Year-End Playbook 2025: 15 Moves to Lower Your Tax Bill and Set Up 2026
As 2025 winds down, you have a window of time to shape how much tax you’ll owe when April arrives. These final weeks of the year are also an opportunity to position yourself for a stronger 2026 financial picture. Whether you’re a business owner, an investor or managing family finances, small, strategic adjustments now can lead to meaningful savings later.
Below is your 2025 Year-End Tax Playbook. These moves help you manage income, maximize deductions, strengthen retirement assets and set your future self up to win.
1. Revisit Your Estimated Tax Payments
If your income fluctuated in 2025, check your year-to-date taxes paid so you can avoid penalties and unnecessary surprises.
2. Accelerate or Defer Income Strategically
If you expect higher income in 2026, accelerate year-end revenue. If you expect lower income, defer income into next year. Timing matters.
3. Max Out Workplace Retirement Contributions
401(k) and 403(b) contributions reduce taxable income. Confirm you’ve reached allowable contribution limits before December 31.
4. Evaluate Opening or Funding a SEP, SIMPLE, or Solo 401(k)
Business owners and self-employed professionals often have additional retirement contribution capacity. These plans can shelter significant income.
5. Stack HSA Savings
If you have a high-deductible health plan, fully fund your Health Savings Account. HSAs offer tax benefits on contributions, growth and withdrawals when used for eligible expenses.
6. Use Donor-Advised Funds for Charitable Giving
A donor-advised fund (DAF) allows you to take a large charitable deduction now while distributing grants to charities over time.
7. Consider a Qualified Charitable Distribution (QCD)
If you’re age 70½ or older, direct IRA distributions to charity to reduce taxable income while supporting causes you care about.
8. Harvest Investment Losses
Selling investments at a loss can offset capital gains from other assets. Be mindful of wash-sale rules.
9. Evaluate Tax-Lot Selection in Your Brokerage Account
Choosing which shares to sell (highest cost basis vs. lowest) can reduce or manage capital gains taxes.
10. Review Equity Compensation
Stock options, RSUs and ESPPs create tax consequences. Strategic exercising or holding can shift income into tax-favorable periods.
11. Check Your Business Expense Timing
Make planned purchases before the year’s end to increase deductible expenses in 2025.
12. Use Bonus Depreciation While Still Available
Several depreciation rules are phasing down. Claim accelerated depreciation on qualifying business assets while you can.
13. Confirm Qualified Business Income (QBI) Deduction Eligibility
Optimizing salary levels, entity structure and deductions can help service businesses stay within QBI phaseout ranges.
14. Fund 529 Plans for Education and Credentialing
529 plans now cover trade programs, professional licenses and continuing education. Contributions may also offer state tax benefits.
15. Revisit Your Entity Choice and Long-Term Tax Strategy
With new legislation on the horizon, 2026 may look different. Reviewing whether your business should operate as an LLC, S-Corp or C-Corp can unlock tax efficiencies.
Put Strategy Behind Your Numbers
Year-end planning isn’t only about reducing your tax bill. It’s about strengthening the systems and decisions that influence your financial future. The right moves now create flexibility, cash flow and opportunity later.
If you’d like help applying these strategies in a coordinated, personalized plan, we’re here to assist.
Illumination Wealth helps individuals and business owners align tax planning, investment strategy and long-term goals so their wealth works intentionally and effectively. Contact us today for help with all your tax planning needs for 2025, 2026 and beyond.