2025 End-of-Year Tax Planning is Crucial

The passage of the One Big Beautiful Bill Act (OBBBA) in July 2025 created some interesting tax planning opportunities all of us should consider as 2025 draws to a close. Here are a  few that caught our fancy.

Charitable contribution deduction for nonitemizers

Starting in 2026, taxpayers who do not itemize can deduct up to $1,000 in charitable contributions (up to $2,000 for married couples who file jointly). Caution: donations to donor-advised funds and private foundations are not eligible for this deduction.

If you don’t itemize and want to consider this tax break, consider making your 2025 end-of-year charitable contributions after January 1, 2026.

Charitable contribution deduction for itemizers

Taxpayers who do itemize and deduct charitable contributions will be subject to new limits on the amounts they can deduct. Beginning in 2026, the charitable deduction will be limited to the amount that exceeds 0.5% of adjusted gross income.

For example, a married couple whose 2026 adjusted gross income is $200,000 can only deduct charitable contributions in excess of $1,000 (200,000 x .005=1,000). If they donate $2,000 to charity in 2026, they can only deduct $1,000 on their tax return.

To avoid the new floor, itemizers may want to make their 2026 contributions in 2025. But talk to your tax professional so you can consider how higher charitable contributions will affect other aspects of your 2025 tax liability.

Wagering loss deduction limitation 

For taxpayers who have gambling losses in 2026, OBBBA limits how much of your loss can be claimed on your taxes. Only 90% of wagering losses will now be deductible, up to the amount of winnings. This may result in taxes owed on some of your gambling gains.

For example, on your December 2025 trip to Las Vegas, you win $50,000 and have gambling losses of $50,000. In 2025, you can deduct losses up to the amount of gains. Therefore, none of your winnings are taxable on your 2025 tax return.

Suppose your December 2025 trip to Las Vegas was postponed for one month. In January 2026, you win $50,000 and have gambling losses of $50,000. You can only deduct 90% of your loss on your 2026 tax return, or $45,000. Therefore, you must pay income tax on $5,000 of your winnings on your 2026 income tax return.

State and local tax deductions 

In 2025, the cap on the amount of state and local tax (SALT) that itemizers can deduct is $10,000. Starting in 2025, the cap on the deduction is $40,000. It may make sense for some taxpayers to make 2025 end-of-year property tax payments in early 2026. The SALT deduction limit reverts to $10,000 in 2030.

Standard deduction 

The standard deduction in 2025 is $31,500 for joint filers, $23,625 for heads of households, and $15,750 for single filers. If your itemized deductions are close to the standard deduction, consider bunching or accelerating discretionary expenses like charitable contributions and medical costs into 2025 to itemize in 2025 and use the higher standard deduction in 2026.

Wash-sale rules and cryptocurrency

The wash-sale rule prohibits claiming a tax loss under certain circumstances. If an investor sells an investment for a loss and replaces it with the same or substantially identical investment 30 days before or after the sale, you will not be allowed to deduct the investment loss.

The wash sale rules do not currently apply to cryptocurrencies because they are not regulated as securities. You can therefore sell coins whose value has declined to realize a loss and buy them back immediately at the same price. By doing this, you can recognize a loss while still holding the asset. This loophole will likely be eliminated in the future, so stay in touch with your tax advisor so you can keep track of any changes.

The tax planning strategies discussed above are somewhat lighthearted, but good end-of-year planning is a critical, proactive strategy that can allow individuals and businesses to legally minimize their current year tax liabilities. With some of the provisions of OBBBA taking effect in 2025 and some in 2026 and later years, it is especially important for you to do careful tax planning now, before the close of the year, with someone who understands the new law.

At R&A, we have outstanding tax professionals who can help you create solid tax-planning strategies for the end of 2025. We encourage you to take advantage of our expertise soon because December 31st will be here before you know it! End-of-year tax planning is vitally important, and we would love to be part of the process for you, your family, and your business. Reach out to us today!