Year-End Tax Planning Moves to Make Before December 31
The tax season just officially ended a few weeks ago, but that doesn’t mean it’s time to forget about taxes until next April. Now is actually the time to make the most of your tax planning opportunities.
If you wait until next April to think about taxes, it’s already too late.
Here are the most impactful year-end tax moves to consider now while you still have time to act.
1) Maximize Retirement Contributions
This is one of the easiest and most powerful ways to reduce your taxable income.
401(k): You can contribute up to $23,500 for 2025 ($30,000 if 50+).
Solo 401(k): If you’re self-employed, you can go up to $70,000 when combining employee and employer contributions.
SEP IRA: Up to 25% of net earnings or $70,000, whichever is less.
If you have the cash flow, max these out before year-end. You’ll thank yourself come tax time.
2) Taking Advantage of Accelerated Depreciation
If you know you’ll need a new work truck, piece of equipment, or other business asset in early 2026, consider buying it before December 31st instead.
Why? Because under current tax law, you may be able to take bonus depreciation, which is an accelerated deduction that allows you to write off a large portion of the purchase price in the year you place the asset in service.
Here’s what that means in practice:
Let’s say you buy a $75,000 truck in December and start using it for business immediately. You could deduct as much as 60% of that ($45,000) right away on your 2025 return, instead of depreciating it slowly over several years.
That deduction directly reduces your taxable income this year, which can significantly cut your tax bill if your business is profitable.
A few reminders:
· The vehicle or equipment must be in service (not just ordered) before year-end.
· The rules phase down each year, so this opportunity is shrinking over time.
· Always coordinate with your tax professional to ensure the purchase qualifies and fits into your broader strategy.
If you’re planning on making large business purchases soon, timing them in December can make a real difference for tax purposes.
3) Prepay Expenses or Delay Income
If you’re a business owner using cash basis accounting, you can:
Pre-pay any big planned expenses (accelerating deductions into this year)
Consider delaying any December invoices so you can realize that income next year (pushing income into next year)
This gives you more control over what your taxable income looks like for 2025.
4) Check Your Estimated and Safe Harbor Payments
Avoid IRS penalties by hitting your safe harbor thresholds:
Pay 110% of last year’s tax liability, or
90% of this year’s projected liability
If you’ve had a big income year, review what’s been paid in so far and top up your Q4 estimates.
5) Optimize Your Investment Accounts
Two moves to look at before year-end:
Tax-loss harvesting: Sell losing investments to offset gains and reduce taxable income.
Roth conversions: Convert traditional IRA dollars to Roth while markets are lower or income is temporarily down.
Both require careful analysis but can save you thousands over time.
6) Review Entity Structure and Reasonable Compensation
Business owners should review whether their entity type aligns with their
Entity strategy alone can often save tens of thousands a year.
Final Thoughts
Year-end tax planning isn’t about scrambling is the most important time of the year and it’s all about being intentional. You want to know what your tax liability is now, not in April of next year or else you’re always behind the curve. It’s all about being proactive and not reactive.
The best moves require coordination between your financial advisor, CPA, and bookkeeper before December 31.
Schedule time with us for a free consultation to learn what proactive tax planning looks like to see if it could help you.
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