Tax Planning for 2025
Tax season might not be anyone’s favorite time of year, but a little planning now can mean big savings later. With tax laws constantly evolving, it pays to stay ahead of the game. The good news? A few tax planning smart strategies can help you keep more of your hard-earned money in 2025.
Max Out Retirement Contributions
One of the easiest ways to lower your taxable income is by contributing to tax-advantaged retirement accounts like a 401(k) or an IRA. In 2025, contribution limits have increased, meaning you can stash away even more tax-deferred income. If your employer offers a match, don’t leave free money on the table—contribute enough to maximize that benefit.
Take Advantage of Tax Credits
Unlike deductions, which reduce taxable income, tax credits cut your tax bill dollar for dollar. Some of the best credits to look into for 2025 include:
Child Tax Credit – If you have dependents, this can significantly lower what you owe.
Education Credits – If you or your children are in school, the American Opportunity and Lifetime Learning credits can help offset tuition costs.
Energy-Efficient Home Credits – Upgrading your home with solar panels or energy-efficient systems can qualify you for valuable tax credits.
Harvest Investment Losses
If the market had some rough patches, you might be able to use investment losses to offset gains—a strategy known as tax-loss harvesting. By selling underperforming assets, you can reduce capital gains taxes while keeping your portfolio aligned with your long-term goals.
Consider Roth Conversions
Converting a traditional IRA to a Roth IRA can be a smart move, especially if you expect tax rates to rise in the future. While you’ll pay taxes on the conversion now, your withdrawals in retirement will be tax-free. This can be a valuable strategy for managing long-term tax efficiency.
Make Strategic Charitable Donations
Giving to charity isn’t just a good deed—it can also provide tax benefits. Consider donating appreciated assets instead of cash to avoid capital gains taxes while still claiming a charitable deduction. If you plan to give regularly, setting up a donor-advised fund (DAF) can help you manage donations strategically.
Review Your Withholding and Estimated Taxes
Underpaying taxes throughout the year can result in a nasty surprise come April, while overpaying means you’ve given the government an interest-free loan. Review your withholding and estimated tax payments to make sure you’re on track for 2025. Self-employed? Be sure to stay on top of quarterly estimated tax payments to avoid penalties.
The Bottom Line
Tax planning isn’t just about reducing what you owe—it’s about making sure your financial plan is as efficient as possible. A little preparation now can save you thousands in 2025 and beyond.
At Halter Ferguson Financial, we help our clients navigate tax strategies that fit into their larger financial goals. Want to make sure you’re maximizing your tax efficiency? Let’s talk and make 2025 a year of smart financial moves.