🎧 Listen to the article
Note: Article adapted from Forbes. MSA reviewed and updated select items for accuracy in consultation with our CPAs.
As 2025 draws to a close, taxpayers have a rare chance to benefit from the sweeping One Big Beautiful Bill Act (OBBBA). The law introduced new deductions, higher limits, and expanded credits—but many of these provisions are temporary. Taking the right steps before December 31 could save you thousands when you file next year.
Your 2025 End-of-Year Action Plan
Here are five smart moves to consider before ringing in the new year:
- Review your income and deductions to see if shifting income or expenses could lower your 2025 tax bill. (See “Key Tax Changes to Know.”)
- Maximize charitable giving while 2025 deduction rules are still favorable. (See “Charitable Giving Strategies.”)
- Use your annual gifting exemption to transfer wealth tax-free before thresholds reset. (See “Estate and Gifting Opportunities.”)
- Check your state and local tax payments to take advantage of the higher SALT deduction limit. (See “Key Tax Changes to Know.”)
- Evaluate business deductions and purchases that qualify for immediate expensing. (See “For Business Owners.”)
Each of these moves ties back to recent tax code changes. Here’s what’s new and how you can make it work for you.
KEY TAX CHANGES TO KNOW
Stable Tax Rates
Individual tax brackets, ranging from 10% to 37%, are now permanent. This stability removes much of the uncertainty that made long-term planning difficult in prior years.
Higher Standard Deduction
For 2025, the standard deduction rises to $15,750 for single filers and $31,500 for joint filers, with automatic inflation adjustments. Because fewer people will itemize, taxpayers may want to re-evaluate their charitable and mortgage deduction strategies.
In addition, taxpayers age 65 or older (and/or those who are blind) will now qualify for an extra $6,000 standard deduction per person, beginning January 1, 2025. This additional deduction is subject to a phase-out at higher income levels, so eligible taxpayers should confirm how it applies to their situation.
SALT Cap Relief: A Four-Year Window
The cap on state and local tax (SALT) deductions jumps from $10,000 to $40,000 for 2025, though it begins to phase out for higher earners and reverts to $10,000 in 2030.
Tip: This temporary expansion creates a short window for strategic planning. Consider prepaying property taxes or state estimates before year-end to maximize the deduction. Assets held in non-grantor trusts are also eligible for their own $40,000 deduction.
Estate and Gifting Opportunities
Starting in 2026, the lifetime estate and gift tax exemption increases to $15 million per person ($30 million per couple) and will be indexed for inflation. The annual gift tax exclusion for 2025 is $19,000 per recipient, allowing families to transfer wealth now and reduce future estate taxes.
Tip: Make your annual exclusion gifts before December 31, and review Wills, Trusts, and beneficiary designations to ensure they reflect the new limits.
CHARITABLE GIVING STRATEGIES
Bunching Contributions for 2025
Beginning in 2026, only gifts exceeding 0.5% of adjusted gross income will qualify for deductions, and high earners will face a 35% deduction cap. That makes 2025 the ideal year to “bunch” donations, combining several years’ worth of giving into one to capture the full benefit now.
IRA Charitable Distributions
Taxpayers age 70.5 and older can give up to $108,000 directly from an IRA to a qualified charity. This counts toward required minimum distributions but avoids adding income to your tax return.
For Business Owners
- Qualified Business Income (QBI) Deduction: Now permanent, with expanded eligibility and a $400 minimum deduction for tax years beginning January 1, 2026.
- Section 179 Expensing: Businesses can immediately deduct up to $2.5 million in qualifying purchases, making late-year equipment upgrades or software investments more attractive.
- New Above-the-Line Deductions: Up to $25,000 in tip income, $12,500 in overtime pay, and $10,000 in vehicle loan interest may qualify, subject to income limits.
The Bottom Line
The One Big Beautiful Bill Act creates valuable, but temporary opportunities for individuals and businesses alike. Acting before December 31 can make a lasting impact on your tax position for years to come.
If you have questions about how these changes may affect your situation, please reach out to your MSA advisor. We are here to help you make the most of these opportunities before year-end.
Source: Adapted from Forbes. Reviewed and updated by Martin Starnes & Associates.