December 30, 2025, 12:34 PM ET
Tax Reduction for 2 Days Only
If you haven’t already thought about maximizing your tax savings for 2025, there might still be a window—albeit a narrow one. I mean, you’ve got less than 48 hours left to make the most of these opportunities.
One good tip: thanks to the SECURE 2.0 Act of 2022, if you’re under 59-1/2, you can withdraw up to $2,500 from your retirement account to cover qualified long-term care insurance premiums without facing a 10% early withdrawal penalty. Just remember, this needs to be done after December 29, and you’ve got just today and tomorrow to make that happen, as noted by Richard Pong, a CPA in San Francisco.
The Last Call for Tax Cuts
It’s worth mentioning that the Residential Clean Energy Credit and the Energy Efficient Home Improvement Credit will be ending after December 31st. If you’re planning to take advantage of these, time is running short.
- Residential Clean Energy Credit: If you complete installation by year’s end, it can cover 30% of costs for items like solar panels, small wind turbines, and battery storage.
- Energy Efficient Home Improvement Credit: Homeowners can also claim 30% of the cost for energy-efficient upgrades, such as new windows or HVAC systems, if they’re ready by December 31.
Catch-Up Contributions to 401(k) Plans
For anyone aged 50 and older, the clock is ticking on catch-up contributions to 401(k) plans, which must also be done by December 31. Those 50 and up can typically contribute an extra $7,500, but if you’re between 60 and 63, you qualify for a “super” catch-up of $11,250.
It’s good to keep in mind that 401(k) contributions lower your taxable income, although withdrawals will be taxed later. If you’re saving in an IRA, you could see a $1,000 return by the tax filing deadline, usually around April 15.
Item Creators, Take Note
If you don’t itemize, you need to hold off on donations until after the New Year. Then you can claim a deduction of up to $1,000 for single filers or $2,000 for couples. But just remember, any donations made in 2025 won’t be deductible.
On the other hand, if you’re an itemizer, it’s actually important to make your donations by December 31 to maximize tax benefits. Next year, only contributions exceeding 0.5% of your adjusted gross income will be deductible. For example, with an AGI of $200,000, the first $1,000 of your donation won’t count as deductible.
Furthermore, for those in the top 37% tax bracket, the benefit on itemized deductions—including charitable donations—will drop from a potential 37% to just 35%. So, that $10,000 donation will give you a tax break of $3,500 this year, compared to $3,700 last year. It’s a bit of a hit, really.
