As we approach 2026, there are a few strategies you might consider to save on taxes before the new year rolls around.
With just a few hours left in 2025, taking some quick actions can keep more cash in your wallet.
According to tax expert Brian Lake, one effective approach is to engage in charitable giving before the year’s end. Starting in 2026, the way itemized charitable deductions are calculated will change based on income levels.
“In 2026, significant adjustments will come into play regarding charitable giving. Those who itemize will have to lower their itemized charitable deductions by a specific percentage,” Lake explained.
To illustrate, each donation lowers your adjusted gross income by 0.5%. For someone making $200,000, that equates to a reduction of $1,000 for each contribution. Hence, donating now could yield greater benefits.
Another suggestion: If you’re looking to settle your state or local taxes this year, it might be wise to take care of that before midnight. Under the One Big Beautiful Bill Act, the cap on state and local tax deductions has risen from $10,000 to $40,000, but high earners will experience some phaseout. For individuals making over $500,000, the deduction decreases by 3% for amounts exceeding that limit and phases out entirely for incomes surpassing $600,000.
“So, it’s worth considering whether it’s advantageous to pay your estimated amount in the next couple of days, receiving the deduction sooner rather than waiting for next year,” Lake suggested.
Paying now means you can take advantage of this year’s tax credit without delay, often leading to a quicker refund for most taxpayers.
“When you think about the time value of money, it’s prudent to look at these deductions now, since money today holds more value than it does tomorrow,” Lake noted.
Additionally, purchasing a car before the new year might make you eligible for a tax deduction. Buyers can deduct up to $10,000 in interest if they acquire a new car made in the U.S. for personal use in 2025, a benefit not previously available.
This year also brings new advantages for seniors. Individuals aged 65 and older can claim an extra $6,000 for singles and $12,000 for married couples filing jointly, in addition to their standard or itemized deductions.
Keep in mind, other changes are on the horizon: tips and overtime pay will not count as taxable income in 2025, potentially lowering the tax burden for workers who earn additional income this year.
