As we approach the end of 2025, now is the perfect time to review your financial progress and prepare for the year ahead. The final weeks of the year offer a powerful opportunity to reduce your 2025 tax liability and gain clarity before April 15, 2026. Proactive planning today can strengthen your cash flow, reduce stress, and support long term financial success.
This edition breaks down the why and how of effective year end planning with clear and practical insights.
Why Year End Tax Planning Matters
Many taxpayers wonder whether they can simply wait until April to deal with their taxes. By then, however, most of your opportunities to influence your 2025 tax outcome have already passed. Planning before December 31 allows you to:
Manage Your Tax Liability
You can intentionally time income and expenses to reduce your tax burden.
Avoid Surprises
A clear year end review helps you anticipate what you will owe in April.
Make Strategic Business Decisions
Understanding your financial position helps you decide whether to reinvest, save, or purchase equipment before year end.
Think of year end planning as the strategy session, while tax filing in April is the final score.
What Proactive Year End Planning Can Do for You
Thoughtful planning accomplishes much more than lowering taxes. It can also:
Improve Cash Flow
By deferring income or strategically paying expenses, you can retain more money now.
Maximize Deductions and Credits
Ensure you receive the full benefit of every tax break available.
Support Your Long Term Goals
Align your tax decisions with your plans for growth, expansion, or retirement.
Reveal Additional Opportunities
We often uncover savings that clients were not aware existed.
What to Review Before December 31
Here are essential areas to evaluate. The right strategies depend on your unique circumstances, but this checklist provides a strong foundation.
For Business Owners
Income Deferral and Acceleration
If 2026 will place you in a higher tax bracket, consider accelerating income into 2025. If next year will be the same or lower, deferring income may be advantageous.
Example: If you complete a major project in mid December, invoicing on December 31 could shift income into 2026.
Expense Acceleration
Purchasing required equipment or supplies before year end can increase deductions.
Example: Buying and placing a 15000 machine into service by December 31 may qualify for Section 179 or bonus depreciation.
Retirement Plan Contributions
Maximizing SEP IRA or Solo 401k contributions lowers taxable income while building future savings.
Example: As an S Corporation owner employee, contributing up to 25 percent of W2 wages can significantly reduce your tax liability.
Bonus Payments and Owner Compensation
Strategic bonuses paid before year end can reduce corporate profits.
For Real Estate Investors and Homeowners
Property Tax Payments
If you pay taxes directly, paying the 2026 bill before December 31 secures the deduction for 2025.
Mortgage Interest
Paying your January mortgage before December 31 allows you to deduct that interest in 2025.
Real Estate Professional Status
Qualifying can allow unlimited deduction of real estate losses. This requires strict documentation and careful planning.
For All Taxpayers
Charitable Giving
Donations to qualified charities are deductible. Donating appreciated stock allows deduction of fair market value without triggering capital gains tax.
Gains and Loss Harvesting
Selling losing investments can offset realized gains.
Health Savings Account Contributions
Maximize HSA contributions to receive a deduction and ensure tax free withdrawals for medical expenses.
Your Next Step Build Your Personalized Plan
This checklist is a starting point. The best results come from a strategy tailored to your income, investments, and long term goals. The opportunity for action closes on December 31, 2025.
We recommend scheduling a Year End Tax Planning Session. During your session we will:
• Review your 2025 financials
• Project your 2025 tax liability
• Identify the most effective strategies for your situation
A small investment of time now can save you stress and money in 2026.
If you need help preparing your plan, our team at RSK Tax and Consulting LLC is ready to assist.
