As the calendar winds down, taxpayers are looking for strategic moves to reduce their 2025 federal income tax and take advantage of significant changes under the One Big Beautiful Bill Act (OBBBA). DunlapSLK, a CPA and business advisory firm based in Chalfont, outlines four key planning steps individuals should consider before year end.

First, reconsider whether to itemize deductions or take the standard deduction. While the OBBBA increases the standard deduction for 2025 — $15,750 for singles, $23,625 for heads of household, and $31,500 for joint filers — some taxpayers may save more by itemizing if their total qualifying deductions exceed those amounts. Itemizable expenses can include medical and dental costs above 7.5 percent of adjusted gross income (AGI), mortgage interest, casualty losses, and charitable gifts. Higher-income taxpayers may benefit by accelerating itemizable deductions into 2025 before certain limits tighten in 2026.

Second, maximize the expanded SALT (state and local tax) deduction. The OBBBA temporarily raises the SALT cap to $40,000 (with adjustments for inflation in future years), up from the old $10,000 limit. If you expect property taxes and other SALT expenses to exceed the standard deduction, bunching — paying deductibles like property taxes for two years in one — can push you into itemizing and boost tax savings.

Third, prepare for upcoming changes to charitable contribution rules. In 2026, a floor based on 0.5 percent of AGI will limit deductible charitable gifts. Bunching 2026 planned donations into 2025 may allow more deductions while avoiding the new restriction. Giving appreciated stock rather than cash can also enhance tax efficiency. For those not itemizing, you may want to delay 2025 charitable contributions until next year. Beginning in 2026, the OBBBA creates a permanent deduction for nonitemizers’ cash contributions, up to $1,000 for individuals and $2,000 for married couples filing jointly. Donations must be made to public charities, not foundations or donor-advised funds.

Lastly, manage your modified adjusted gross income (MAGI). MAGI affects eligibility for various credits and deductions, including the enhanced SALT cap, Child Tax Credit, and new temporary deductions, including the “senior” deduction of $6,000 for taxpayers age 65 or older. Strategies like spreading Roth conversions across years, maximizing retirement and HSA contributions, or using qualified charitable distributions (QCDs) for those 70½ and older can help lower MAGI and reduce tax exposure.

Learn more about both new and traditional planning opportunities to reduce your 2025 taxes from DunlapSLK.