With the 2025 tax year coming to a close, smart planning now can help maximize deductions, credits, and savings for your 2025 return filed in 2026. The Inflation Reduction Act’s OBBBA provisions introduce new opportunities—and some deadlines—before December 31, 2025. Here’s what your clients should know.

1. Homeowners and High-Tax State Residents

Maximize SALT Deductions:
The 2025 SALT cap allows itemizers to deduct up to $40,000 in state and local taxes. However, the expanded cap begins phasing out at $500,000 MAGI and disappears above that.

Year-End Moves:

• If under $500k MAGI: Pay any assessed property taxes due in December to count on your 2025 return.

• If near $500k MAGI: Avoid boosting income with year-end bonuses, Roth conversions, or capital gains that could reduce SALT benefits.
  
  

Charitable Giving for SALT Optimization:

• Large cash gifts to public charities or donor-advised funds.

• Gifts of appreciated stock or ETFs.

• Qualified Charitable Distributions (QCDs) from IRAs (age 70½+).

• Ensure these are executed before December 31, 2025 to impact 2025 deductions.

2. Families with Kids or Dependents

Enhanced Child Tax Credit:
OBBBA raises the 2025 Child Tax Credit to $2,200 per qualifying child. Phaseouts remain $200k single / $400k joint.

Year-End Checklist:

• Verify each child has a work-eligible Social Security number.

• Confirm dependency rules for other dependents (college students, elderly parents) to claim the $500 Other Dependent Credit.

3. Working Americans

New Above-the-Line Deductions:

• Tips: Deduct up to $25,000 of reported tips (phases out above $150k single / $300k joint). Report all tips to your employer or keep detailed logs.

• Overtime: Deduct the overtime premium portion, up to $12,500 single / $25,000 joint. Save year-end paystubs for proof.

• Car Loan Interest: Deduct up to $10,000 interest on a new, personal-use vehicle financed in 2025, with U.S. final assembly. VIN must be reported.

Deadline: Ensure all qualifying items are documented by 12/31/2025.

4. Seniors (Age 65+)

Additional Deduction: OBBBA provides $6,000 extra per qualifying senior. Phaseouts start at $75k MAGI (single) / $150k joint.

Tip: Delay income where possible (bonuses, extra IRA withdrawals) to stay under phaseout thresholds.

5. Energy and Vehicle Credits

Sunset Dates:

• EV tax credits end for vehicles acquired after 9/30/2025.

• Home energy credits expire for improvements and solar installed after 12/31/2025.

Action Items: Complete and place projects in service before year-end. Keep invoices, proof of payment, and certifications.

6. Small Business Owners (Schedule C / K-1 Filers)

Bonus Depreciation: 100% bonus depreciation applies to qualified property placed in service after Jan 19, 2025. Ensure equipment is in service, not just ordered, for year-end deductions.

QBI Deduction: Permanent provision—verify wage and basis limits if income is high.

7. Gig and Side-Hustle Income

1099-K Reminder: Forms are issued only if you exceed $20,000 and 200 transactions, but all income remains taxable. Keep detailed records to ensure accurate reporting.

Key Takeaway

Year-end planning under OBBBA can significantly impact your 2025 federal tax return. From SALT deductions and charitable strategies to energy credits and business depreciation, now is the time to act—before December 31, 2025.