Year-end tax planning tips for individuals and businesses.

As the year comes to a close, one of the smartest financial moves you can make is to review your tax situation before December 31st. Year-end tax planning isn’t just about compliance — it’s about strategy. By taking a few proactive steps now, you can minimize your 2025 tax liability, keep more of your hard-earned income, and set yourself up for a stronger financial year ahead.

Let’s break it down step by step.

For Individuals: Deferring Income and Accelerating Deductions

The goal of year-end planning for individuals is simple:
Reduce taxable income today while maximizing deductions before the clock strikes midnight on December 31st.

1. Maximize Retirement Contributions

Retirement accounts are one of the most powerful tools for lowering your taxable income.

• 401(k) or 403(b): You can contribute up to $23,500 for 2025, plus a $7,500 catch-up if you’re age 50 or older. Adjust your final paychecks now to hit the limit.
  
  
• IRAs: Contributions can be made until April 15, 2026, but adding funds before year-end helps your investments grow sooner.
  
  
• Health Savings Accounts (HSAs): If you have a high-deductible health plan, maximize your HSA. Contributions are tax-deductible, growth is tax-free, and withdrawals for medical expenses are tax-free — a triple tax benefit.
  
  

Example:
If you’re in the 24% tax bracket and contribute $10,000 to your 401(k), you immediately reduce your tax bill by $2,400. That’s money saved simply by planning ahead.

2. Strategic Charitable Giving

Charitable donations can reduce your taxable income, especially if you itemize deductions.

• Bunching Deductions: The standard deduction in 2025 is $15,000 for single filers and $30,000 for joint filers. If your deductions are close to that, consider bunching two or three years’ worth of charitable contributions into one year.
  
  
• Donor-Advised Funds (DAFs): Contribute now, get the deduction this year, and distribute the funds to charities later. This lets you plan giving strategically without losing the tax advantage.
  
  

Example:
If you plan to give $5,000 annually, donating $15,000 in 2025 may push you above the standard deduction — resulting in additional tax savings this year.

3. Investment Check-Up

Before the year ends, review your investment portfolio to take advantage of tax-loss harvesting.

• Sell losing investments to offset capital gains.
  
  
• If your losses exceed gains, you can deduct up to $3,000 of excess losses against ordinary income and carry forward the rest to future years.
  
  

Example:
If you realized $8,000 in capital gains but have $10,000 in losses, you’ll only pay taxes on $5,000 of gain — and carry forward $2,000 to next year.

For Business Owners: Optimize Income and Expenses

For small business owners, year-end tax planning means strategic timing — pushing taxable income into next year and pulling deductible expenses into this one.

1. Accelerate Expenses and Defer Income

• Prepay Expenses: Consider prepaying January rent, insurance, or supplies in December to lock in deductions for 2025.
  
  
• Buy Equipment or Vehicles: Under Section 179 and bonus depreciation, you can deduct the full cost of qualified business assets placed in service before December 31st.
  
  
• Delay Invoicing: If you’re a cash-basis taxpayer, sending invoices later in December can defer income into 2026.
  
  

Example:
If you prepay $5,000 in expenses before year-end, that’s $5,000 less taxable income for 2025 — simple but effective.

2. Maximize Business Retirement Plans

Business owners have additional options that can dramatically reduce taxable income.

• SEP IRA, Solo 401(k), or SIMPLE IRA: These plans allow higher contribution limits than traditional IRAs.
  
  
• Most must be established before December 31st, even if you fund them later.
  
  
• Contributions are often deductible and grow tax-deferred.
  
  

Example:
A self-employed owner earning $100,000 could contribute up to $25,000 to a Solo 401(k), cutting their taxable income to $75,000.

3. Review Inventory and Bad Debts

• Inventory Write-Downs: Reduce the value of obsolete or damaged inventory for a legitimate deduction.
  
  
• Bad Debt Deductions: Declare and document uncollectible business debts before year-end — these may qualify as deductible losses.
  
  

Why Year-End Planning Matters

These strategies aren’t just about reducing your tax bill — they’re about intentional financial management.
Every dollar you save in taxes is a dollar you can reinvest in your business, your future, or your family.

Take Carlos, a small business owner who met with a CPA in December last year. By prepaying expenses, adjusting his 401(k) contributions, and harvesting investment losses, he saved over $9,000 on his final 2024 tax bill. Smart planning truly pays off.

Conclusion

The window to act closes December 31st — and once it does, your 2025 tax picture is set in stone.
Don’t wait until tax season to find out what you could have saved.

If you want personalized guidance tailored to your financial situation, book your year-end tax strategy session with Guerrero CPA today.
Our team will help you identify deductions, optimize timing, and build a plan that keeps more money in your pocket.

📞 Call 210-490-7100 or visit www.guerreocpa.com to schedule your appointment.
The clock is ticking — make sure you’re ready before the year ends.