With only a few weeks remaining in 2025, time is running out to reduce your taxable income for the year. Taking just a few steps before year-end can help strengthen your financial position as you head into 2026, and your future-self will thank you when tax preparation season rolls around next year. 

Harvest losses in your investment portfolio. During the year, your portfolio might have shifted due to market performance. Selling those investments that have lost value can offset capital gains and reduce taxes owed on your investment portfolio. At Thielen & Associates, Inc., we can assist with tax-loss harvesting, as well as portfolio rebalancing to ensure your asset allocation still fits your goals and risk tolerance.

Maximize contributions to tax-advantaged accounts. Pre-tax contributions to your 401(k) or traditional IRA can reduce your taxable wages up to the IRS’s annual limit. If you’re contributing the maximum allowed amount each year, you’re doing your part to minimize taxes while bolstering retirement savings. 

Fund your health savings account. HSAs offer a triple tax benefit; contributions, growth, and qualified withdrawals are all tax-free, so be sure you’re maxing out HSA contributions every year. 

Give charitable gifts. Charitable giving can reduce your taxable income while supporting worthwhile causes. Donor-advised funds, qualified charitable distributions from IRAs, or bunching multi-year contributions into a single year to maximize deductions are all helpful tax-saving strategies. Although California follows federal rules allowing for itemized deductions, the state caps cash gifts at 50% of adjusted gross income rather than the 60% allowable in many other states.

Defer income until next year, if you expect to be in the same or a lower tax bracket. If you own a business, timing can be a valuable tool in your tax-saving toolbox. Delaying self-employment invoices, deferring bonuses, or controlling the timing of asset sales can helpfully reduce your taxable income in 2025. However, it’s important to assess how your tax rates might change next year to determine if deferring income to next year is, in fact, beneficial.

Accelerate the purchase of deductible business equipment. Buying qualified business equipment has two tax-saving perks. First, it allows for immediate expensing under Section 179 instead of depreciating the property over several years. Second, it lowers your 2025 taxable business profit. You also get the peace of mind of heading into the new year fully stocked with the resources your business needs to operate smoothly.

At Thielen & Associates, Inc., we integrate tax and investment advice to optimize your financial outcomes. Contact our team if you’d like to discuss any of these tax-saving strategies.