Maximize 2025: 5 Tax Moves to Make Before the Year’s Over
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Paying taxes is definitely up there on the list of Least Fun Activities, but you may have more control over it than you realize.
With a month left in 2025, it’s your last chance to lower your taxable income for the year — and maximize other tax benefits.
Let’s get into it:
1. Max out your 401(k) contributions (if you can.) Putting as much as you can into your workplace retirement account is a great way to kill two birds with one stone: You’ll be preparing for the future while lowering your taxable income. If you can spare the money from your paycheck, take full advantage of the tax deferral by contributing the maximum allowed — $23,500 for the 2025 tax year (or higher, if you’re at least 50). Unlike IRAs or Health Savings Accounts, where contributions can be made until the tax filing deadline, the deadline for 401(k)s, 403(b)s, and similar plans is Dec. 31.
2. Do a paycheck “check-up.” If you haven’t checked your federal tax withholding amount recently, it’s a good time. Adjusting what’s taken out of your paycheck now — before the end of the year — could prevent an unpleasant surprise when you file your taxes next year, especially if you owed taxes last time. Even better, you might discover that you can hang on to more of your paycheck ahead of the holidays. (And the IRS recommends checking your withholding at least once a year anyway.) Knowing where you stand can also give you a better sense of how important maxing out other contributions may be.
Use the IRS’s online tax withholding estimator to estimate where you’ll stand at the end of the year if you don’t change your withholding. It will do the math for you, estimating if you’re going to have a tax bill (if you’re withholding too little,) if you’re in store for a refund (if you’re withholding too much,) or if you’re on track to break even. If you decide to make a change, it will actually fill out a new W-4 form for you so all you have to do is submit it to your employer. (Those tricky allowances have gone away.)
Pro tip: If you earn tips, pay car loan interest, or anticipate other tax deductions established by the One Big Beautiful Bill, use this deductions worksheet instead. The tax withholding estimator hasn’t been updated to reflect some of those changes.
3. Wait a few weeks to make charitable contributions. You want to give to the causes you love, especially this time of year. And charitable donations are often tax-deductible. But they may only have a tax benefit if you wait a few weeks. Right now charitable donations only lower your tax burden if itemizing your donations and other deductions adds up to more than the standard deduction amount. And it doesn’t for the vast majority of taxpayers. (This year it’s $15,750 for an individual filer and $31,500 for a married couple.)
If you don’t meet the itemizing threshold, you’re better off waiting until the new year. Beginning in 2026, even those who take the standard deduction can benefit from their charitable giving, taking what’s known as an “above-the-line” deduction of up to $1,000 ($2,000 for couples) for eligible donations.
Caveat: If you’re in the minority that itemizes, you may want to consider speeding up your donations instead. Other tax changes taking effect in 2026 could limit some of the tax benefits of donating to charity in the future, depending on your circumstances.
4. Use it or lose it. If you’ve contributed pre-tax money to a Flexible Spending Account (FSA) for healthcare costs, don’t let it go to waste. While some employers may let you carry over up to $680 for next year — or give you until March 15, 2026, as a grace period — the deadline otherwise is Dec. 31 (unlike with a HSA, where the funds never expire.) But you can spend that money on supplies like certain over-the-counter meds, bandages, or menstrual care products, so consider stocking up on things you’ll eventually need more of. Or buy your next pair of contact lenses or glasses a little early (assuming your doctor bills are all paid up.) Here’s a complete list of eligible expenses.
And while you’re in healthcare mode, make sure to make any outstanding doctor’s appointments before your insurance deductible resets in January.
5. Consider tax-loss harvesting. If you’ve profited from selling investments this year, you’ll likely have to pay capital gains tax. But you may be able to offset that bill if you also sell investments for a loss. This strategy, known as tax-loss harvesting, may be worth exploring if you have investments that have dropped significantly in value.
• If your capital losses exceed your capital gains, you can typically reduce your taxable income by up to $3,000 for the year and then can carry forward any additional losses to offset gains in future years.
• Keep in mind: Tax-loss harvesting only applies to realized gains and losses, meaning when you sell your investments. And the strategy can get complicated due to IRS rules. (Read: It may require the help of a tax professional).
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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SoFi isn't recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
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