tax deduction for such gifts, the recipients won't owe income tax on the gifts, and the gifts can help reduce the value of your estate without using up your lifetime gift and estate tax exemption.
11. Don't forget RMDs
If you're 735 or older, you have until December 31 to take your required minimum distribution, or RMD, from traditional IRAs, 401(k)s, and other retirement accounts.6 This is an important deadline: Missing it can result in a hefty penalty of 25%, reduced to 10% if the distribution is taken within 2 years, of the required RMD. Your first RMD is due by April 1 of the year following the year you turn 73. If this is your first year, think carefully about waiting until the April 1 deadline of the following year. You may be taking 2 RMDs in a single tax year, which can increase your taxable income. Remember, withdrawals are taxable, but there are ways to help reduce taxes with careful planning.
12. Trying to reduce taxes on your RMD?
Consider giving it to charity. You can make a qualified charitable distribution (QCD) from an IRA of up to $108,000 per individual (if you're married and filing jointly, and you have separate accounts in your names, you could each make a QCD up to the maximum amount), as long as the charity receives your donation by December 31. The money you donate is not deductible, but it's not subject to federal taxes, qualifies as your RMD for the year (assuming it meets or exceeds your RMD amount), and you can make one even if you don't itemize deductions. QCDs are also allowable starting at age 70½, so you don't have to wait until you're 73 to take advantage of one.Looking ahead to 2026
Each person's tax situation is unique, and inflation adjustments to tax brackets announced by the IRS for 2026 mean people may have more of their income taxed in lower brackets before being bumped into a higher tax bracket, which may affect some tax decisions. But it's important to consider putting together a plan with enough flexibility to meet your financial goals for the current and future years. As always, consult with a tax or financial professional to construct a plan that works for you.