End-of-year tax-saving moves you should make.

Below are several tax-planning strategies I am implementing to reduce my tax liability for 2025. For context, this perspective is written from the standpoint of a business owner with both 1099 and W-2 income.

1. Tax-Loss Harvesting (W-2/1099 Income): Tax-loss harvesting involves selling investments in a taxable brokerage account at a loss to offset taxable income. For 2025, you may deduct up to $3,000 in capital losses against ordinary income. Any losses exceeding this limit can be carried forward indefinitely and applied to future tax years.

2. Maximize Contributions to Retirement Accounts (W-2/1099): As a high-income earner, maximizing retirement contributions is one of the most effective ways to reduce taxable income. The U.S. tax system is progressive, meaning additional income is taxed at higher marginal rates. Contributing to tax-advantaged accounts reduces income subject to these higher rates.

For 2025, the maximum employee contribution to a 401(k) or 403(b) is $23,500. For business owners, the maximum contribution to a Solo 401(k) or SEP IRA is $70,000, which includes both the employee portion ($23,500) and the employer portion ($46,500).

You may also contribute to a Traditional or Roth IRA. Traditional IRA contributions may be fully or partially deductible if your income is below $83,000 for single filers or $240,000 for married couples filing jointly. Roth IRA contributions are not deductible; however, qualified withdrawals in retirement are entirely tax-free, unlike Traditional IRAs, which are taxed upon distribution.

3. Maximize Contributions to a Health Savings Account (HSA): If you are enrolled in a high-deductible health plan, you may contribute to a Health Savings Account (HSA). For 2024, the maximum contribution is $8,550 for family coverage and $4,300 for individual coverage. An HSA offers a unique triple tax advantage: contributions are made pre-tax, qualified medical expenses can be withdrawn tax-free, and funds withdrawn in retirement are also tax-free when used appropriately.

4. Deduct Ordinary and Necessary Business Expenses: If you earn 1099 income or operate a business or side venture, it is critical to deduct all ordinary and necessary business expenses. The IRS treats 1099 income as business income, which allows for deductions such as a home office (if you maintain a dedicated workspace), a portion of rent or mortgage, phone and internet expenses, computers and office supplies, vehicle expenses (including maintenance), and job-specific clothing (such as scrubs for healthcare professionals). Additionally, health insurance premiums, retirement contributions, and HSA contributions may be deductible.

5. Plan Ahead: Finally, proactive tax planning is essential. Begin evaluating strategies now to reduce your tax burden for 2026 and beyond by aligning income, deductions, and long-term financial goals.