It’s the time of year when the holidays aren’t the only things that deserve attention. Before the ball drops on New Year’s Eve, a little tax‑engineering can save you serious money — or build a nest egg that makes the future you very happy. And right now, 2025 ends with more levers to pull than usual.
I’ve categorized some available moves into three buckets: the old classics still worth using, some new opportunities thanks to the 2025 tax law, and the 2026‑onward shifts you should plan around now.
The Old Standbys: Still Solid, Still Smart
Use It All
The U.S. income tax code is progressive, meaning that we pay a small percentage of our first dollars of income and a larger share if we are fortunate enough to earn more. The increases do not grow gradually, however, like the bottom of an infinity pool. They are more like terraces, remaining level for substantial ranges of income and then increasing sharply when you earn one dollar more.
Married couples, for example, are in the 12 percent bracket for taxable income from $23,850 to $96,950. Notice I said taxable income. This is after a standard deduction of $30,000. Married seniors get another $3,200 automatically. If their income stays under $150,000 they are eligible for the shiny new $12,000 deduction aimed at reducing federal taxes on Social Security.[1]
A couple, therefore, can have $141,450 of income and remain in the 12 percent bracket. This is a valuable place to be as it also means your dividends and capital gains escape taxation.[2]
The idea is not to waste this valuable bracket if, at some point in the future, you expect to hit the next level, which is currently 22 percent. This often happens when people age into such things as maximum Social Security at age 70 and Required Minimum Distributions (RMDs) at age 73. (It’ll be 75 for those of us born after 1960.)
So, if a couple entered December with $100,000 of income, they may want to realize up to $40,000 more this year to avoid higher taxes on it later. IRA withdrawals are the sure way to do it. Convert the money to a Roth IRA and it’ll grow tax-free forever under the current set of rules.
If you plan to use it soon, put it in a bank or investment account.
Harvest Your Tax Losses
End of year is a good time to pay attention to any current year or long-term losers you have in taxable investment accounts. Selling them now to offset gains (or up to $3,000 of ordinary income) remains a low‑drama, high‑value move.
Give It Away
Each of us can give $19,000 a year to anyone we want. No tax to us. No tax to them. Ever. This is a calendar year benefit known as the annual gift exclusion. If you’re planning a large gift in 2026--say, for example, a down payment for a child--you may want to give a portion prior to December 31 and then the rest in January or any other month of 2026. This gift‑tax exclusion remains a straightforward, clean way to shift wealth (to kids, grandchildren, loved ones) without triggering gift tax — simple estate planning that compounds over time.[3]
What’s New (or Especially Useful) in 2025
Thanks to the 2025 law changes, a few new tools have arrived — but each comes with caveats, income limits, or time windows.
New Senior Deduction (Age 65 Plus)
Individuals age 65 or older may claim an additional deduction of $6,000 (per eligible person) in 2025–2028. For a married couple where both spouses are 65 plus, that’s $12,000.[4] That deduction stacks on top of your regular standard or itemized deduction. Be sure to incorporate this in any bracket bumping and Roth conversion calculations. It starts phasing out at joint income over $150,000 and completely disappears once income reaches $250,000.
Subtract Some State and Local Tax Deduction (SALT)
For years, Americans were used to adding up the income and property taxes we paid to local and state governments and then subtracting them from our federal taxable income. This came to a sudden halt with the 2017 Tax Cut and Jobs ACT (TCJA). It’s now back until 2030, at least for people and couples earning up to $600,000. The cap is $40,000 of taxes.[5] This may put you back in the itemization game. If you’re close to the standard deduction, a classic strategy is to bunch two years of taxes into one year and itemize. Then take the standard deduction next year. You should seek the advice of a tax professional if you plan to do this to make sure you comply with the rules.
Driving Down Your Taxes
If you purchased in 2025 or plan to purchase before 2029 a new, U.S.-assembled, personal-use vehicle (car, SUV, truck, etc.) with a loan, under certain conditions up to $10,000 of annual interest may now be deductible. It’s an above-the-line deduction so you don’t need to itemize to benefit. It phases out by $100,000 of income for individuals and $200,000 for couples. As with other new deductions, verify your eligibility carefully —vehicles must meet criteria, interest must be on a qualified loan, and other regulatory rules apply.[6]
What’s Coming in 2026–Beyond: New Retirement and Giving Rules
Retirement Plan Changes
For those still working, there are two retirement plan changes arriving in 2026 that may affect you. The first is an optional opportunity. The second is a restriction.
For those age 60–63, there’s a “super catch-up” option that plans may have implemented as early as 2025, although I’ve yet to see it in an employer’s plan.[7] In 2026, the limit is $11,250, a $3,250 increase over the standard $8,000 catch-up for those of us what have reached our seventh decade.[8] The IRS has confirmed that this is voluntary for employers, so you may never have the opportunity to use it.
Only Post-Tax for the Top Tier
If your W-2 documents that you earned more than $145,000 next year, any catch-up contribution to your retirement plan must be to a Roth account. (This post-tax mandate does not apply to self-employed people who report income on a Schedule C.)[9] This will limit your ability to lower your income in your working years when you are potentially in a higher income tax bracket. You should get it out tax-free later, however, provided the government doesn’t change the rules again.
Charitable Giving Rules Change for Everyone
2026 will bring shifts to how charitable donations are treated that are worth paying attention to today.
Floors and Caps
First, there’s a new 0.5 percent Adjusted Gross Income “floor” for itemizers. Starting in 2026, if you itemize, only the portion of your charitable contributions above 0.5 percent of your AGI will be deductible. If you earn $100,000, for example, you can’t deduct the first $500 you give to a qualified charity.
This floor applies to all itemizers. In addition, the government will cap the deduction at 35 percent. This means that if you’re in the top 37 percent marginal bracket, the tax benefit of a charitable deduction is reduced — from 37 cents per donated dollar to 35 cents.
What the floor and cap take away from itemizers, a new “universal” deduction provides for non‑itemizers. If you don’t itemize, starting in 2026 you may deduct $1,000 (single) or $2,000 (married filing jointly) in cash donations to qualifying public charities.[10]
Time Your Gift
For high earners, donation tax benefits shrink in 2026 — meaning you’ll get less “tax value” per dollar donated. For smaller donors or non‑itemizers, the new universal deduction provides incentive to give. That makes 2025 a potentially ideal window for high-income itemizers to make larger or bunched donations under more favorable rules. Those who plan to give modestly and use the standard deduction may want to hold off until 2026.
The Biggest Tax Break Ever--Expanded
The Health Savings Account (HSA) is the triple threat of tax planning. It reduces your income tax when you contribute, grows tax-free, and is tax-free if you use withdrawals to pay for health care. The catch is you must have a qualified health plan to contribute. It’s also not great to die with it if you’re single, as it all gets taxed at that time.
Staring in 2026, you can tap your HSA funds to pay for Direct Primary Care, which is essentially non-insurance-based fees to pay physicians.[11] You are also eligible to fund an HSA if you’re enrolled in a Bronze-level health plan purchased on the Affordable Care Act (ACA), regardless of its deductible structure.[12] This is a tax break worth paying attention to.
Wrapping It Up
Between the classics, the 2025 specials, and the curveballs coming in 2026, there’s a lot you can still do before the year is out. These aren't one-size-fits-all strategies — they're just structure that provides opportunity. The right move depends on your income, your goals, and your stage in life. But the message is the same: December isn’t just for holiday shopping. It’s for tax-smart planning, strategic giving, and making your future self proud.
As always, our team is here to help.
Michael Lynch CFP® is an award-winning financial planner at the Barnum Financial Group in Cape Coral, Florida. A best-selling author, his fourth book, “Start Simple, Grow Big: Your Simple System to Help Family Members Build Wealth in Their 20s &30s” (S&B Press 2025), is available at Amazon.
Any discussion of taxes is for general information purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax or accounting advice. Clients should confer with their qualified legal, tax and accounting advisors as appropriate.
CRN202812-10001903
[1] Tax Information from irs.gov, specifically https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025.
[2] https://www.irs.gov/taxtopics/tc409
[3] Information on irs.gov, specifically https://www.irs.gov/faqs/interest-dividends-other-types-of-income/gifts-inheritances/gifts-inheritances-1
[4] https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions
[5] https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions
[6] https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions
[7]IRS finalizes rules for SECURE 2.0 “super catch-up” contributions
[8] https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500
[9] https://irahelp.com/8-questions-answered-about-the-new-mandatory-roth-catch-up-rule/
[10] All information in this section is documented here: How OBBBA alters charitable deduction strategies for 2025 and 2026
[11] https://www.dlapiper.com/en/insights/publications/2025/08/paying-for-direct-primary-care-arrangements-with-hsa
[12] https://www.healthcare.gov/hsa-options/