2025 Tax Planning: Deductions to Take Before December Ends
Most of us would rather think about cozy plans and time off than our tax bill, but, this year, a little attention in December can really pay off.
Several of Trump's tax law changes are now in effect, and a handful of new rules only apply if we take action before we turn the page on the calendar.
The best news for us is that year-end tax planning in 2025 doesn’t have to be complicated.
It mostly means knowing which breaks are available, which ones are expiring, and where a few small adjustments can lower what we owe in April.
Here are the most significant changes, opportunities, and last-minute tax moves that can make a real difference as the year wraps up.
New Tax Deductions 2025: Four Breaks To Know
A set of new tax deductions in 2025 is available to qualifying taxpayers, whether you itemize or take the standard deduction.
Mainly, they’re designed to help seniors, employees, and folks dealing with higher everyday costs.
Bonus Deduction For Seniors
Taxpayers aged 65 or older with income under $75,000 can claim an extra $6,000 deduction. It’s a straightforward way for retirees or older workers with modest income to reduce their taxable base.
Auto Loan Interest Deduction
If you bought a qualifying vehicle this year, up to $10,000 of your auto loan interest can count as a deduction.
That said, the benefit phases out once your income reaches $100,000 for single filers and $200,000 for joint filers.
Deduction For Tips And Overtime
Employees who earn a lot of their income from tips or extra shifts will have a new option in 2025.
They can deduct up to $25,000 in eligible tips and up to $12,500 in overtime if they file as single, or up to $25,000 in overtime if they file jointly.
This, too, is subject to higher income phaseouts.
Higher SALT Limit
The cap on the state and local tax deduction has shifted from $10,000 to $40,000.
That change could make itemizing attractive again for folks in high-tax states, especially when they combine income tax, property tax, and mortgage interest.
A Narrow Window For Long-Term Care Costs
There’s a new opportunity connected to long-term care insurance.
Taxpayers younger than 59½ can take up to $2,500 from a retirement account to pay for qualified long-term care insurance without paying the usual 10% early withdrawal penalty.
The catch is the timing.
The withdrawal has to happen in the final two days of the year, on December 30th or 31st, and the amount is still treated as income. For certain households, however, that tradeoff is still worth considering.
2025 Tax Credits That End On December 31st
Two 2025 tax credits are tied to home upgrades, and clean energy will sunset at the end of the year.
So, if you’ve been debating an installation, this deadline is worth noting.
Residential Clean Energy Credit
As long as everything is installed by year-end, this credit covers 30% of the cost of eligible clean energy additions, such as:
Solar panels
Small wind systems
Certain battery storage
Energy-Efficient Home Improvement Credit
Homeowners may also qualify for a credit equal to 30% of specific upgrades, including:
Windows
Doors
Insulation
HVAC systems
Again, they must be qualifying upgrades and in service by December 31st.
Choosing When To Give
Charitable donations are another area where timing matters this year.
If you don’t itemize, you may be better off waiting to donate until next year, when a new above-the-line deduction will allow certain cash gifts to reduce your taxable income, even if you take the standard deduction.
If you do itemize, however, the reverse is true.
Donating before December 31st can provide more benefits in 2025, since future rules will limit how much of your giving actually counts, especially for higher-income households.
Rethinking Taxes As Part Of Everyday Money
Tax professionals often point out how we encounter taxes in small ways all year long, not just at the time of filing.
Sales tax at the store, payroll withholdings on every paycheck, and taxes on bonuses or side income all shape what we bring home.
Seeing those costs clearly can change how we negotiate a salary, evaluate a bonus, or set a budget for next year.
It also helps us understand why last-minute tax moves in December are only part of the picture. Paying attention in real time can be just as powerful.
Setting Yourself Up For A Smoother 2026
Put together, Trump’s tax law changes, higher SALT limits, new deductions, and expiring 2025 tax credits make this a year where planning has extra impact.
Whether you itemize or stick with the standard deductions, a short review now can lighten your load when you file in April. But, you don’t have to overhaul everything.
Choosing one or two moves that fit your situation, from claiming a new deduction to timing a donation, can quietly improve your financial picture for the year ahead.
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