Smart Tax-Saving Strategies for 2025

Matt Erickson
Jul 17
6 min read

You asked for more information about smart tax-saving strategies for 2025, so I am back with some opportunities for you to consider. As you read this post, you’ll notice that I rarely mention specific dollar amounts, thresholds or income limits. There is a good reason for that. Because there have been so many recent tax changes, even the IRS hasn’t published details on all of them yet. What I’m aiming to provide you with today is a list of ideas for you to read through and note which ones you want to ask your CPA about possibly using as part of your own strategy to save on taxes.

1. Maximize Retirement Contributions

Contributing to tax-advantaged retirement accounts is one of the most effective ways to lower your taxable income and accelerate long-term savings. Higher catch-up amounts for ages 50+ help help you catch up if you’re late to the game. For 2025, the limits have just been raised, so it’s a great time to make certain that you are taking full advantage of this strategy. With applicability to 401(k)s, 403(b)s, Roth IRAs, Traditional IRAs, SEP-IRAs, and Solo 401(k)s, you can opt in whether you have an employer or are self-employed.

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👉 Tip: Automate your contributions through payroll or other regularly scheduled transfers to stay on track.

📚 Learn more: Check out two of my recent blog posts on retirement accounts, How to Prioritize Your Retirement Contributions and Roth vs Traditional IRA, which both offer more details.

2. Use Tax-Free or Tax-Advantaged Accounts

Health Savings Accounts (HSAs)

HSAs offer triple tax benefits that include deductible contributions, tax-free growth, and tax-free qualified withdrawals. To qualify, you must have a high-deductible health plan (HDHP) with a specific minimum deductible amount depending on your filing status.

529 College Savings Plans

This one is better than its name suggests since it can also be used for K-12 tuition and related expenses. Contributions grow tax-free when used for qualified education expenses, and many states offer tax deductions or credits for 529 contributions. (Check your state’s rules for caps and benefits.)

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“Trump Accounts”

Embedded in the newly passed One Big Beautiful Bill, Trump Accounts go into effect in 2026 and offer a $1,000 government-funded investment account to every American child born between 2025 and 2028 with no income limits. Contributions from various sources are allowed up to $5,000 annually (including $2,500 tax-free from employers), are locked in until age 18, and are earmarked for future education, a first home, entrepreneurial ventures, or retirement. As of this writing, there is no information directly from the IRS, so stay tuned for their official release. It is our understanding that these accounts will be treated similarly to IRAs once the children reach age 18.

3. Harvest Tax Losses

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Selling underperforming investments in taxable accounts can generate capital losses that offset capital gains and therefore reduce tax on ordinary income. While there are annual deduction limits, you can carry forward unused losses to future tax years.

⚠️ Caution: Avoid wash sales. If you sell a security at a loss and buy a "substantially identical" security within 30 days before or after the sale, the loss is disallowed. To maintain market exposure, you can replace the sold asset with a similar (but not identical!) investment or simply wait 31 days.

👉 Tip: Track capital loss carryovers each year to use them before they expire.

4. Leverage Tax Credits

Tax credits are better than deductions because they reduce your tax bill dollar-for-dollar. Some important credits for 2025 include:

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Child Tax Credit
Earned Income Tax Credit
American Opportunity Tax Credit
Lifetime Learning Credit
Saver’s Credit (Retirement Savings Credit)

⭐ You can find a much more comprehensive list from the IRS here.

5. Bundle Deductions

If your annual itemized deductions are close to the standard deduction, bunching can help. By bunching, you may be able to alternate between itemizing this year and taking the standard deduction next year, so you can maximize tax breaks. Strategies include:

Bunch charitable gifts

Rather than take the standard deduction two years in a row, make two years’ worth of tax-deductible donations in one tax year if that allows you to itemize. The following year you can take the standard deduction or employ another strategy. Donor-advised funds can front-load contributions for future distribution. (See more detail on this in the next section under Strategic Charitable Giving.)

Timing medical expenses

Deductible medical expenses must exceed a certain percentage of AGI. Schedule costly or major elective treatments in one year to surpass the threshold.

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Prepay property taxes

Pre-pay state and/or local property taxes in December instead of the new year to include them in the current year’s deductions.

6. Income Shifting & Gifting Assets

Shifting income to family members in lower tax brackets can reduce the household tax burden. Key tools include:

Annual Gift Exclusion

You can gift up to $19,000 per recipient in 2025 tax-free. (Gifts above this count

against your lifetime estate/gift exemption.)

Estate/Gift Tax Exemption

The federal estate and gift tax exemption is nearly $14 million per person for 2025, sheltering large transfers.

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UGMA/UTMA Custodial Accounts

Fund Uniform Gifts to Minors Act or Uniform Transfers to Minors Act children’s accounts; earnings are taxed at the child’s rate. However, beware the “kiddie tax” on investment income over a certain threshold.

Spousal IRA Contributions

You can contribute to your nonworking spouse's IRA, potentially offering you another tax deduction.

These and other similar income shifting strategies require careful planning, so I strongly recommend professional advice for complex gifting or income shifting.

7. Strategic Charitable Giving

Donor-Advised Funds (DAFs)

Contribute assets to a DAF for an immediate tax deduction, then grant the money to charities later. This allows you to lock in deductions in high-income years and decide charities later.

Qualified Charitable Distributions (QCDs)

If you’re age 70½ or older, you can donate a limited amount annually directly from your IRA to charity. QCDs are excluded from income and count toward required minimum distributions (RMDs).

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8. Real Estate Strategies

If you own real estate investments, they offer you unique tax benefits.

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Depreciation & Cost Segregation Studies

Rental property owners can deduct asset depreciation (a non-cash expense) against rental income, sheltering more income. You might also consider cost segregation studies to take this a step further.

1031 Exchanges

If you sell investment real estate and reinvest in like-kind property, you can defer capital

gains taxes. Strict rules and timelines apply, and depreciation recapture will apply when you eventually sell, so I encourage you to work with a tax professional.

9. Lesser-Known Tax Hacks

Qualified Business Income (QBI) Deduction

Many pass-through business owners can deduct a certain percentage of qualified business income. Note that above the set income thresholds, the deduction phases out for specific service businesses, such as health, law, and finance.

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Home Office Deduction

If you’re self-employed and use part of your home exclusively for business, you can deduct a portion of mortgage interest, utilities, and internet.

W-4 Withholding Adjustments

Periodically adjust your W-4 at work to more closely match your tax liability. Proper withholding can help avoid owing a big bill or getting a very large refund, which is effectively an interest-free loan to the government.

Energy-Efficient Home Credits

Through 2032, you can claim a certain amount for qualifying energy-efficient home improvements (e.g. insulation, heat pumps, windows).

Adoption Tax Credit

For special needs adoptions, there is an available credit per child. If your adoption expenses don’t meet the threshold, the credit won’t produce a tax refund for you, but any unused credit can be carried forward to future years.

Start Now with Your Tax-Saving Strategies for 2025

Ultimately, starting now and being proactive with tax planning can reduce your 2025 tax bill and therefore boost your overall savings. The right mix of retirement contributions, credits, deductions, and strategic timing can significantly lower your tax burden. While this isn't an exhaustive list, I hope it will inspire you to investigate and look for new ways to save on taxes. Just remember what I said at the beginning; as we saw again just recently, tax laws change frequently, so please consult with the IRS or your CPA for personalized advice and the latest available details.

If you have any thoughts or questions, feel free to email me. Otherwise, let me know... what has been your favorite tax-saving strategy in the past and which ones are you looking forward to taking advantage of in 2025?