Mid-Year Tax Moves: Cut Your 2025 Tax Bill

Though tax season might seem a world away during the sunny days of summer, now is actually the ideal time to take action that can reduce your tax bill for 2025. By making smart financial decisions now, you can relieve the stress of a last-minute scramble when April rolls around and potentially save a significant amount in taxes.

Contribute to Retirement Accounts

Increasing contributions to your 401(k) or IRA not only helps build your retirement nest egg but also reduces your taxable income. By maximizing these contributions, you’re securing your future while also optimizing your current tax situation.

Take Advantage of Tax-Advantaged Accounts

Be sure to fund your Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) if you have access to them. Contributions to HSAs are tax-deductible, lowering your taxable income, and FSAs can be used for a variety of health-related expenses. Remember the "use-it-or-lose-it" rule for FSAs, and check for any rollover or grace periods.

Check Your Tax Withholding

Life changes such as marriage, having a child, or income adjustments may affect your tax situation. Updating your tax withholding now can prevent unexpected tax bills or free up more income throughout the year.

Consider Charitable Contributions

If you itemize deductions, donating to qualified charities can reduce your taxable income. Be sure to document all contributions carefully to ensure that you can claim them come tax time.

Take Advantage of Credits

Investigate mid-year eligibility for tax credits such as the Child Tax Credit or education credits. These credits can offer significant savings, and eligibility often depends on your income thresholds throughout the year.

Mid-year tax planning is not overwhelming; rather, it is empowering. Acting before the year-end deadline not only promises significant tax savings but also grants you greater financial confidence. Take a moment today to review your current financial situation and consult a tax professional to ensure no opportunity is missed.