New $40,000 SALT Cap and OBBBA Changes Drive Urgent 2025 Year-End Tax Planning Ahead of December 31 Deadline

As the year draws to a close, taxpayers are urged to finalize their 2025 tax planning strategies by December 31 to capitalize on significant legislative changes. Financial expert Ankur Nagpal highlighted the urgency on social media, stating, > "Most tax planning to save money on your 2025 taxes has to be implemented by December 31. Here's your end-of-year guide for every tax planning move you need to look into before the end of the year." These moves are critical following the passage of the One Big Beautiful Bill Act (OBBBA), which has reshaped federal taxation.

The OBBBA has permanently extended several Tax Cuts and Jobs Act (TCJA) provisions and introduced new tax rates and deductions. Notably, the State and Local Tax (SALT) cap has been increased to $40,000, offering greater relief for many taxpayers. Other key changes include maximized deductions for tips, overtime, and car loan interest, alongside 100% permanent bonus depreciation and doubled IRC § 179 limits for businesses.

Investors should review their portfolios for tax-loss harvesting opportunities, with November 28, 2025, being a critical deadline for recognizing losses. The act also preserved lower long-term capital gains rates, encouraging strategic timing of asset sales. Furthermore, new regulations for digital assets will require brokers to report sales and exchanges on Form 1099-DA starting in 2026 for 2025 transactions, emphasizing the need for accurate self-tracking for decentralized exchanges.

Year-end is also crucial for optimizing retirement savings, with increased contribution limits for IRAs and 401(k)s. Individuals aged 60 to 63 can benefit from higher catch-up contributions, reaching $11,250 for 401(k)s in 2025. Taxpayers must also ensure they take their Required Minimum Distributions (RMDs) by December 31 to avoid steep penalties, or by April 1, 2026, for their first RMD if they turned 73 in 2025.

Charitable giving strategies, such as donating appreciated stock or utilizing donor-advised funds, can maximize deductions before new limitations take effect in 2026. The OBBBA also increased the maximum child tax credit to $2,200 per dependent and enhanced the adoption credit. Additionally, dependent care Flexible Spending Account (FSA) limits are set to rise significantly in 2026, making 2025 a good time to review and plan.

Given the complexity and individualized nature of tax planning, consulting with a professional tax advisor is highly recommended. These experts can help assess personal circumstances, estimate tax liabilities, and identify the most suitable strategies to reduce tax burdens for 2025 and beyond. Proactive planning before the December 31 deadline is essential to leverage these opportunities effectively.