1. Review and Pre-Pay SALT (State & Local Taxes)
Action: Pre-pay property taxes or other deductible state/local taxes if itemizing.
Why by Year-End: The SALT deduction cap for 2025 is temporarily increased to $40,000.
Paying now locks in the full deduction under 2025 rules.
2. Accelerate Charitable Contributions
- Action: Make charitable donations (cash or property) before year-end.
- Why by Year-End: Starting in 2026, new limitations on itemized charitable deductions take effect. Giving in 2025 allows you to maximize deductions under the current rules.
3. Accelerate Qualified Business Expenses & Capital Purchases
- Action: Buy qualifying equipment, property, or other deductible items and place them in service before December 31.
- Why by Year-End: Assets must be in service in 2025 to qualify for 100% bonus depreciation, reducing taxable business income for 2025.
4. Use Increased Estate & Gift Exemptions for Gifting or Trust Transfers
- Action: Make gifts or fund trusts using the $15M individual / $30M married exemption.
- Why by Year-End: Gifts made by December 31 count toward 2025 exemptions, allowing you to remove future appreciation from your estate under the new OBBBA rules.
5. Re-Evaluate Whether to Itemize or Take the Standard Deduction
- Action: Compare itemized deductions with the standard deduction for 2025.
- Why by Year-End: With the enhanced SALT cap and potential large deductions, acting now may make itemizing more advantageous than taking the standard deduction.
6. Maximize Retirement Plan Contributions
- Action: Contribute to 401(k), SEP IRA, or other retirement accounts.
- Why by Year-End: Contributions credited in 2025 reduce your taxable income for this year, helping offset income from employment or self-employment.
Next Steps
✅ Schedule a year-end tax strategy session with Penrose & Associates LLC
✅ Review your expected 2025 income, deductions, and possible prepayments or contributions
✅ Decide which actions to accelerate or defer to optimize your overall tax outcome
Acting before December 31, 2025, ensures you maximize the expanded SALT deduction, charitable contributions, business deductions, and estate/gift planning benefits — positioning you for an efficient 2026 under OBBBA.