13 Last Minute Tips "to Do" to Lower Your 2025 Taxes.
Yes, There's Still Time
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Tax season is probably the last thing on your mind during the holidays, but with New Year’s just around the corner now is your last chance to lower your 2025 tax bill. Fortunately, there are a host of options to trim your bill in minutes, so if you act fast you could save some major moola come April 15, 2026.
To lower your tax bill, here are possibilities to consider with your financial advisor.
1. Donate or give monetary gifts to your children. You and your spouse can give up to $14,000 each without having to pay gift taxes. IRS offers taxpayers a golden opportunity to give substantial and meaningful gifts up to $14,000 annually (or $28,000 if you give jointly with your spouse) in 2025 to as many people as desired in cash, investments, and/or property without triggering mandatory filing of IRS Gift Tax Form 706 and possible payment of gift taxes. You options include:
Small Gifts Can Grow Into Big Savings
Through UGMA/UTMA, the first $1,000 per year of unearned (investment) income is tax-free. The next $1,000 is taxed at the child's lower tax rate, which is typically 5% for most children. For children up to the age of 19 and for certain children through age 23, unearned income in excess of $2,000 is taxed at the parent's higher tax rate.
For many, $14,000 may seem like a lot to bestow in one year's time. Although most mutual funds have initial investments of $1,000 to $2,500, many lower those requirements on custodial accounts.
Now is also a great time to make donations, as you can write off monetary and non-cash charitable contributions if you itemize your expenses. You can also include costs you incurred to help a charity, such as transportation costs while volunteering (you can deduct 14 cents per mile). The optional standard tax deductible IRS mileage rates for the use of your car, van, pickup truck, or panel truck during 2025 are:
Additional Vehile Use Deductions: In addition to the standard mileage rates, you may deduct the costs of tolls and parking while using your vehicle for one of the approved purposes. These are separate deductions. However, if you have claimed vehicle depreciation, you may not deduct tolls and parking fees.
2. Delay your invoices and receivables. If you're self-employed, delay December billings until January. This will reduce your taxable income for 2025. Similarly, it may be in your best interest to ask your employer to delay a holiday bonus or December payment until 2026 as well.
3. Pre-pay medical expenses. You can only deduct medical expenses if they exceed 10% of your adjusted gross income. So if you know you are close to approaching (or past) this threshold, pre-pay this year for whatever you can (prescription medications, doctor's bills, etc.). This way you'll have a larger deduction. If your medical expenses won't exceed the limit, then by all means wait to pay.
Medical expenses that are typically deductible, according to the Wall Street Journal, include insurance premiums, Medicare Part B and D premiums, co-payments for drugs and treatments, weight-loss plans (if medically necessary), lead abatement, bandages, wigs after chemotherapy, acupuncture, and medical travel (24 cents per mile).
4. Pay your January mortgage payment this month. By paying by December 31, you can include the interest deduction on your 2025 tax return.
5. Make estimated state tax payments for fourth quarter. By doing so before December 31 you can take the deduction for your 2025 taxes.
6. Pay your property taxes early. If your taxes are coming due in January or February, you can pre-pay them before December 31 and use them for a deduction in 2025.
7. Sell your losing stocks and mutual funds. By selling stocks and other investments that you've lost money on, you'll be able to use the losses to offset any gains you've made on other investments. If your loss is more than your capital gains, you can then use it to offset up to $3,000 in ordinary income. If you still have more loss after that, it can be carried over to future years. Be advised … you cannot sell shares, take a loss deduction and then buy them back in a 30-day period, as that violates IRS “wash sale” rules.
8. Buy a new car. If you’re in the market for a new car, now’s the time to buy. Doing so before January 1 means you can deduct sales and excises taxes and other fees on up to $49,500 of the purchase price.
9. Buy a new home. The most notable is the First-Time Homebuyer Tax Credit Act of 2025, a proposed bill that would offer an eligible first-time homebuyer a refundable tax credit of up to $15,000. As of November 2025, this bill has been introduced in Congress (H.R. 4717 and S. 2402) but has not been passed into law.
Proposed First-Time Homebuyer Tax Credit Details (if passed)
If the $15,000 credit bill were to become law, key features would include:
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Amount: A credit of up to 10% of the home's purchase price, capped at $15,000. Eligibility: Must be a first-time homebuyer (not owned a home in the last 36 months) and meet specific income and home price limits based on the area median income/price.
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Financing: The home must be financed with a federally backed mortgage (conventional, FHA, VA, USDA).
Existing Homeowner and Builder Tax Credits for 2025
While a direct "new home buyer" credit is not currently law, other relevant tax provisions for 2025 include:
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Credit for Builders: A tax credit under Section 45L is available for eligible contractors who build and sell qualified new energy-efficient homes acquired before July 1, 2026. This credit can be up to $5,000 per home depending on energy efficiency standards met.
10. Pay your January college tuition. If you'll be taking classes in the first quarter of 2025, you can prepay the tuition now and get a 2025 tax benefit from the American Opportunity credit.
11. Max out your IRA, 401(k) and other retirement plans. Every contribution you make will lower your taxable income and boost your retirement savings. You can contribute up to $17,500 to a 401(k) (and $23,000 if you're over 50). The IRA contribution limit is $5,500 or $6,000 if you are over 50. The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $59,000 and $69,000. For married couples filling jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $95,000 to $115,000, up from $92,000 to $112,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is pased out if the couple's income is between $178,000 and $188,000, up from $173,000 and $183,000.
The AGI phase-out range for taxpayers making contributions to a Roth IRA is $178,000 to $188,000 for married couples filing jointly, up from $173,000 to $183,000 in 2025. For singles and heads of household, the income phase-out range is $112,000 to $127,000, up from $110,000 to $125,000. For a married individual filing a separate return who is covered by a retirement plan at work, the phase-out range remains $0 to $10,000. The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $59,000 for married couples filing jointly, up from $57,500 in 2023; $44,250 for heads of household, up from $43,125; and $29,500 for married individuals filing separately and for singles, up from $28,750
12. Use up your flexible spending account (FSA). If you set aside pre-tax income in an FSA, many employers require you use it up by December 31. Although the deadline may be extended to March 15, not all employers use this option. Some ideas to quickly use up excess FSA money include eyeglasses, prescription sunglasses, dental work, smoking cessation programs, physical therapy, massage therapy for an injury, counseling, contact lenses, hearing aids, drug and alcohol treatment or chiropractic care.
13. Stock up on supplies if you’re self-employed. You can deduct all the supplies you use for your business, so it’s a good time to buy any extra equipment (computer, printer, fax machine, etc.) or supplies (paper, stamps, printer ink, etc.) you’ll be needing.
Whew! We hope you’ll find one or more tips helpful having taken a few minutes (or a few hours) to go through this last minute list to minimize your 2024 tax bill. It could well be well worth your time come April 15. Remember to take a minute relax and breath slowly if you begin to even feel overwhelmed and or stressed out. Simple relaxation techniques cna be a lifesaver whenever you’re feeling emotionally stressed … especially as tax day comes nearer.
14. If you’re older than 70.5 years, consider a QCD
If you are 70.5 years or older and would like to support a charity, consider making a qualified charitable distribution (QCD) directly from an IRA to a qualified charity. A QCD keeps IRA distributions from impacting your adjusted gross income (AGI) now and in the future. It works whether you take the standard deduction or itemize deductions, and it can count toward your required minimum distribution (RMD), if you have one.
15. Look for opportunities to leverage available tax credits
Consider “bunching” your itemizable deductions within a single year for a bigger tax benefit. Consider timing certain deductible expenses — like medical procedures or charitable donations4 — to occur within a single tax year. This strategy, known as “bunching,” allows you to reap maximum impact from itemizing your deductible expenses in certain years, while in other years, you take the standard deduction.
A tax credit reduces your tax liability, dollar-for-dollar. To ensure you’re not missing new credits from the government, review potential credits available to you on a yearly basis. For example, the One Big Beautiful Bill Act introduced changes to the tax credits that are available to Americans to claim when they file their taxes.
16. Consider tax-loss harvesting
If you experienced any investing losses, they can potentially become a tax-savings opportunity through a strategy called tax-loss harvesting. When executed properly, tax-loss harvesting allows you to manage and reduce your tax burden by selling investments at a loss to offset the taxes owed on capital gains from other investments. In summary, it’s one way to use the tax code to reduce the sting of an investment loss. However, this strategy can be complex to employ, so please reach out to an Ameriprise financial advisor for personalized guidance.
17. Consider tax-gains harvesting
Harvesting capital gains to achieve tax benefits is the opposite of tax-loss harvesting. It may be worth considering strategic opportunities to sell certain assets that have experienced gains, if you think you may be in a higher capital gains bracket in the future. If executed correctly, you could potentially pay taxes on the gains under more favorable tax brackets in years you have less capital gains and less ordinary income.
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Sources
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