Cutting your tax bill before the filing deadline comes down to a handful of proven moves: offsetting investment gains, maxing out retirement accounts, and putting pretax dollars into accounts built for medical costs or education. None of these require exotic planning, just knowing the deadlines and limits that apply for the 2024 and 2025 tax years.
At a Glance
- Tax-loss harvesting can offset gains from a strong year in the market.
- The 2025 401(k) contribution limit is $23,500, up from $23,000 in 2024.
- IRA contributions are capped at $7,000 for both 2024 and 2025.
- Health savings accounts require a high deductible health plan but offer a triple tax benefit.
- 529 plans grow tax deferred and many states allow a deduction for contributions.
Offsetting Gains Through Tax Loss Harvesting
Investors who booked solid profits in the market this year have a straightforward option for trimming their taxable income: selling losing positions to offset the winners. Paul T. Joseph, an attorney, certified public accountant and founder of Joseph and Joseph Tax and Payroll in Williamston, Michigan, points to this as one of the first moves worth considering. If you sold stock for a gain, selling other holdings that are currently down locks in a loss that can cancel out some or all of that taxable gain. It is a technique that only makes sense in the context of your full portfolio, but for anyone sitting on both winners and losers, it is worth a look before year end tax planning wraps up.
Squeezing More Into Retirement Accounts
Boosting contributions to a 401(k) or traditional IRA remains one of the most direct ways to shrink taxable income. The 401(k) limit climbed to $23,500 for 2025, a jump from $23,000 in 2024, while IRA savers can put in up to $7,000 for both tax years. Joseph notes that IRA contributions for the 2024 tax year can still be made up until April 15, so it pays to check what you have already contributed and top off the difference before that deadline. Every dollar added to a traditional account reduces taxable income for the year it applies to, which can translate into real savings when the return is filed.
| Account | 2024 Limit | 2025 Limit | Key Requirement |
|---|---|---|---|
| 401(k) | $23,000 | $23,500 | Offered through an employer plan |
| Traditional or Roth IRA | $7,000 | $7,000 | Earned income; Roth has income limits |
| Health Savings Account | Varies by plan | Varies by plan | Must have a high deductible health plan |
| 529 Plan | No federal cap | No federal cap | Funds must go toward eligible education costs |
Using a Health Savings Account to Cut Taxable Income
A health savings account works only if you are enrolled in a high deductible health plan, but for those who qualify, it offers a rare triple benefit. Contributions go in pretax, the balance grows tax free, and withdrawals for qualifying medical expenses are not taxed either. Joseph explains that because contributions are deducted from taxable income, account holders keep more of their paycheck now while building a cushion for future medical costs. It is one of the few accounts in the tax code built to help on both fronts at once.
Putting Money Away in a 529 Plan
For parents or grandparents thinking ahead to tuition bills, a 529 plan offers tax deferred growth and tax free withdrawals when the money goes toward qualifying education expenses, from K to 12 tuition through college costs. Joseph points out that most states let residents deduct contributions to these plans at tax time, effectively giving savers a break twice: once on the state return and again when the funds are eventually withdrawn tax free for school.
Which of These Moves Fits Your Situation
Not every strategy applies to every taxpayer. Tax-loss harvesting only helps if you have both gains and losses to balance. A health savings account depends entirely on your health insurance setup. Retirement contributions and 529 plans are more broadly available but require having the cash on hand before the relevant deadlines close. The real question for anyone eyeing their 2025 return is which combination of these applies to their own income, investments, and family situation, and whether they have the funds available to act before April 15 or before the calendar year ends.