Year-end tax planning often involves navigating expiring provisions and adjusting to late-breaking legislative changes. This year, however, there is an unusual level of legislative certainty in the air.
The One Big Beautiful Bill Act (OBBBA) became law on July 4, 2025, giving taxpayers a long runway to anticipate and plan for the new tax rules. Now that the year is in its final stretch, individuals should evaluate how these updated provisions interact with their current financial position and leverage the available windows of opportunity before December 31.
The following article walks through the OBBBA updates relevant to individual taxpayers and how to braid them with traditional year-end tax strategies to create a better tax outcome.
How Tax Reform Changes Can Drive Year-End Savings
Expanded SALT Cap Provides Limited Window
One of the most valuable updates under the OBBBA is the expanded state and local tax (SALT) deduction cap. For tax years 2025 through 2029, the allowable deduction quadruples from $10,000 to $40,000 (adjusted for inflation) for taxpayers with MAGI under $500k.
This change presents a limited, four-year planning opportunity for households that that may want to accelerate payments on eligible, assessed state and local taxes to capture the expanded deduction while it lasts.
Permanent Tax Brackets and Higher Standard Deductions
The OBBBA made permanent the current tax rates and brackets established under the Tax Cuts and Jobs Act (TCJA), which means the 10%, 12%, 22%, 24%, 32%, 35%, and 37% rates will stay in place instead of increasing next year. Without this change, most people would have ended up paying more in taxes.
For planning purposes, taxpayers can now be more intentional about the timing of income and deductions, when to trigger gains, whether to convert to a Roth IRA, and how to avoid slipping into a higher bracket accidentally. The rate stability also makes multi-year decisions easier to model and project.
In addition, the OBBBA raised the standard deduction to $15,000 for individuals ($30,000 married filing jointly) and introduced a $6,000 senior bonus deduction ($12,000 for married filing jointly when both spouses qualify), which means fewer taxpayers will itemize. As a result, charitable giving and medical expense planning may require more strategic timing to be fully utilized.
Energy Credits Slated to Phase Out
Several energy-related credits are scheduled to phase out sooner than expected for both residential and commercial property owners.
Homeowners looking to replace windows, doors, insulation or HVAC systems will need to act before Dec. 31, 2025 to capture the expiring Energy Efficient Home Improvement Credit. This credit applies only to qualifying improvements placed in service by year-end, making timing particularly important with only a few weeks left in the year.
Likewise, the Residential Clean Energy Credit is ending for clean-energy systems purchased after Dec. 31, 2025, which includes solar panels and solar water heaters, wind turbines, and geothermal heat pumps.
For commercial builders, Section 179D, a two-decade-long incentive for energy-efficient building improvements, will sunset for projects that begin after June 30, 2026.
Homeowners, building owners, and contractors thinking of using tax credits to help fund projects will need to act quickly to meet impending deadlines.
Wealth Tax Planning Strategies
In what had been a looming expiration, the OBBBA permanently increased the estate, gift, and generation-skipping transfer (GST) tax exemptions to $15 million for individuals and $30 million married filing jointly in 2026, indexed for inflation.
With this increase, it’s an important time to look over your assets and estate structure to determine whether these provisions prompt a change in direction or reinforce your existing strategy. Remember to:
• Revisit your trust strategy. The higher exemption amount allows families to move more assets into irrevocable or non-grantor trusts to manage estate exposure and potentially benefit from income-tax planning opportunities like increased SALT deductions and QSBS exclusion strategies.
• Review state-level estate and gift tax exposure. Massachusetts is one of a few states that imposes an estate tax, currently set at a $2 million exemption, with estates above that taxed at graduated rates ranging from 7.2% to 16%. New Hampshire does not impose an estate or inheritance tax.
• Evaluate capital gains and basis planning to determine which assets may be better suited for lifetime gifting versus holding for a potential step-up in basis.
• Assess liquidity for future estate needs so executors are not forced to sell assets at a disadvantage or during down market conditions.
• Consider Qualified Charitable Distributions (QCDs). Taxpayers age 70 ½ or older can direct up to $108,000 from an IRA to charity, satisfying RMDs without increasing taxable income and helping avoid higher tax brackets or deduction phaseouts.
• Plan ahead for 2026 charitable contribution rules. Next year, non-itemizers can deduct up to $1,000 ($2,000 for joint filers) for eligible charitable gifts. Itemizers face a new 0.5% AGI floor that will limit deductions to amounts above that threshold; shifting 2026 giving into 2025 could offer a better tax benefit.
Where Traditional Planning Fits Into Year-End Tax Strategy
Even with the OBBBA garnering most of the attention lately, traditional year-end tax planning strategies continue to be highly effective in reducing tax liabilities in both the short and long term.
Tax Loss Harvesting
Selling underperforming investments through tax-loss harvesting can offset realized capital gains and help stabilize taxable income. Up to $3,000 of excess losses can be applied against ordinary income each year, and any remaining losses can be carried forward indefinitely to offset future gains or ordinary income.
Max Out Retirement Plans
To further reduce taxable income, another tried-and-true strategy is to maximize contributions to 401(k)s, IRAs and other qualified plans. The contribution limits for 2025 are as follows:
• Standard 401(k), 403(b), profit sharing, etc.: $23,500 for those under 50 with an additional $7,500 catch-up contribution allowed for those 50 and older. The overall defined contribution limit (employee + employer) is $70,000 for 2025.
• IRAs: $7,000 for those under age 50 and $8,000 for those 50 and older.
• SEP: $70,000 (the lesser of 25% of compensation or the annual limit).
If you’re considering a Roth conversion, compare the tax impact against your current marginal bracket and key income thresholds before moving forward to avoid triggering additional taxes or any higher Medicare premiums.
Steps to Take Before Yearend
As you consider your year-end strategy, be mindful of deadlines, expiring provisions, and the short-term decisions that influence long-term outcomes. The question now is how to make the most of these opportunities and align them with your broader financial goals.
Contact Kerry McMenamy at kerry@erocktax.com or 781-247-5569 to discuss your situation and how the OBBBA tax reform and traditional planning strategies can positively position your tax and wealth planning moving forward.
