Wondering How to Approach 2025 Year-End Tax Planning? Here’s What Matters Most

Hi Friends,

It is hard to believe we are already into December. The holidays always feel like a big nudge that it is time to get moving, especially when it comes to 2025 Year-End Tax Planning.

When we prepare tax returns, we often see moments where a bit of proactive planning could have made life easier and taxes less expensive. We only get to work with the tax rules that exist right now, and under the current law we still have a few good years left. With the nation’s rising debt, it is hard to imagine that tax rates will not increase eventually, so it makes sense to take advantage of today’s opportunities while they are available.

A New Deduction for Seniors

If you are over 65 and your income is under 150,000 dollars (single) or 300,000 dollars (married), you may qualify for a new 6,000 dollar deduction per person. That is a 12,000 dollar reduction for married couples. It does not make Social Security tax-free, but it does lower taxable income.

If you've been thinking about a Roth conversion, this may be a good time to explore it during your tax consulting session so we can run the numbers together.

Solar and Energy Credits Still Matter

If you made solar improvements this year, do not overlook the energy credit. A well-timed credit can offset tax you might owe on a Roth conversion or a planned retirement withdrawal. The IRS explains the credit in their energy credits overview, which is a helpful resource if you want to understand how the timing works.

There are Capital Gains Opportunities

The market has done well this year, and that creates opportunity. Many taxpayers miss the chance to realize gains at low or even zero tax rates. Long-term capital gains fall into the 0 percent, 15 percent, and 20 percent brackets.

The key is figuring out how much you can take without bumping yourself into a higher bracket. If you're unsure, our planning for retirement can help you weigh the benefits so your choices support your long-term goals.

Working together, we can project your 2025 income and make sure your timing supports the best possible outcome.

Why Timing Matters This Year

My call to action is simple. Let’s talk.

Do not wait until tax season to find out what could have been done. When we plan ahead, we can avoid surprises, reduce penalties, and take advantage of deductions that may not be available forever.

We want to be proactive, not reactive. That will be my battle cry for the next few years. The current tax law gives us only a few more years of favorable planning opportunities. Let’s make the most of them while we still can!

Warmly,

Melissa Ochoa

Enrolled Agent & Owner, Apple Blossom Tax Service

Serving Sebastopol and Sonoma County