5 Year-End Tax Moves To Slash Your 2025 Taxes Fast
The 2025 tax year is quickly coming to an end. Planning ahead now could help lower your tax bill and boost your savings.
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Chief strategist at JPMorgan Asset Management, David Kelly, told Yahoo Finance that many taxpayers will pay more upfront in 2025 and receive a larger refund in 2026. He estimated the average refund could be $3,743 — a more than 17% increase compared to 2025, or about $557.
But how much you could potentially save also depends on how you prepare. According to Fidelity, here are five tax-saving moves to consider.
Contributions
Although April 15 is the tax deadline, Dec. 31 is another important date to mark on the calendar. This is the cutoff date for contributions to workplace retirement plans, college savings accounts and more, Fidelity pointed out.
You can contribute up to $23,500 to 401(k) or 403(b) plans for 2025, with an extra $7,500 catch-up if you’re 50 or older. According to Charles Schwab, a $20,000 401(k) contribution could lower your taxable income by the same amount and save you about $4,400 in federal taxes if you’re in the 22% bracket.
The deadline also applies to 529 college savings plans, which may qualify for state tax deductions and allow up to $19,000 per person in annual gifts.
And for those age 73 or older, Dec. 31 is also the last day to take required minimum distributions (RMDs) to avoid penalties.
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Tax-Loss Harvesting
If you have investments that have lost value this year, you may be able to use those losses to lower your tax bill. Through a strategy known as tax-loss harvesting, investors can sell underperforming assets to offset capital gains from other investments, and even apply up to $3,000 of remaining losses toward ordinary income each year. Any additional losses can be carried forward to future tax years.
It’s also important to follow the wash-sale rule, which prevents you from buying a “substantially identical” investment within 30 days before or after the sale. Currently, this rule doesn’t apply to cryptocurrencies, but that could change, Fidelity noted.
Itemizing
Fewer than 10% of taxpayers itemize, Fidelity pointed out, but it can be worthwhile if your deductions surpass the standard deduction, which is $15,750 for single filers and $31,500 for married couples in 2025. Common itemized deductions include medical expenses, mortgage interest, state and local taxes (SALT) and charitable donations.
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