Charitable giving and retirement planning
Charitable contributions remain one of the most effective year-end tax strategies. Donating appreciated stock or property instead of cash can eliminate capital gains while still providing a full deduction at fair market value if you itemize.
For those taking required minimum distributions (RMDs), qualified charitable distributions (QCDs)—direct transfers from an IRA to a charity—can satisfy your RMD while excluding the amount from taxable income.
Year-end tip:
Complete charitable gifts and QCDs before December 31 to count for 2025. If you’re under the itemized deduction threshold, consider “bunching” charitable gifts or using a donor-advised fund to group multiple years of giving into one.
Business owners: equipment and expensing
While some high-end business deductions were trimmed, OBBBA raises Section 179 expensing limits to $2.5 million, with the phase-out beginning at $4 million. Businesses can continue to immediately deduct the cost of most tangible equipment placed in service this year.
Year-end tip:
If you’re planning to buy machinery, vehicles, or office equipment, place them in service by year-end to claim the 2025 deduction.
Practical year-end reminders
Before the clock strikes midnight on December 31, check these boxes:
Review withholding and estimated payments. If you’ve had irregular income or capital gains, make an additional payment by January 15 to avoid penalties.
Harvest investment losses. Selling losing investments to offset capital gains can lower your taxable income, up to $3,000 against ordinary income.
Maximize retirement contributions.
• 401(k): $35,000 limit, plus $7,500 catch-up for those 50+.
• IRA: $7,000, plus $1,000 catch-up.
What to expect next filing season
The IRS is updating forms to reflect new OBBBA deductions and credits, so expect revised 1040 lines and additional schedules. Refunds could take longer early in the season as the agency processes new compliance checks. Likewise, due to staffing shortages at the IRS, we expect to see extended delays in processing returns filed on paper, so file electronically when you are able.
Most importantly, with so many moving parts, the best move you can make before year-end is to review your entire tax picture now. Whether you’re a wage earner, retiree, or small business owner, early action before Dec. 31 can make a measurable difference on your 2025 return.
As always, consult your CPA or tax advisor to tailor these opportunities to your situation and ensure you’re ready for the new season ahead.
Peyton C. Cavin, CPA, is a tax partner at the accounting firm of Silas Simmons, LLP in Natchez.
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