Don't Overpay: 4 Last-Minute Tax Strategies to Lower Your 2025 Bill
Tax season is here again. You might find yourself wondering, “Is there anything I can do to lower last year’s tax bill?” While many tax-saving strategies need to be implemented before the year-end, there are still a few smart moves you can make now to reduce what you owe.
Here are 4 practical ways to lessen your 2025 tax burden and keep more of your hard-earned money in your pocket. Keep in mind that these moves must be taken before you actually file your 2025 tax return.
1. Contribute to Your IRA
If you haven’t reached the contribution limit for your Traditional IRA ( $7,000 for 2025, or $8,000 if you're age 50+), there’s still time! You have until April 15, 2026, to make contributions that count for the 2025 tax year.
Traditional IRA contributions are tax-deductible, which means they lower your taxable income.
Here’s a practical example: Let’s say you earned $90,000 last year and contribute $7,000 to a Traditional IRA before the tax deadline. Your taxable income drops to $83,000, which reduces your overall tax bill while also boosting your retirement savings.
PSA: Be sure to code the contributions for 2025. Custodians (e.g., Fidelity or Schwab) auto-assign the contribution year as the current year (2026) unless you specify otherwise. This is a common “gotcha”.
2. Contribute to Your HSA
Similar to your IRA, HSAs allow contributions up until April 15, 2026.
There’s not another account out there like an HSA! Contributions are triple-tax advantaged: they are tax-deductible, grow tax-free, and allow tax-free withdrawals for qualified expenses. For 2025, the contribution limits are $4,300 for self-only coverage and $8,550 for family coverage. (If you’re 55 or older, you can add an extra $1,000 catch-up contribution).
Want to learn more about HSAs? Here’s the full rundown!
3. Contribute to Your Child(ren)’s 529 Account
In Mississippi, you can make contributions to your child’s education funding account(s) until the tax deadline. While this will not lower your federal taxable income, it can potentially lower your state liability.
If you are a married couple, you can deduct up to $20,000 of contributions each year. One caveat: the 529 account must have been opened during the previous year (i.e., 2025 or earlier) in order to fund it in the spring of the next year.
4. For Those Who Itemize
Check for overlooked deductions and credits that could lower your tax bill.
- Charitable Donations: Donations to qualified organizations can be deducted. Remember, how you donate matters. Strategies like using donor-advised funds, bunching donations, or donating appreciated assets may help maximize your deductions.
- Mortgage Interest: You may deduct interest on loans up to certain limits.
- Out-of-Pocket Medical Expenses: You can deduct medical expenses that exceed 7.5% of your AGI.
- State and Local Taxes (SALT) Deduction: This is a big one! The passage of OBBB raised the SALT deduction limit from $10,000 (2024) to $40,000. This includes state income taxes, sales tax(es), property taxes, etc.
These deductions can add up, so it’s worth looking into. Just remember, to claim most of these, you’ll need to itemize your deductions instead of taking the standard deduction ( $31,500 for married filing jointly in 2025).
Bonus Tip for Gen Z & Millennials: Student Loan Interest
Still paying off that degree? Here’s a rare win: you can deduct up to $2,500 in student loan interest as an “above-the-line” adjustment.
This brings your taxable income down automatically - meaning you get to keep that money in your pocket without having to itemize.
- Income Limits: This starts to phase out if your MAGI is over $170,000 (MFJ).
Tax planning is a crucial part of your overall financial plan. By making the right choices to optimize your tax situation year after year, you can keep more money in your pocket over the course of your life. Take time today to ensure you're making the most of the available tools.
Johnson is a fee-only, fiduciary financial advisor with Asset Dedication LLC, DBA Branning Wealth Management. He provides hands-on, practical financial advice for millennials and young professionals. He is a board member of the Financial Planning Association of Mississippi.
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