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Still Time to Lower Your 2025 Taxes in 2026

Still Time to Lower Your 2025 Taxes: What You Can Do Before Filing in 2026. In our experience working with clients, many assume that once the calendar year ends, their tax situation is fully locked in, and any tax-saving moves must have been made before the end of the year. But your 2025 tax bill isn’t set in stone once New Year’s hits. While Q1 provides time to prepare for the year ahead, it’s also your final chance at reducing last year’s tax bill.

In this blog post, we’ll cover:

  • Retirement contributions that may still reduce your 2025 taxable income
  • Legislative changes that affect 2025 tax deductions
  • How expanded SALT limits could affect your itemizing decision
  • Tax credits that are often overlooked before filing
  • Key reporting considerations for investments and digital assets

Retirement Contributions That Still Count for 2025

Depending on which kind of retirement accounts you hold, the easiest and most efficient way to reduce your 2025 taxable income may be simply to make more contributions to your account.


Traditional IRA Contributions

You have until the tax filing deadline (typically April 15, 2026) to make a Traditional IRA contribution for 2025.

For 2025:

  • $7,000 under age 50
  • $8,000 if age 50 or older (including the $1,000 “catch-up” contribution)

If eligible for the deduction, that contribution may reduce your 2025 adjusted gross income.

Anyone with earned income can contribute to a Traditional RIA. However, whether that contribution is tax-deductible depends on your modified adjusted gross income (MAGI) and whether you (or your spouse) participate in a workplace retirement plan such as a 401(k).

For the 2025 tax year, the deduction begins phasing out at $79,000 for single filers covered by a workplace plan and is fully eliminated at $89,000.

For married couples filing jointly where the contributing spouse is covered, the phaseout range is $126,000 to $146,000.

If you’re not covered but your spouse is, the phaseout occurs between $236,000 and $246,000.


Self-Employed Retirement Plans

Business owners often have access to retirement plans that offer more flexibility than traditional IRA rules provide.

For 2025, contributions to self-employed retirement plans such as SEP-IRAs or the employer portion of a Solo 401(k) can generally be made up until the business tax return deadline, including extensions. In many cases, that means contributions can still be funded well into 2026 and applied to 2025 income.

Contribution limits are much higher than IRAs, reaching up to $70,000 for 2025, depending on your income and plan type. The calculation is different for sole proprietors and S-corporation owners, and Solo 401(k)s have both employee and employer parts with separate deadlines.

In years with high income, this may be one of the more impactful ways business owners can reduce prior-year taxable income, depending on their circumstances.


HSA Contributions (Often Overlooked)

If you were covered by a qualified high-deductible health plan and met HSA eligibility requirements in 2025, you may still make a 2025 contribution up until the filing deadline.

For 2025:

  • $4,300 (self-only coverage)
  • $8,550 (family coverage)
  • $1,000 (catch-up if age 55+)

If you were eligible in 2025, contributing up to the allowable limit before the filing deadline may reduce your 2025 taxable income.

HSAs also offer tax-deferred growth and tax-free withdrawals for qualified medical expenses, which allows you to claim a rare triple tax benefit that can help you beyond this year.

New 2025 Tax Law Changes Worth Reviewing Carefully

Due to recent legislation, the 2025 tax year brought additional deduction opportunities. While you cannot create these deductions in the first quarter of 2026, you can make sure you qualify and have the right documentation before you file.

These are deductions, not credits, so they lower your taxable income instead of directly reducing your taxes. Eligibility rules and income phaseouts still apply.


Qualified Tip Income Deduction

Eligible taxpayers may deduct up to $25,000 of qualified tip income.


Qualified Overtime Deduction

Up to $12,500 (single) or $25,000 (married filing jointly) of qualified overtime compensation may be deductible.


Car Loan Interest Deduction

Up to $10,000 of interest on loans for new, U.S.-assembled vehicles may be deductible, subject to income limits and vehicle requirements.


Senior Bonus Deduction

Taxpayers age 65 or older may qualify for an additional $6,000 deduction ($12,000 for qualifying married couples), with phaseouts at higher income levels.


Itemizing vs. Standard Deduction

For 2025, the State and Local Tax (SALT) deduction cap increased to $40,000 (or $20,000 if married filing separately). However, taxpayers with modified adjusted gross income above $500,000 may not receive the full benefit, as the cap begins to phase down at higher income levels.

This change alone could lead more people to itemize their deductions this year, especially in high-tax states.

The 2025 standard deduction is:

  • $15,750 (single)
  • $31,500 (married filing jointly)
  • $23,625 (heads of households)

To see if itemizing is right for you, compare the standard deduction to the total of the following:

  • State and local taxes paid (subject to the cap)
  • Mortgage interest (generally limited to interest on up to $750,000 of acquisition debt)
  • Charitable contributions (subject to AGI limitations)
  • Medical expenses that exceed 7.5% of adjusted gross income

For some households, the higher SALT cap may make itemizing worthwhile. For others, especially those with higher incomes affected by phase-down rules, the benefit may be smaller than expected.

Tax Credits You Don’t Want to Miss

Tax credits lower your tax bill directly, making them even more valuable than deductions. While you cannot create new credits in the first quarter, you can make sure to claim any you earned in 2025.


Child Tax Credit

Up to $2,200 per qualifying child, subject to income phaseouts.


Adoption Credit

Up to $17,280 of qualified expenses, with a portion potentially refundable for 2025.


Energy Credits

If you completed qualifying improvements to your home in 2025, you may be eligible for:

Investment and Crypto Reporting

You cannot retroactively harvest losses after December 31, 2025.

However, you can ensure that:

  • Capital loss carryforwards are properly applied
  • Cost basis reporting matches brokerage records
  • Wash sale adjustments are accounted for

As of 2025, there are new reporting rules for digital assets. Many centralized exchanges must now provide Form 1099-DA, giving the IRS more insight into crypto transactions.

If you bought or sold digital assets in 2025, review the tax forms provided by your exchange and confirm they align with your records, ideally in coordination with your tax professional.

Review Your 2025 Tax Strategy Before You File

Before you file your 2025 return, consider reviewing your retirement contributions, deduction eligibility, and income projections as part of an overall strategy. Taking a second look now may help identify overlooked items and support more coordinated planning for the year ahead.

We are not tax preparers, but we can help you consider the strategic impact of your tax decisions and work with your CPA to make sure your investments, retirement contributions, and income planning are coordinated.

To get started, call us at 877-930-4015, reach out online, or schedule an introductory call with one of our advisors.

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This article is provided for informational purposes only and should not be construed as tax advice. Individual circumstances vary, and we encourage you to consult with your CPA or tax professional regarding your specific situation.

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