3 tax moves to make before the end of the year to get bigger deductions

From paying more state and local taxes this year to moving holiday charitable gifts to 2026 and making clean energy improvements in your home, here’s what taxpayers need to do before the end of the year to take advantage of the variable tax breaks.

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

Ways to Maximize Incremental Salt Reductions

The “big, beautiful bill” increased the maximum 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 state and local governments from their federal taxable income, thus reducing their tax burden. The increased cap would significantly 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 ends, may want to “double pay” their estate taxes before the end of the year, said Jonathan Jack, senior tax advisor at Wealth Enhancement, a wealth management and advisory firm.

This strategy involves taxpayers paying state and local taxes on their property for both 2025 and 2026, and allows them to take the full deduction if their 2025 state and local taxes do not exceed the maximum SALT deduction.

“There are pros and cons to that,” Jack said. “It works well if you know you have other itemized deductions and plan to itemize only this year, mainly because if you double the payment this year, you won’t be able to accept it next year.”

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

“One big, beautiful bill” would make many deductions for charitable contributions more generous, starting with taxpayers who don’t itemize on their taxes in 2026. That means it may make more sense for non-itemizer individuals to defer any year-end charitable gifts until after 2025 ends, Jack said.

Specifically, the legislation reintroduces a charitable deduction to taxpayers who do not itemize their taxes. This deduction, also temporarily implemented in the 2020 tax year, allows filers to deduct up to $1,000 from their charitable contributions.

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

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

This is your last chance to use these discounts

Many Clean Energy Vehicle Credits expire at the end of September, but some Clean Home Credits are scheduled to expire on December 31. Taxpayers will need to make clean energy improvements to their homes before the end of the year to take advantage of these credits:

• Residential Clean Energy Credit: Taxpayers can deduct 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 deduct up to 30% of qualified expenses, up to $3,200, from their taxes. Eligible expenditures must meet energy efficiency requirements and may include the following:
• External doors
• Exterior windows and skylights
• Insulation and air sealing materials or systems
• Home energy audit
• 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 water heaters
• Biomass stoves and boilers