Smart Tax Moves Before December 31: A Year-End Checklist for Families and Small Business Owners

By Andre Shammas

As a tax preparer and accountant in El Cajon, I see it happen every year—clients scrambling to reduce their tax burden just as the clock runs out on December 31. But here’s the truth: the best tax outcomes don’t come from last-minute panic. They come from year-end strategy.

Whether you’re a working family trying to keep more of your hard-earned money or a small business owner looking to reduce taxable income, the final weeks of the year offer golden opportunities—if you act in time.

Here’s a practical, easy-to-follow checklist to help you make smart tax moves before December 31 and head into tax season with confidence.

1. Max Out Your Retirement Contributions

One of the most effective ways to reduce your taxable income is to contribute to a tax-advantaged retirement account. For 2025, the contribution limits are:

$23,000 for 401(k), 403(b), or similar employer-sponsored plans ($30,500 if you’re 50 or older)
$7,000 for traditional IRAs ($8,000 if you’re 50 or older)

Contributions to traditional IRAs and 401(k)s (not Roth accounts) are tax-deductible, meaning they directly lower your taxable income.

If you’re self-employed, consider opening and contributing to a SEP IRA or Solo 401(k). These plans allow for even higher contribution limits, depending on your income.

2. Review Your Withholdings

If you’ve experienced a major life event this year—like a new job, a baby, or buying a home—your current paycheck withholdings might not be accurate.

Use the IRS Tax Withholding Estimator to see if you’re on track. If you’re likely to owe, now is the time to adjust your W-4 to withhold more. It’s better to catch up now than be surprised in April.

3. Spend Down Flexible Spending Accounts (FSAs)

If you have a healthcare or dependent care FSA, check your balance. These accounts often have “use-it-or-lose-it” rules, meaning any unused funds may be forfeited at year-end.

Common eligible expenses include:

Eyeglasses or contact lenses
Over-the-counter medications
Copays or deductibles
Childcare services

Some employers offer a short grace period or allow you to roll over a portion, but don’t assume—check with your HR department and use those funds if you can.

4. Time Charitable Contributions

Giving to charity isn’t just good for the heart—it’s also good for your taxes. Donations to qualified organizations can be deducted if you itemize your return.

To maximize the benefit:

Make contributions before December 31
Get proper documentation for each donation
Consider donating appreciated assets (like stocks), which can avoid capital gains tax and offer a full deduction of the asset’s value

Even small, consistent giving adds up. And if you’re close to the threshold for itemizing, a few extra gifts might push you over the line and make all your deductions count.

5. Plan Capital Gains and Losses

If you’ve sold investments this year, you may be facing capital gains tax. But you can offset those gains by selling other assets at a loss—a strategy called tax-loss harvesting.

Here’s how it works:

Short-term gains are taxed at higher rates than long-term gains
You can use losses to offset gains of the same type
If your losses exceed your gains, you can deduct up to $3,000 from your ordinary income

Just be mindful of the wash-sale rule, which prevents you from buying back the same investment within 30 days and still claiming the loss.

6. Defer Income (If You Can)

If you’re self-employed or a small business owner, and you expect to be in the same or a lower tax bracket next year, you might benefit from deferring income until January.

Ways to defer income include:

Sending out late-year invoices in January
Delaying end-of-year bonuses or commissions
Holding off on income-generating projects until the new year

Just make sure this strategy aligns with your overall financial plan and won’t create cash flow issues.

7. Make Large Business Purchases Before Year-End

If you’re a small business owner, now is the time to consider accelerating deductible expenses. Under Section 179, you can deduct the full cost of qualifying equipment, software, or vehicles used for business purposes—up to $1,220,000 in 2025.

Purchases must be:

Placed in service by December 31
Used more than 50% for business

Even smaller expenses—like office supplies or tech upgrades—can be valuable deductions if made before the end of the year.

8. Organize Your Tax Documents Now

The more organized you are now, the smoother tax season will be. Start by:

Reviewing last year’s return
Creating folders (physical or digital) for receipts, forms, and statements
Noting key deadlines (e.g., 1099s due in January, W-2s by the end of January)

This is especially helpful for families who track childcare costs, education credits, or home-related deductions. The earlier you start, the less likely something important slips through the cracks.

Planning Pays Off

Tax planning doesn’t have to be complicated or overwhelming. In fact, the most powerful moves are often the simplest—and the ones done consistently before December 31.

Whether you’re managing a household or running a small business, you owe it to yourself to be proactive. A few smart decisions now can lead to real savings and less stress in the new year.

At Shammas Bureau, I specialize in helping families and entrepreneurs build financial plans that serve their long-term goals. If you’d like personalized guidance, I’m here to help you finish the year strong—and set the stage for a prosperous 2026.

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Andre Shammas