Brennan Decima November 5, 2025
It is hard to believe that we are already in November. The clocks have changed, the temperature is cooling, and our neighborhood has already started to show signs that Christmas is around the corner. With the holidays bearing down on us, it is that time of year to make sure we have used all the levers available to us to maximize our tax efficiency. If you are looking to reduce your taxes in 2025, this article is for you.
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Consider Energy Efficient Property Improvements
The One Big Beautiful Act (OBBA) has eliminated many of the existing energy tax credits. Most residential credits will end on December 31, 2025. To qualify for the existing credits, the improvements need to be installed before year end.
- Energy Efficient Home Improvement Credit: The credit for energy-efficient improvements expires at the end of 2025. For qualifying improvements made through December 31, 2025, you can claim the credit, as outlined on the IRS website.
- Residential Clean Energy Credit: The 30% credit for installing new clean energy property, such as solar panels and whole-home battery systems, ends after December 31, 2025. Property installed on or after January 1, 2026, is not eligible.
- Deadline: For both residential credits, the installation must be completed and the system must be operational by the end of 2025 to qualify.
Review Your Workplace Retirement Plan Contributions
For employer retirement plans, such as a 401(k) or 403(b), contributions must be made by December 31, 2025. For 2025, you can contribute up to $23,500 into traditional and Roth contributions. For those over 50, you are eligible for additional catch up contributions of $7,500. Under new rules, employees who are between the age 60 and 63 may be able to contribute a $11,250 catch up contribution instead of the usual $7,500. For those that are looking for a tax deduction, making a pre-tax contribution to your employer’s 401(k) will reduce your taxable income on a dollar for dollar basis.
Review the New Charitable Deduction Rules
In 2025, there is no tax deduction for charitable donations if you use the standard deduction. For those using the standard deduction, consider bunching together multiples years of charitable giving into a Donor Advised Fund to allow for an itemized deduction of your donation.
For those that are already charitably inclined and currently itemizing, consider expediting your charitable planning into 2025. In 2026, the new legislation limits the benefits of itemized charitable deductions at 35% for those in the 37% marginal tax bracket. In 2026, contributions may only be deducted after the donation has exceeded 0.5% of their adjustable gross income.
Partial Roth Conversions
For those that are in retirement and are not yet taking Required Mandatory Distributions (RMDs), it may be worth exploring how a potential Roth Conversion might make sense for you. If you are in a lower tax bracket and have some wiggle room in the bracket, a Roth Conversion can reduce future RMD’s, give you and your spouse additional flexibility, and allow for more tax free growth in your retirement. There is no limit to the amount you can convert, but any amount converted will be added to ordinary income. The conversion deadline for 2025 is December 31st.
Tax Loss Harvesting
For investments held in brokerage accounts, make sure you take inventory of any holdings you have at a loss. Tax Loss Harvesting is a strategy where you can make the IRS participate in the bad times. By selling a position at a loss, you can then use that loss to offset capital gains. If you have more losses than you have gains, the remaining losses can be used to offset up to $3,000 of ordinary income. Any additional losses can be carried forward indefinitely.
Have Kids in K-12? Review 529 Opportunities
Some state sponsored plans provide a state income tax deduction for contributions made to a a 529 college savings plan. The new tax legislation also expanded what a 529 can be used for. If you spent money in 2025 on tutoring, testing fees, or professional credentials, you are now eligible to reimburse yourself from a 529 tax free.
Retired? Review your Retirement Income Plan for 2026.
For many clients we work with, taxes are the biggest expense in retirement. Understanding what your income needs are for next year, will allow you to determine what combination of accounts you should draw from in the most efficient way.
If you need support building your Retirement Income Plan, schedule a free Retirement Analysis today.
Frequently Asked Questions FAQ
Q: What is the deadline for 2025 tax strategies?
Most actions—such as Roth conversions, 401(k) contributions, and charitable gifts—must be completed by December 31, 2025.
Q: Are energy tax credits still available in 2025?
Yes, but both the Energy Efficient Home Improvement Credit and Residential Clean Energy Credit expire at the end of 2025.
Q: How can retirees lower taxes in 2025?
Strategic Roth conversions, tax-loss harvesting, and charitable planning can significantly reduce lifetime taxes.
