Below are several key items to review as part of your year-end tax planning.
Maximize Retirement Contributions
One of the easiest ways to lower taxable income is by contributing to retirement accounts like a 401(k) or IRA.
2025 Contribution Limits
- 401(k), 403(b), most 457 plans & TSP:
- Employee elective deferral limit for 2025 is $23,500.
- Standard catch-up contributions remain at $1,000 for individuals age 50 and older.
- Traditional & Roth IRAs:
- The contribution limit for 2025 is $7,000 for individuals under age 50 and $8,000 for those age 50 or older (includes the catch-up amount).
- Self-employed plans (SEP IRA, Solo 401(k)):
- Contribution remains at 25% but limits have increased for 2025 to $70,000; eligible business owners should verify their maximum allowable contributions based on net earnings.
These contributions can reduce your taxable income and grow tax-deferred until retirement. Maxing out retirement contributions before the year closes out can save you current or long-term taxes as well as ensure long-term financial security.
Harvest Investment Losses
Tax-loss harvesting is another useful strategy to consider before year-end. This involves selling investments at a loss to offset taxable gains from more profitable assets. Commonly harvested assets include:
- Individual stocks
- ETFs and mutual funds
- Bonds
- REIT shares
- Cryptocurrencies
Investors often sell underperforming positions, such as a sector ETF or stock that has fallen below its purchase price, to reduce short-term capital gains, which are taxed at higher rates than long-term gains.
For 2025, you may use up to $3,000 of net losses to offset ordinary income, with any unused losses carried forward to future years.
Investors should be mindful of the wash-sale rule when utilizing this strategy. This rule prohibits the repurchase of the same or “substantially identical” investment within 30 days before or after the sale. Doing so disallows the loss, instead adjusting the cost basis of the replacement asset.
Just as tax-loss harvesting helps manage capital gains in a securities portfolio, real estate investors have a parallel strategy: the 1031 Exchange, which defers capital gains and other associated taxes when reinvesting in new property. Both strategies rely heavily on timing and are often evaluated as part of year-end decision-making.
Real Estate and 1031 Exchange Considerations
For real estate investors, a 1031 Exchange allows you to defer capital gains taxes by reinvesting proceeds from the sale of investment or business-use property into new like-kind property.
For investors who are on the fence about selling property in Q4 or delaying listing the property until Q1 2026, 1031 tax straddling could be a compelling reason to list the property now rather than waiting until 2026. If a 1031 Exchange spans two tax years, i.e. is started in 2025, but the 180-day exchange period extends into 2026, and the Exchanger fails to identify or acquire Replacement Property, the Exchanger may still be able to defer capital gains taxes until the 2026 tax due date under IRS Installment Sale rules (Section 453). This provides flexibility in managing tax obligations, even in failed exchanges.
Conducting a 1031 Exchange in Q4 can provide flexibility. If the exchange fails due to missed deadlines, any returned funds become taxable in 2025. However, the default reporting allows for the deferral of capital gains payment on the sale of the Relinquished Property until the 2026 taxes are due. By combining Section 1031 with Section 453, Exchangers can report exchange funds as income in the year received rather than the year of the sale, which provides a potential benefit for those considering a Q4 sale.
Exchanges started after October 18, 2025, require special attention. Because the 180th day will fall after the April 15, 2026, tax deadline, the Exchanger must file a tax-return extension to keep the full 180-day exchange window open. Some states—including Delaware, Iowa, Louisiana, and Virginia—have different state filing deadlines, so coordinating federal and state timing is important.
Review Expiring Tax Provisions and Opportunities
Several tax provisions have updated rules or sunset schedules that may impact your 2025 planning:
Bonus Depreciation & Section 179 Expensing
Under legislation effective in 2025:
- Many businesses now have access to 100% bonus depreciation for qualifying property placed in service after January 19, 2025.
- Section 179 expensing limits are increased, with a deduction limit of $2.5 million (subject to phase-out thresholds).
Because state conformity varies, consult a tax professional before accelerating major equipment purchases solely for federal tax benefits.
Energy and Efficiency Credits
Credits for home energy improvements, residential clean energy property, and certain high-efficiency equipment remain available in 2025. However, two popular residential energy credits sunset at the end of 2025:
- Energy Efficient Home Improvement Credit (IRC § 25C)
- Residential Clean Energy Credit (IRC § 25D)
To claim these incentives, qualifying improvements or installations must be placed in service by December 31, 2025. Homeowners considering upgrades such as heat pumps, insulation, solar panels, battery storage, or energy-efficient windows should plan for project timelines accordingly. Once these credits expire, they will no longer be available for credits on 2026 tax returns.
Additional Tax Provisions from H.R.1 to Watch
The H.R.1, also known as the “One Big Beautiful Bill Act”, introduced several new or expanded items that may have an impact on year‐end planning:
- SALT Deduction Increase: For 2025, the cap on state and local tax (SALT) deductions rises from $10,000 to $40,000, subject to phase-out for higher income filers.
- New Deductions for Working Americans: Effective 2025-2028, eligible taxpayers may deduct:
- up to $12,500 of qualified overtime pay ($25,000 joint filers)
- up to $25,000 of reported tip income regardless of itemizing status
- up to $10,000 of interest on a loan used to purchase a U.S.-assembled personal vehicle (2025-2028)
- Additional Deduction for Seniors: Taxpayers age 65+ may claim an extra deduction of up to $6,000 (2025-2028).
- Charitable Contribution Changes (effective 2026): Although not yet applicable in 2025, note that starting 2026 there will be new rules on charitable deductions—such as a deduction for non‐itemizers, and new minimum AGI percentages for donors who itemize.
Discussing these in your planning review with your tax advisor may help capture less common but potentially meaningful tax saving opportunities.
Child Tax Credit
For 2025, the maximum child tax credit (CTC) per qualifying child (under age 17) is $2,000
Taxpayers with dependents should confirm current-year credit amounts, phase-out thresholds, and documentation requirements when planning for 2025.
Review Tax Withholding and Estimated Payments
If your financial circumstances changed this year whether through a pay raise, bonus, freelance work, or investment income you may need to adjust your withholding or estimated tax payments.
Updated Standard Deduction Amounts for 2025
Inflation adjustments may affect your expected tax liability. For 2025, the standard deduction increases to:
- $15,750 for Single filers
- $31,500 for Married filing jointly
- $23,625 for Head of household
Using the IRS Tax Withholding Estimator or reviewing your W-4 with a tax professional can help ensure you’re on track and avoid surprises at tax time.
The end of the year is the perfect time to review your tax strategy and make adjustments that may help minimize your 2025 tax liability. With a combination of updated contribution limits, evolving tax provisions, and ongoing inflation adjustments, professional guidance can be invaluable.
For personalized guidance, consult a qualified tax professional to ensure your decisions align with your financial goals and the latest IRS rules. Accruit is here to help provide clarity and support for real estate investors contemplating the a 1031 Exchange as part of overall year-end strategy.
Updated 11/20/2025