Essential Tax Planning Tips for a Successful New Year

As the New Year begins, it’s the perfect time to review your financial strategy and ensure your tax planning is on track. Proactive planning can help you reduce your tax liability, maximize deductions, and align your financial goals for the year ahead. Here are some actionable tax tips to help set yourself up for financial success in 2025:

In your previous tax return, search for areas where you may have overpaid or missed deductions to establish a baseline for adjustments this year. Pay attention to any opportunities to carry over funds, such as unused charitable deductions or capital losses that can reduce this year’s taxable income.

Consider contributing to accounts that offer tax benefits, such as:

• Health Savings Accounts (HSAs), which provide triple tax advantages: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified expenses.
• 529 Plans for education savings, which grow tax-free when used for qualifying education expenses. Learn more about 529 plans here.

If you didn’t max out contributions last year, take advantage of the first quarter to catch up. Contributing to retirement accounts is one of the most effective ways to lower your taxable income. For 2025, the IRS allows contributions up to:

• $23,500 salary deferrals to 401(k) plans (with a $7,500 catch-up for those 50 and older and $11,250 catch-up for those between 60 and 63).
• $7,000 for IRAs (with a $1,000 catch-up for those 50 and older).

Learn more about retirement account contribution limits here.

For those who are self-employed or have significant income outside of traditional employment (such as investment income or rental properties), ensure you’re making estimated tax payments quarterly, as missing these deadlines can result in penalties. Use the first quarter to project your income and set aside funds accordingly.

If you have taxable investments, review your portfolio for opportunities to sell underperforming assets and offset gains. This strategy, known as tax-loss harvesting, can minimize your overall tax burden while maintaining your investment strategy. Read more about tax-loss harvesting here.

The New Year is an ideal time to organize and track deductible expenses, including:

• Charitable donations
• Medical expenses
• Home office costs
• State and local taxes

Credits often provide more value than deductions because they directly reduce your tax liability. Common credits include:

• Child Tax Credit
• Earned Income Tax Credit
• Energy-efficient home improvement credits

Keep an eye on legislative changes that might impact your taxes. For example, adjustments to income brackets, standard deductions, or specific credits could influence your strategy. Staying informed helps you pivot quickly and avoid surprises.

With potential tax law changes, the advice of a financial professional can ensure you’re taking full advantage of available opportunities. Schedule an appointment early in the year to develop a customized strategy and avoid last-minute stress. Click here to find an Oppenheimer financial professional near you.

Starting the year with a clear tax plan will help you set the tone for financial success. By taking these proactive steps, you can reduce your tax liability, maximize your savings, and feel confident as you move through the year.