Dear [CLIENT NAME]:

As the midpoint of 2025 approaches, it’s a good time to think of planning moves that will help lower your tax bill for this year and possibly next. Some of the best planning is done years in advance, but there are still many short-term moves you can make to reduce or help manage your 2025 income tax liability.

Many tax provisions, as currently written, are scheduled to expire at the end of 2025. If allowed to expire, taxpayers can expect higher tax rates in 2026 combined with more allowable deductions. As we speak, major tax legislation is working its way through Congress that seeks to largely extend the expiring tax provisions. In either scenario, the transition from 2025 to 2026 will contain major tax changes.

[I/We] have compiled a short checklist of actions based on current tax rules that may help you save tax dollars this year. The checklist is far from a list of all potential actions; however, it addresses some of the most common ones. Not all actions will apply in your particular situation, but you (or a family member) will likely benefit from some of them.

We can narrow down some of the specific actions that you can take if you would like to discuss these items over the phone or in person. However, if you are unsure of the tax effects of any move, then it is imperative that we discuss those potential effects ahead of time. In the meantime, please review the following list and contact me at your earliest convenience so that we can discuss which tax-saving moves make the most sense for you.

Separate checklists for individuals and business/real estate are attached. Thank you and [I/We] look forward to serving you in the coming year.

Sincerely,

Your Tax Professional

Tax Planning Moves for Individuals
☐	Realize losses on stock while substantially preserving your investment position. For example, you can sell the original holding, then buy back the same securities at least 31 days later. If you do not wait the full 31 days, then the losses are disallowed.
☐	Accelerate income into 2025 and delay deductions into 2026. In most tax years, we would advise the opposite, but tax rates are scheduled to increase in 2026 and more expenses are scheduled to be deductible. You will generally pay a lower rate of tax on income in 2025 and expenses that aren’t deductible in 2025 may be deductible in 2026, such as state income and property taxes in excess of the current $10,000 annual deduction limit, investment advisor fees, and unreimbursed employee business expenses.
☐	Consider converting traditional IRAs into Roth IRAs if eligible to do so. The conversion will increase your income for 2025 but depending on your expected tax bracket this year and going forward, the conversion may be beneficial in the long run.
☐	If you are paying state estimated tax payments, don’t pay your fourth quarter estimate in 2025. Instead, pay it in 2026 by its due date on January 15, 2026.
☐	Remember to take required minimum distributions (RMDs) from your IRA, 401(k), or other employer-sponsored retirement plan. RMDs from IRAs must generally begin by April 1 of the year following the year you reach age 73. Failure to take a required withdrawal can result in a penalty of 25% of the amount of the RMD not withdrawn. If you turned age 73 in 2025, you can delay the first required distribution to 2026, but if you do, you will have to take a double distribution in 2026-the amount required for 2025 plus the amount required for 2026. Think twice before delaying 2025 distributions to 2026 because of the anticipated higher tax rates in 2026.
☐	Solar credits and clean vehicle credits are still very beneficial. Taxpayers can claim credits of 30% of the cost to purchase and install solar panels on their home them and the credits are not reduced for high-income earnings like many other credits and deductions. Additionally, clean vehicle credits of up to $7,500 are available. Taxpayers can purchase (not lease) a qualifying clean vehicle by December 31 and finance the vehicle, then claim a federal tax credit of $7,500 immediately.

Tax Planning Moves for Businesses/Real Estate
☐	A tax break for small businesses allows you to expense (currently deduct) in 2025 up to $1,250,000 of the aggregate cost of many business assets. A reduction in the $1,250,000 dollar limitation (that can completely eliminate the expensing benefit) starts to take effect when qualifying property placed in service in the tax year exceeds $3,130,000.
☐	Before the end of 2025, businesses can buy new machinery and equipment and, for the cost of the property not expensed, deduct as bonus depreciation 40% of the cost of the assets if certain conditions are satisfied. President Trump has indicated that he wants bonus depreciation reinstated at 100%, but we must wait and see what coming legislation has to offer.
☐	To reduce 2025 taxable income, consider disposing of a passive activity in 2025 if doing so will allow you to deduct suspended passive activity losses.
☐	If you own an interest in a partnership or S corporation, consider whether you need to increase your basis in the entity so you can deduct a loss from it for this year.
☐	Alternatively, business and real estate investors looking to sell an asset or property that is under-producing and buy a new one may want to consider a tax free 1031 exchange. Qualifying exchanges allow you to effectively sell one property and buy another while deferring gain on the sale until the replacement property is sold.
☐	Businesses have a new credit available for clean vehicles that is, in some ways, less stringent than the vehicle credits available to individuals, but also requires special planning. For example, only vehicles that are used 100% for business purposes qualify. Vehicles that are used less than 100% for business purposes can still be treated as if they are used 100% for business purposes if certain requirements are met.