Last-Minute Tax Moves to Make Before the Year Ends
The clock is ticking on the 2025 tax year, but there’s still time to make smart financial decisions that can reduce your tax bill—or even boost your refund. As December 31 approaches, now is the time to act. Many tax-saving strategies must be completed before the end of the calendar year to count on your upcoming return.
Whether you’re employed, self-employed, or somewhere in between, these last-minute tax moves could make a big difference when you file in early 2026.
1. Max Out Retirement Contributions
If you haven’t hit your annual limit, consider topping up your 401(k), 403(b), or other workplace retirement plan. Contributions to traditional retirement accounts reduce your taxable income, which can lead to a lower tax bill or a higher refund.
2025 401(k) contribution limit: $23,000
Catch-up contribution (age 50+): Additional $7,500
Note: You have until December 31 to contribute to a workplace retirement plan, but you have until the tax filing deadline (April 15, 2026) to contribute to IRAs.
2. Donate to Charity
If you plan to give this holiday season, make sure your donations are made by December 31 to qualify for a 2025 tax deduction. Contributions must be made to registered charities and properly documented.
You can deduct:
Cash donations
Donated goods (clothing, electronics, household items)
Appreciated assets like stocks (for even bigger tax savings)
Tip: If you itemise deductions, charitable giving can significantly reduce your taxable income—especially when combined with other itemised expenses.
3. Use Up Your Flexible Spending Account (FSA)
If you have an FSA through your employer, now is the time to spend down your balance. Most FSA plans operate on a “use it or lose it” basis, meaning unused funds may be forfeited at the end of the year.
Eligible expenses include:
Prescription medications
Medical equipment
Eyeglasses or contact lenses
Dental or vision care
First aid supplies
Some employers offer a small carryover or grace period, but check your plan’s rules to avoid losing funds.
4. Offset Capital Gains with Losses
If you’ve sold investments this year and made a profit, consider harvesting losses to offset those gains. Selling underperforming assets to realise a loss can reduce your taxable capital gains—and potentially lower your overall tax bill.
You can use losses to offset gains, plus up to $3,000 of ordinary income
Unused losses can be carried forward to future tax years
Just be mindful of the wash-sale rule, which prevents claiming a loss if you repurchase the same or similar asset within 30 days.
5. Defer Income (If Possible)
If you’re self-employed or in control of when you receive income, you may be able to defer end-of-year income until January. This can be especially helpful if you’re close to crossing into a higher tax bracket.
For example, delaying a client invoice or end-of-year bonus by just a few days could shift the tax liability to 2026.
6. Prepay Tax-Deductible Expenses
To increase your deductions for 2025, consider prepaying certain deductible expenses, such as:
Mortgage interest
Property taxes
Student loan interest
Business expenses (software, supplies, subscriptions)
This strategy is especially helpful if you plan to itemise deductions or if your income is unusually high this year.
7. Review and Adjust Your Withholding
If you’ve had a significant change in income or tax situation this year, now is a good time to check your withholding. Submitting an updated Form W-4 to your employer can help ensure you’re not under- or over-withholding as you head into 2026.
It’s also a great time to use a tool like the Tax Refund Calculator to get an estimate of your potential refund—or tax bill—before the year ends.
8. Organise Your Records
Take time to organise:
Income statements (W-2s, 1099s)
Receipts for deductions or business expenses
Charitable donation receipts
Investment records
Medical expenses and insurance documents
Getting ahead now makes January and February much less stressful—and helps ensure you don’t miss any deductions or credits that could increase your refund.
Final Thought:
While the year may be winding down, there’s still time to take action that can improve your financial outlook come tax season. A few smart moves before December 31 can help you lower your tax liability, increase your refund, and start the new year on the right foot. Don’t leave money on the table—take advantage of these last-minute opportunities while you still can.