3 Tax Moves to Make Before Year-End for Bigger Deductions

From paying more state and local taxes this year to moving holiday charity gifts to 2026 and making clean energy improvements to your home, here is what taxpayers need to do before the year ends to take advantage of changing tax breaks.

The “One Big, Beautiful Bill” Act introduced several significant changes to tax credits and deductions for the 2025 tax year and subsequent years. Some will retroactively impact 2025 taxes, while others will take effect in 2026. However, tax experts say that individuals should take action now to maximize the benefits of the new tax changes, regardless of when they take effect.

Ways to Maximize the Increased SALT Deductions

The “One Big Beautiful Bill” increased the cap for the state and local tax deduction from $10,000 to $40,000 for the 2025 tax year.

The SALT deduction allows taxpayers who itemize to subtract the amount they paid in taxes to their state and local governments from their federal taxable income, thereby lowering their tax burden. The increased cap will most impact higher-income earners and those who live in high-tax states.

Taxpayers who make less than $633,333, the income point at which the deduction fully phases out, may want to “double-pay” their real estate taxes before the year ends, said Jonathan Jack, a senior tax advisor at Wealth Enhancement, a wealth management and advising company.

This strategy involves a taxpayer paying state and local taxes on their real estate for both 2025 and 2026, and allows them to take the full deduction if their 2025 state and local taxes do not exceed the increased SALT deduction cap.

“There’s a pro and a con to that,” Jack said. “It works well if you know you have other itemized deductions and you plan on only itemizing this year, mainly because if you double pay this year, you can’t take it next year.”

Taxpayers who receive income through interest, self-employment, capital gains, and more typically have to pay an estimated amount of taxes four times throughout the year. For the IRS, as well as many state and local governments, estimated taxes for the fourth quarter are generally due by Jan. 15.

However, paying quarterly state and local taxes before the end of the year can count toward the newly increased SALT deduction.

Whether You Itemize Your Taxes Will Change When You Should Make Charitable Donations

The “One Big, Beautiful Bill” makes several charitable contribution deductions more generous, starting for taxpayers who do not itemize their taxes in 2026. This means it may make more sense for non-itemizing individuals to hold off on any end-of-year charity gifts until after 2025 ends, Jack said.

Specifically, the legislation reintroduced a charity deduction for taxpayers who do not itemize their taxes. This deduction, which was also temporarily in place in the 2020 tax year, allows filers to deduct up to $1,000 of their charitable contributions.

However, the bill restricts charitable deductions for itemizers starting in 2026, so these taxpayers may want to expedite a donation they had planned to give next year, said Mark Luscombe, a principal tax analyst at Wolters Kluwer, a business information and data organization.

In 2026, itemizers will essentially face a new floor and limit on the amount of their charitable contributions that can be deducted from their taxes. These changes will reduce the amount that many taxpayers can subtract from their taxable income.

This Is Your Last Chance to Use These Deductions

Several clean energy vehicle credits expired at the end of September, but some clean home credits are scheduled to expire on Dec. 31. Taxpayers will need to make the clean energy improvements to their home before the year ends to take advantage of these credits:

• Residential Clean Energy Credit: Taxpayers can subtract up to 30% of qualified expenses from their taxes. These expenses include:
• Solar electric panels
• Solar water heaters
• Wind turbines
• Geothermal heat pumps
• Fuel cells
• Battery storage technology
• Energy Efficient Home Improvement Credit: Taxpayers can subtract up to 30% of qualified expenses, up to $3,200, from their taxes. Qualified expenses must meet energy efficiency requirements and can include:
• Exterior doors
• Exterior windows and skylights
• Insulation and air sealing materials or systems
• Home energy audits
• Central air conditioners
• Natural gas, propane, or oil water heaters
• Natural gas, propane, or oil furnaces and hot water boilers
• Electric or natural gas heat pumps
• Electric or natural gas heat pump water heaters
• Biomass stoves and boilers