Most tax savings disappear after December 31 — once the calendar flips, the window for reducing that year's bill largely closes. A handful of moves, made before year-end, can meaningfully change what's owed.
Max Out Retirement Contributions
Contributions to a 401(k), Solo 401(k), SEP-IRA, or traditional IRA can reduce taxable income for the year, and business owners often have higher limits available through a Solo 401(k) or SEP-IRA than a typical employee plan allows. Contribution limits are adjusted annually, so the right target changes every year — check the current-year limit rather than assuming last year's number still applies.
Harvest Investment Losses
Tax-loss harvesting means selling losing investments before year-end to offset realized capital gains elsewhere in the portfolio, and up to a limited amount of ordinary income if losses exceed gains. The wash-sale rule disallows the loss if you buy a substantially identical security within 30 days before or after the sale, so timing and replacement choices matter.
Bunch Deductions
Because many itemized deductions only help once they clear the standard deduction, some taxpayers "bunch" two years' worth of charitable giving, or elective medical expenses, into a single year to itemize meaningfully — then take the standard deduction the following year. A donor-advised fund (DAF) is a common tool here: you get the deduction the year you contribute to the fund, then grant the money to charities over time.
Charitable Giving and QCDs
Beyond bunching, taxpayers age 70½ or older can make Qualified Charitable Distributions (QCDs) directly from an IRA to a qualifying charity. A QCD isn't included in taxable income at all, and for those subject to required minimum distributions (RMDs), it can count toward satisfying the RMD — often a better result than taking the distribution personally and donating afterward.
Consider a Roth Conversion
Converting traditional IRA or 401(k) funds to a Roth account means paying tax on the converted amount now, in exchange for tax-free growth and withdrawals later. This tends to make the most sense in a year when income — and therefore the tax bracket — is unusually low, since the conversion is taxed at whatever rate applies that year.
Time Income and Accelerate Deductions
Business owners with some control over when they bill clients or pay deductible expenses can shift income into a lower-tax year or pull deductible purchases into the current year, depending on which direction the numbers favor.
Section 179 and Bonus Depreciation
Equipment or qualifying property purchased and placed in service before year-end may qualify for Section 179 expensing or bonus depreciation, allowing a business to deduct much of the cost immediately rather than over several years. Both the Section 179 limit and the bonus depreciation percentage are set by current law and have changed in recent years, so confirm the current-year figures before assuming full expensing applies.
The right combination of these moves depends on your income, filing status, and timeline. Book a free consultation with a Taxperts CPA or EA before December 31 to build a year-end plan that fits your actual numbers.
Max Out Retirement Contributions
Contributions to a 401(k), Solo 401(k), SEP-IRA, or traditional IRA can reduce taxable income for the year, and business owners often have higher limits available through a Solo 401(k) or SEP-IRA than a typical employee plan allows. Contribution limits are adjusted annually, so the right target changes every year — check the current-year limit rather than assuming last year's number still applies.
Harvest Investment Losses
Tax-loss harvesting means selling losing investments before year-end to offset realized capital gains elsewhere in the portfolio, and up to a limited amount of ordinary income if losses exceed gains. The wash-sale rule disallows the loss if you buy a substantially identical security within 30 days before or after the sale, so timing and replacement choices matter.
Bunch Deductions
Because many itemized deductions only help once they clear the standard deduction, some taxpayers "bunch" two years' worth of charitable giving, or elective medical expenses, into a single year to itemize meaningfully — then take the standard deduction the following year. A donor-advised fund (DAF) is a common tool here: you get the deduction the year you contribute to the fund, then grant the money to charities over time.
Charitable Giving and QCDs
Beyond bunching, taxpayers age 70½ or older can make Qualified Charitable Distributions (QCDs) directly from an IRA to a qualifying charity. A QCD isn't included in taxable income at all, and for those subject to required minimum distributions (RMDs), it can count toward satisfying the RMD — often a better result than taking the distribution personally and donating afterward.
Consider a Roth Conversion
Converting traditional IRA or 401(k) funds to a Roth account means paying tax on the converted amount now, in exchange for tax-free growth and withdrawals later. This tends to make the most sense in a year when income — and therefore the tax bracket — is unusually low, since the conversion is taxed at whatever rate applies that year.
Time Income and Accelerate Deductions
Business owners with some control over when they bill clients or pay deductible expenses can shift income into a lower-tax year or pull deductible purchases into the current year, depending on which direction the numbers favor.
Section 179 and Bonus Depreciation
Equipment or qualifying property purchased and placed in service before year-end may qualify for Section 179 expensing or bonus depreciation, allowing a business to deduct much of the cost immediately rather than over several years. Both the Section 179 limit and the bonus depreciation percentage are set by current law and have changed in recent years, so confirm the current-year figures before assuming full expensing applies.
The right combination of these moves depends on your income, filing status, and timeline. Book a free consultation with a Taxperts CPA or EA before December 31 to build a year-end plan that fits your actual numbers.
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