INSIGHTS

2025 Year-End Tax Tips for Individuals & Families

by Teresa Durbin, CPA, Larson Gross

As we approach the end of 2025, taxpayers are navigating a familiar—but still shifting—tax environment. Many of the Tax Cuts and Jobs Act (TCJA) provisions were extended under the One Big Beautiful Bill Act (OBBBA), and a few new deductions take effect for the 2025 tax year.

Below is a straightforward overview of what to review before December 31 so you can make informed, intentional tax decisions—with an eye toward what’s coming in 2026.

Revisit Your Standard Deduction (and Age 65+ Add-On)

The standard deduction continues to be the starting point for most individuals and families.

2025 standard deduction:

$15,750 for single filers

$31,500 for married filing jointly

2026 estimated amounts: 

$16,100 (single)

$32,200 (married)

Taxpayers age 65+ also get a temporary bonus deduction—up to $6,000 per eligible individual—available for tax years 2025 through 2028, with income-based phaseouts.

Year-End Move
If you or your spouse turn 65 by December 31, make sure you account for the extra deduction when projecting your total tax liability.

 

 

If you’re close to the line between standard and itemized deductions, consider bunching expenses—medical, charitable, property taxes—into 2025. You may be able to itemize this year and take the standard deduction next year when it increases.

Take Advantage of New Above-the-Line Deductions

Starting in 2025, two new deductions apply for certain workers:

Qualified Tip Income Deduction:Up to $25,000 for eligible tipped workers with income under $150,000 (single) or $300,000 (married).

Qualified Overtime Deduction: Up to $12,500 (single) or $25,000 (married), available 2025–2028.

Because these are above-the-line deductions, they reduce your AGI—potentially preserving other credits and phaseout thresholds.

Year-End Move
If you earn tips or significant overtime, confirm whether you qualify and be sure your reporting is clean and well-documented. These deductions have very specific rules—working with a CPA can help ensure you’re maximizing them correctly.

Understand the Updated SALT Deduction Cap

The OBBBA temporarily increased the state and local tax (SALT) deduction cap from $10,000 to $40,000 for 2025–2029.

A phaseout begins at around $500,000 MAGI (MFJ) for 2025. Without further legislation, the cap returns to $10,000 in 2030.

Year-End Move
If your income is near the phaseout range, consider strategies to reduce MAGI—maximized retirement contributions, capital loss harvesting, and timing of income can all help.

Business owners should also explore pass-through entity (PTE) workarounds, which may allow deduction of state taxes at the entity level.

Maximize Retirement Savings & Check Withholding

Retirement contributions remain one of the most efficient ways to reduce taxable income.

Also review your withholding and estimated tax payments—especially if you had unexpected income (a bonus, stock activity, asset sale, etc.).

Year-End Move
Make sure you’ve contributed as much as possible to IRAs, 401(k)s, and similar plans. Then run a quick tax projection to ensure you’re meeting IRS safe harbor rules and avoiding underpayment penalties.

 If needed, you can make an additional estimated tax payment before January 15, 2026.

Review Capital Gains, Losses, and Timing

Long-term capital gains are taxed at 0%, 15%, or 20%, while short-term gains are taxed at ordinary rates. Timing matters—especially with possible changes coming in 2026.

If you expect higher income or higher tax rates next year, taking gains in 2025 may be beneficial.
If your income may drop next year, holding off until 2026 could save tax.

Tax-loss harvesting remains an effective strategy to offset gains. Up to $3,000 of net capital losses can be used against ordinary income, with the rest carried forward.

Year-End Move
Work with your CPA to review your portfolio and estimate year-end tax impact. They can help you consider whether it makes sense to realize capital gains now vs. deferring them to next year.. Coordinating investment decisions with tax projections can meaningfully reduce both current and future tax liability.

Revisit Gifting & Estate Planning

For 2025, the annual gift exclusion is $19,000 per recipient, or $38,000 per couple. These gifts do not require using any of your lifetime exemption.

Year-End Move
If annual gifting is part of your planning, make gifts before December 31 to make full use of this year’s limits. Options include 529 funding, direct tuition or medical payments, or trust contributions.

 

Even smaller strategies—such as forgiving intrafamily loans or contributing to a child’s Roth IRA—can be impactful over time.

Make the Most of Charitable Giving

For itemizers, charitable contributions may be more valuable in 2025 than in future years, due to two OBBBA changes starting in 2026:

  1. A 0.5% AGI floor on charitable deductions
  2. A 35% cap on the value of itemized deductions, reducing the benefit for high-income taxpayers

Year-End Moves

  • Consider bunching several years of charitable giving into 2025.
  • Donate long-term appreciated assets to avoid capital gains and deduct the full fair market value.
  • If you’re 70½ or older, you can contribute up to $108,000 directly from your IRA to charity via a Qualified Charitable Distribution (QCD), which counts toward your RMD without increasing AGI.

    2026: A Year of Planning Opportunity

    With the OBBBA extending and modifying many TCJA provisions, taxpayers have a clearer view of the near-term landscape. New deductions for tips, overtime, and SALT add additional planning opportunities through 2028–2029.

    As you review your year-end decisions, keep both your 2025 tax liability and your long-term strategy in mind. Your income, filing status, and timing of deductions or deferrals can shift the effectiveness of each move.

    If you’d like personalized guidance or help modeling different scenarios, Larson Gross is here to help.

     Have questions? Let’s talk.

    Larson Gross is here to walk you through these changes and help you make the most of them for your operation. Please contact us to learn more at 800-447-0177.

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    Teresa Durbin

    Teresa Durbin

    Tax Senior Manager, Larson Gross

    Teresa Durbin joined Larson Gross back in 2009, and she proudly brings over a decade of experience in public accounting to her role. She specializes in offering comprehensive federal and state tax consulting services to closely held businesses and high net worth individuals. What truly fuels her passion is the opportunity to work with clients across a wide spectrum of industries.