Tax Guide 2025

2025 Year End Tax Guide

We wanted to help clients get updated on some year-end tax savings strategies that may be of interest.  Not all of these may apply to you, but many may be helpful.  Feel free to pass this along to anyone it may help!

Retirement Plan Contribution Opportunities

We are big fans of maxing out retirement plans you are eligible for because of their tax benefits. Below are the IRS limits for 2025 and 2026 for various plans/accounts.

401(k), 403(b), and Similar Plans

*** beginning January 1, 2026, pre-tax catch-up contributions are no longer allowed for individuals making over $150,000.

IRA Options – Traditional & Roth IRA

SIMPLE IRA

SEP IRA

• 2025: 25% of the employee’s compensation, maximum contribution $70,000
• 2026: 25% of the employee’s compensation, maximum contribution $72,000

Advanced Retirement Strategies

Non-Deductible IRA Contributions / Backdoor Roth Conversions

• You can put money into a Traditional IRA even if you earn too much for a Roth, but the contribution won’t reduce your taxes.

• The money you put in is after-tax dollars, meaning you already paid taxes on it.

• Later, you can move that money from the Traditional IRA into a Roth IRA.

• Once in the Roth IRA, it can grow and be withdrawn tax-free in the future.

Itemized Deduction Strategies for 2025

This section can be confusing for many people, so we want to clarify the rules.

Standard Deduction vs. Itemized Deduction

2025 Standard Deduction Amounts:

• Single Filers: $15,750
• Married Filing Jointly: $31,500
• Head of Household $23,625
• Additional deduction per taxpayer age 65+ or Blind: $2,000 (Single) / $1,600 MFJ

The standard deduction is what you receive automatically each year unless your itemized deductions exceed it.

Itemized Deductions Include:

• Charitable Contributions
• State & Local Taxes (SALT) (previously capped at $10,000, but new rules apply effective in 2025)
• Medical Expenses (only amounts above 7.5% of AGI)
• Mortgage Interest (on mortgages up to $750,000)

Strategic Charitable Giving Options

If you’re charitably inclined and want to maximize your tax benefits, here are several strategies:

• Bundling Multiple Years of Donations

This may involve:

• Donating several years’ worth of contributions in one year
• Using a Donor Advised Fund (DAF) to contribute a larger amount now and distribute gifts to charities over time
  • Highly effective for appreciated securities
  • Avoids paying capital gains taxes on donated appreciated shares

• Donating Appreciated Securities

• Eliminates capital gains taxes
• Works especially well when paired with a DAF

• Qualified Charitable Distributions (QCDs)

Available if you are age 70½ or older:

• May donate up to $108,000 per year (2025 limit) directly from an IRA

• Not included in taxable income

• Helps manage Medicare premium thresholds

• Charitable Remainder Trusts (CRTs)

• Useful for large donations or business sale planning.

Property Tax and Estimated State Tax Payment Timing

• With the increased SALT cap in 2025, it may make sense to prepay your 2026 property taxes before the end of the year.

• Similarly, if you have a January estimated state tax payment due, you may get a benefit by paying that in 2025 (a strategy we have recommended over the years).

• Pairing this strategy with one of the charitable options above could maximize your tax deductions in the current year. 

If you have questions, please contact Marianne Brown, CPA or Dan Koppell, CPA.

Important Reminders

• Required Minimum Distributions (RMDs) must be taken by December 31, 2025 for individuals age 73+ with IRAs/401(k)s
• Beneficiary IRAs/Roth IRAs must take RMDs in 2025
• For questions about your 2025 RMD, contact:
  Alli Panagos — 732-556-4214 | alli@oujowealth.com
• Our office will reach out proactively in early 2026 regarding RMDs

Roth Conversion Considerations

Roth conversions can offer strong long-term tax benefits, but given recent strong market performance, valuations may make conversions less compelling at the moment. You must also have non-retirement funds available to pay the taxes. We will revisit this strategy as market conditions change.

Tax Projections

Contact Marianne Brown, CPA or Dan Koppell, CPA if you:

• Are self-employed and pay estimated taxes
• Had significant income changes
• Need assistance with complex tax matters

Gift and Estate Planning

• 2025 Annual Gift Exclusion: $19,000 per recipient
• Married couples may gift $38,000 per recipient
• We can assist with gift tax returns if your gifts exceed these amounts
• A deduction is available for non-itemizers (up to $1,000 on a single return and $2,000 on a joint return)
• There is a 0.5% AGI floor on itemized deductions (similar to medical expenses, where you can only deduct amounts over 0.5% of the current year AGI)
• Affects individuals 50 and older who make over $150,000 per year
• Catch up contributions must be ROTH or they are not allowed
• Available for children born between 2025 and 2028
• Initial deposits can’t/won’t begin until July 2026
• VERY limited guidance currently available

Looking Ahead: 2026 Tax Changes

Charitable Contributions

Itemized Deduction Limitation applies to taxpayers in the highest tax bracket – 37%

Child Care Credit amount is increased, but an additional income limitation is in place

Child Care Assistance Exclusion increases to $7,500 (previously $5,000)

401k Catch Up Contributions 

Trump Accounts are available for children born in 2025

We will continue to monitor developments and provide updates as more information becomes available.

Recap

If you have any questions regarding any of the information above, please reach out to our office.