If you want to lower your tax bill this year, the clock is ticking, and a few smart moves before December 31 can make a real difference.
Year-end tax savings don’t come from guessing in April. They come from taking action now. Three areas matter most for individuals who want legitimate, IRS-approved savings.
Retirement contributions are one of the fastest ways to reduce taxable income. Contributions to traditional IRAs, 401(k)s, and SEP IRAs can lower what the IRS taxes you on. The key is timing, contributions must be made by the deadline to count. If your income was higher than expected this year, increasing retirement contributions can help balance the tax impact while building long-term wealth.
Medical expenses are another overlooked opportunity. If your out-of-pocket medical costs exceed 7.5% of your adjusted gross income, the amount above that threshold may be deductible. This includes doctor visits, prescriptions, dental work, and certain insurance premiums. If you’re close to the threshold, paying expenses before year-end can unlock a deduction that would otherwise be lost.
Certain business-related costs can also reduce your personal tax bill, especially for self-employed individuals. This may include home office expenses, professional services, equipment, education, and mileage, but only if the expenses are paid before December 31 and properly documented.
Lastly, harvesting investment losses can offset capital gains and reduce taxes owed. Selling underperforming investments before year-end allows you to use losses strategically instead of letting them go to waste.
These moves only work if they’re done on time. If you want help deciding which ones apply to you, now is the moment to review.
