End-of-Year Tax Tips for 2025

An educational guide for businesses and individuals

As 2025 comes to a close, it’s a great time to reflect on your financial health and take proactive steps to reduce your tax liability. Year-end tax planning helps both individuals and business owners. You can leverage deductions, credits and opportunities before 2026 arrives.

This guide outlines updated strategies based on current IRS rules and recent legislative changes, helping you prepare for a smoother and more financially sound tax season.

Individual strategies for tax preparation success

1. Maximize Retirement Contributions

Retirement contributions are one of the most effective ways to reduce taxable income while saving for the future. For 2025, the contribution limits for Individual Retirement Accounts (including traditional and Roth IRAs) are $7,000 for individuals under 50 and $8,000 for those 50 and older.

Learn more: What is an IRA?

If you’re eligible, contributing to a traditional IRA may allow you to deduct the amount from your taxable income. Alternatively, Roth IRAs don’t offer upfront deductions, but qualified withdrawals in retirement are tax-free.

Self-employed individuals should consider a SEP IRA or SIMPLE IRA, which offer higher contribution limits and can be set up before year-end. These plans not only reduce your taxable income but also help build long-term financial stability.

2. Review your deductions and potentially itemize

In 2025, single filers receive a $15,750 standard deduction, while married couples filing jointly receive $31,500 as a result of the One Big Beautiful Bill Act (OBBA) from July 2025. In addition, OBBA also enhanced deductions for seniors. Individuals who are age 65 and older may claim an additional deduction of $8,000 ($16,000 for married couples), which does phase out for taxpayers with modified adjusted gross income over $75,000 ($150,000 for joint filers). While many taxpayers opt for the standard deduction, itemizing may result in greater savings if your deductible expenses exceed these thresholds.

Common itemized deductions include:

• Mortgage interest.
• State and local taxes (SALT).
• Medical expenses exceeding 7.5% of AGI.
• Charitable contributions.
• Investment interest.

Calculate if itemizing saves you more money. This could help especially if you’ve paid large medical bills or made sizable charitable donations in 2025.

3. Manage your capital gains (and losses)

If you’ve sold investments this year, you may have realized capital gains. To offset those gains, consider selling underperforming assets to realize capital losses. This strategy, known as tax-loss harvesting, may reduce your taxable income.

You can deduct up to $3,000 in net capital losses against ordinary income annually if you are a single filer, and any excess can be carried forward to future years.

Additionally, if you’re in a lower tax bracket ($48,350 or less taxable income for single filers or $97,600 or less for married filing jointly), you may qualify for the 0% capital gains tax rate, making it a good time to realize gains strategically.

4. Make charitable contributions

Charitable giving not only supports causes you care about, it can also reduce your tax bill. You can deduct contributions to qualified organizations if you itemize. Regardless if you itemize, you can still take a charitable deduction of up to $1,000 ($2,000 if married filing jointly) for cash donations to public charities (excluding donor advised funds).

For those over 70½, consider making Qualified Charitable Distributions (QCDs) from your IRA. These distributions count toward your Required Minimum Distributions (RMDs) and are excluded from taxable income.

As always, be sure to keep proper documentation, including receipts and acknowledgment letters from the charities.

5. Organize your financial paperwork

The end of the year is the perfect time to organize your financial records and documents—including W-2s, 1099s, receipts, donation records and investment statements. Organized records help you claim deductions accurately and avoid delays or errors when filing.

In addition, you may want to consider using a digital filing system or tax preparation software to streamline the process.

Your tax preparer will thank you!

Filing as an individual? Here’s what to avoid.

Plan early to ensure your end-of-year tax preparation goes smoothly. Don’t fall into these common pitfalls:

• Procrastination: Waiting until the last minute to make contributions or donations can mean missing out on deductions.
• Neglecting deductions: Failing to review your finances may result in missed opportunities.
• Poor recordkeeping: Inadequate documentation can lead to errors and delays.

Small businesses tax tips

For savvy businesses, there are several tax saving strategies that can really make a difference. These are just a few:

1. Contribute to employee retirement plans

Offering retirement plans like 401(k)s, SEP IRAs or SIMPLE IRAs can provide tax benefits for your business and help attract and retain employees.

You can also deduct employer contributions, so be sure to set up a plan before year-end to claim the deduction for 2025. If you’re a sole proprietor, you can also contribute to your own retirement plan and reduce your taxable income.

2. Invest in capital expenditures

Under Section 179 of the Internal Revenue Code, businesses can deduct the full purchase price of qualifying equipment and software purchased or financed during the tax year. For 2025, the deduction limit is $2.5 million.

Additionally, bonus depreciation remains at 100% for property purchased and placed in service after January 19, 2025, allowing businesses to deduct the full cost of eligible assets immediately. This applies to new and used equipment, making it a powerful tool for reducing taxable income.

If you’re considering upgrades to machinery, vehicles or technology, making those purchases before December 31 could yield significant tax savings.

3. Claim available tax credits

Tax credits directly reduce your tax liability and can be more valuable than deductions. Some key credits for small businesses include:

• Work Opportunity Tax Credit (WOTC) for hiring individuals from targeted groups.
• Clean Commercial Vehicle Credit for purchasing electric or hybrid vehicles (only available for vehicles purchased prior to September 30, 2025).
• Energy Efficiency Credits for upgrading buildings or equipment (note, these rules have changed in 2025; contact a tax professional for specific requirements).
• Disabled Access Credit for improving accessibility.

Rules for these credits can change. Consult your tax advisor to determine eligibility and ensure proper documentation.

4. Understand the current 1099-K form limit

The IRS now observes a $2,500 threshold for third-party payment platforms like PayPal, Venmo and Square. If your business receives payments through these platforms in excess of $2,500 and 200 transactions, you may receive a Form 1099-K. However, this threshold is scheduled to decrease to $600 starting in 2026.

Regardless of whether or not you receive a Form 1099-K, be prepared to report this income accurately and reconcile it with your bookkeeping records. Misreporting or underreporting can trigger audits or penalties.

5. Review your estimated tax payments

Businesses are required to make quarterly estimated tax payments. If your income increased in 2025, you may need to make an additional payment before year-end to avoid underpayment penalties.

Use IRS Form 1040-ES or consult your accountant to calculate any remaining liability. Making a final payment now can help you avoid surprises in April.

6. Organize your business records and financial paperwork

Accurate recordkeeping is essential for claiming deductions, preparing financial statements and navigating audits successfully. Before year-end, review:

• Income and expense reports.
• Payroll records.
• Receipts and invoices.
• Asset purchases and depreciation schedules.

Consider using accounting software or hiring a bookkeeper to ensure everything is in order. Clean records also help you plan for the upcoming year and make informed business decisions.

Common tax preparation mistakes for small businesses

What should small businesses be particularly wary of when it comes to tax preparation? These three common concerns top the list:

• Not engaging a tax professional. Tax laws change often. Consult a CPA to stay compliant and maximize savings.
• Not planning for taxes enough (or at all). Strategic investments and credits require foresight and documentation.
• Poor recordkeeping. Just as with individuals, a lack of business recordkeeping can lead to missed deductions and audit risks.

Take the time now to get a handle on your paperwork—and, if necessary, get caught up before the end of the year.

The power of taking action

Whether you’re an individual or a small business owner, year-end tax planning is a powerful tool for improving your financial health. By acting now—contributing to retirement accounts, reviewing deductions, investing in your business and organizing your records—you can reduce your tax liability and be better prepared for 2026.

Disclosures

Information is gathered from sources believed to be reliable; however, we cannot guarantee their accuracy.

Representatives of Ameritas do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your specific situation.