The Best Time to Start a Financial Plan is Now
Year-end tax planning
How Smart Moves Now Can Save You Money
by Tricia Bush, CPA, CFP® Owner, AAA Advisory LLC
Tricia Bush, CPA, CFP®, is the founder of AAA Advisory LLC, where she helps families bring Alignment, Action, and Accountability to their financial lives. She provides financial planning and tax guidance for busy professionals and families looking to feel confident and in control of their future.
As 2025 winds down, now is the time to review your finances and plan ahead. Waiting until April to think about taxes can mean missed opportunities. You might be close to hitting an income limitation that makes you ineligible for certain deductions or credits, but with some planning before year-end, you may be able to reduce your taxable income and take full advantage of available savings. Small moves now can save money, reduce surprises, and set you up for a strong start to 2026.
Here’s a clear guide to the key tax and financial planning opportunities for year-end.
New Deductions You Might Qualify For
Several temporary deductions are available for 2025–2028:
Tips: Up to $25,000 in qualified tips.
Overtime pay: Up to $12,500 ($25,000 if married filing jointly).
Car loan interest: Up to $10,000 for loans on new U.S.-assembled vehicles.
Senior deduction: Extra $6,000 if you’re 65+ and itemize or take the standard deduction.
These deductions have income limits and eligibility rules. Taking the time to review them now ensures you maximize the benefits before the year ends.
Charitable Giving: Timing Matters
Charitable giving is one area where timing makes a difference. With the tax law changes coming in 2026, the timing of charitable gifts may affect how much of a tax benefit you receive.
If you don’t itemize and take the standard deduction:
For 2025, there’s no extra tax break for charitable giving if you don’t itemize your deductions. But beginning in 2026, you’ll be able to deduct up to $1,000 in charitable contributions ($2,000 if married filing jointly) even if you take the standard deduction. If you’re someone who typically does not itemize, it may make sense to delay year-end charitable gifts until early 2026 to take advantage of this new deduction. For example, if you normally donate $1,000 to your church in December, waiting until January 1st would allow you to claim a $1,000 deduction instead of receiving no tax benefit at all.
If you do itemize:
Starting in 2026, charitable deductions will be slightly reduced based on the amount of income you have, so only a portion of your contributions will be deductible. If you already itemize today, you may benefit from accelerating charitable gifts into 2025, before this limitation applies, so you can take the full deduction.
Other strategies to consider include donating appreciated assets, opening a donor-advised fund (DAF) for future charitable giving, or using a qualified charitable distribution (QCD) from an IRA if you are 70½ or older. Always maintain proper documentation for gifts of $250 or more, including confirmation letters from the charity.
Energy Credits: Act Before Year-End
Federal energy credits for solar panels, energy-efficient home improvements, and clean vehicles are scheduled to expire after 2025.
Tip: So, if you’ve been putting off that window replacement or new HVAC, make a plan to get them done before December 31, 2025, to take full advantage of these credits.
State and Local Taxes(SALT): Itemizing May Pay Off
The SALT deduction cap is temporarily raised to $40,000 (previously capped at $10,000) through 2029. Subject to certain income thresholds.
Why this matters: (1) If you normally take the standard deduction, it may now be worthwhile to itemize; (2) You may need to gather more detailed records than usual—property taxes, state income taxes, and other deductible payments—to see if itemizing is beneficial; (3) Even if your federal itemized deductions are slightly less than the standard deduction, it may still make sense to itemize. In Maryland, if you claim the standard deduction on your federal return, you are required to take the standard deduction on your Maryland return as well. By itemizing on your federal return, you can also itemize on your Maryland return, which could lower your total combined federal and state taxes.
Working with a CPA or tax advisor ensures that you run the numbers correctly and capture the full benefit.
Retirement and Health Savings Account (HSA) Contributions
Maximizing contributions to tax-advantaged accounts before year-end is one of the simplest ways to reduce taxable income:
401(k): $23,500 ($31,000 if 50+). And for those age 60-63, your catch-up contribution can be up to $11,250, meaning you can contribute up to $34,750 in 2025.
IRA: $7,000 ($8,000 if 50+).
HSA: $4,300 individual / $8,550 family, plus $1,000 catch-up if 55+.
Even small additional contributions can reduce your taxable income and grow tax-free over time.
Other Year-End Planning Considerations
Life changes: Marriage, divorce, birth, death, job change, or major purchases can all affect taxes.
Capital gains and losses: Selling underperforming assets may offset taxable gains or reduce your AGI (up to $3,000 loss can be taken in excess of gains).
Education savings: Contributions to a 529 plan need to be made before year-end. Note: In Maryland, only contributions to an MD 529 plan provide a state tax deduction, though federal tax benefits of tax-free growth apply to any 529 plan.
Required minimum distributions (RMDs): If you are at RMD age (typically 73 or older) or inherited an IRA, make sure you take required withdrawals to avoid penalties.
Roth conversions: Converting traditional IRA funds to a Roth can lock in lower taxes. If you plan on making any Roth conversions, they need to be made before year-end.
Estimated taxes and withholding: Review payments now to avoid interest and penalties. Also, even if your state payment is not due until January 15, you might consider making it before December 31 if you plan to itemize to increase your SALT deduction.
Plan Now to Avoid Surprises
Taking a few minutes now to review your financial situation can help minimize surprises, maximize deductions, and make informed choices heading into 2026. At AAA Advisory LLC, we focus on helping clients make smart moves now that reduce lifetime taxes, not just this year’s filing.
Disclosure: This article is for educational purposes only and is not intended as individualized tax advice. Readers should consult a qualified tax or financial professional regarding their specific circumstances.
