Reduce Your Taxes with These 9 Year-End Tips
Of course, nobody enjoys paying taxes, but it’s a reality for income earners as they contribute to funding critical services and programs within their community and beyond. What most people want to avoid is paying more than their fair share of taxes. While 2025 will soon be over, there’s still time to capture some last-minute tax deductions. Here are nine handy tips that could help shrink your tax bill before 2026 begins.
1. Prepay your taxes
Even if your property tax bill isn’t due until next year, making the payment in December may allow you to claim the tax deduction for 2025. If you pay estimated state income taxes on a quarterly basis, you can also prepay your state taxes. As we’ll discuss below, you may not receive the full benefit of prepaying your state income tax and property taxes if you’re subject to the alternative minimum tax (AMT).
2. Pay your January mortgage payment in December
Submit your January 2026 mortgage payment before the end of this year, which will increase your 2025 mortgage interest deduction.1 This strategy allows you to keep more money in your pocket sooner, and if you invest those tax savings, it may help you better compound the growth of long-term wealth.
3. Avoid the AMT if possible
If you might be subject to the dreaded AMT, be careful about paying your property and state taxes early. Dual-income couples who live in high-tax states are more susceptible to getting snagged by this tax.2 Consult your tax professional about this potential tax trap and steps you may take to avoid it.
4. Defer income
This will likely be easier to do if you are self-employed. If you’re looking to reduce your 2025 income tax obligations, consider delaying certain billings until late December or early January, so those earnings are reported on your 2026 tax return. If you expect to receive a financial bonus at year-end, see if you can postpone it until January. In our opinion, deferring income only makes sense if you expect to be in the same or a lower tax bracket in 2026.
5. Bunch your medical bills
Americans may only deduct medical expenses on their tax returns if their bills exceed 7.5% of their adjusted gross income.3 If you find yourself close to clearing that hurdle, consider paying additional medical expenses now to boost your total beyond the 7.5% threshold. For example, you might prepay your January health insurance premium, make doctors’ appointments now rather than early in 2026, or buy required medical supplies and prescription drugs that qualify for the deduction.
6. Harvest investment losses
If you want to dump an investment loser, you may consider selling it and pocketing the capital loss. This loss can offset the income that your overall portfolio has generated, thereby reducing your tax. You can use the capital loss to offset capital gains on other investments, plus up to $3,000 in ordinary income (or $1,500 if married filing separately).4 If you can’t take advantage of the entire capital loss in one year, you may carry forward the balance to future years. Tip: be sure it makes sense to sell the losing investment based on its merits, and not just to claim the capital loss. The prospects may still be bright for that investment, and it could end up being a winner. Consult your Corient Wealth Advisor to determine the best time to trigger a capital loss on a particular investment.
7. Donate appreciated investments to charity
For stocks or other securities with long-term capital gains, now may be a great time to donate directly to your favorite charity. If you sell a profitable investment and donate the proceeds to a charitable organization, you’re subject to tax on the gain. However, if you transfer the investment itself to a charity, you avoid the tax and pocket a tax deduction based on the fair market value of the investment on the date of donation, up to 30% of your adjusted gross income if you’re donating to a public charity.5
8. Capture a charitable deduction with a credit card
When you contribute to a charity by credit card, you’ll receive credit for the donation based on the date of the charge, not when you actually pay your bill. If you don’t have cash on hand right now, you can donate via credit card in December and capture the deduction in 2025, but pay the bill in January 2026, thereby bringing forward your tax deduction to help lower the current year’s taxes.6
9. Donate your IRA distribution
Retirees who must take yearly required minimum distributions (RMDs) from their individual retirement accounts (IRAs) may donate up to $108,000 to a favorite charity in 2025 with their withdrawal. If both spouses are age 70½ or older, then each spouse may exclude up to $108,000 from their gross income for tax-reduction purposes.7 A donated distribution will not be treated as income for the taxpayer on their return if the RMD is made to the charity directly from their IRA.
1 https://smartasset.com/mortgage/the-tax-advantage-of-making-an-extra-mortgage-payment-this-year
2 https://smartasset.com/taxes/amt-tax-brackets
3 https://www.irs.gov/taxtopics/tc502
4 https://www.irs.gov/taxtopics/tc409
5 https://www.tiaa.org/public/retire/services/preparing-for-retirement/giving/charitable-giving
6 https://www.consumerreports.org/charitable-donations/rules-for-last-minute-charitable-donations/
7 https://www.forbes.com/sites/bobcarlson/2025/03/27/plan-your-2025-qcds-and-rmds-now/
ABOUT THE AUTHOR
Erik Nelson
Erik is an Associate Partner, Wealth Strategist, Regional Director of Wealth Planning based in our San Diego office. He manages the San Diego financial planning team and serves as a technical leader for complex planning issues and initiatives. Prior to joining Corient, he served in financial planning and advisory roles over the last decade with two local wealth management firms in San Diego. Erik holds a CERTIFIED FINANCIAL PLANNER® and Certified Private Wealth Advisor® certifications. He has a Master of Science in Business Administration Financial & Tax Planning from San Diego State University. Erik completed his undergraduate work in Business Administration and Finance at San Diego State University.
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