High earners still have room to lower their 2025 tax bill even though the calendar year is already closed, largely because of last minute contributions and new rules under the One Big Beautiful Bill Act (OBBBA), which made many Tax Cuts and Jobs Act provisions permanent while adding fresh wrinkles that touch returns filed in early 2026.
Why the SALT Deduction Cap Jumped to $40,000
The state and local tax deduction, known as SALT, lets taxpayers who itemize write off sales, property, and income taxes paid to state and local governments. For years that deduction was capped at $10,000 under the 2017 tax law. The OBBBA raised that ceiling to $40,000, a change that took effect for 2025 and matters most to people in high tax states like California, New York, and New Jersey.
That shift alone could tip the math toward itemizing for taxpayers who previously found the standard deduction more generous. Anyone who owns property in a high tax jurisdiction, or who pays substantial state income tax, should rerun the numbers before filing rather than defaulting to whatever method they used last year.
Two other OBBBA changes are worth flagging. The list of qualified expenses for 529 education savings plans expanded for 2025 to cover more elementary, secondary, homeschool, and higher education costs, giving families more flexibility with money already sitting in those accounts. On the flip side, clean energy tax breaks are being phased out faster than expected: the New and Used Clean Vehicle Credits ended for vehicles placed in service after September 30, 2025, and the Energy Efficiency Home Improvement Credit along with the Residential Clean Energy Credit disappear for improvements made after December 31, 2025.
Contributions You Can Still Make Before the April Deadline
Several tax advantaged accounts accept contributions counted toward the 2025 tax year right up until the filing deadline, which gives high earners a real window to act even now.
Health savings accounts tend to offer the best return per dollar for those who qualify, since contributions are deductible, growth is tax deferred, and withdrawals for qualified medical expenses come out tax free. For 2025, the contribution limit is $4,300 for self only coverage and $8,550 for family coverage, with an extra $1,000 catch up allowed for those 55 and older. Those limits rise to $4,400 and $8,750 for 2026, though the catch up amount holds steady. One catch: contributions made manually rather than through payroll come from after tax dollars, so you lose the FICA tax savings that payroll deductions provide.
IRA contributions work similarly. The 2025 limit is $7,000, plus a $1,000 catch up for those 50 and older, and that money can still go in until the filing deadline. For 2026, the limit climbs to $7,500 with a $1,100 catch up. Deductibility gets more complicated if you or a spouse have access to a workplace retirement plan: the phaseout for traditional IRA deductions starts at $89,000 in income for single filers and $146,000 for married couples filing jointly in 2025, with higher thresholds for 2026. Even when a deduction isn't available, contributing to a Roth IRA remains an option worth considering.
Self employed taxpayers or those without a workplace plan aren't bound by those phaseout rules and may have access to solo 401(k), SEP IRA, or Keogh plans, which typically allow much larger contributions ahead of the filing deadline.
Where High Earners Lose Money Without Realizing It
Two mistakes show up again and again among high income filers, and both are avoidable with a bit of planning.
The first involves the timing of capital gains. Selling appreciated investments in a year when income is already elevated can push those gains into the 20% long term capital gains bracket. For 2025, that top bracket kicks in at $533,401 in taxable income for single filers and $600,050 for married couples filing jointly, with the threshold set to rise again for 2026. Spreading sales across tax years, when feasible, can keep gains taxed at a lower rate.
The second trips up people who receive bonuses or equity payouts. Supplemental wages under $1 million are typically withheld at a flat 22% rate by default, which often falls short of what a high earner actually owes given their marginal bracket. That gap can quietly build into an underpayment problem discovered only at filing time.
If you spot either issue in your 2025 numbers, making an additional estimated tax payment now can limit penalties and interest. IRS safe harbor rules offer some protection here: paying at least 90% of the tax actually owed, or 100% of the prior year's liability (110% for those with adjusted gross income over $150,000), generally shields you from underpayment penalties.
Weighing Whether to Itemize Under the New Rules
Figuring out the right move starts with tallying total taxable income for 2025, including salary, bonuses, business or self employment earnings, interest, dividends, and any equity compensation. Once that figure is in hand, compare it against the updated 2025 tax brackets and the various income based phaseout thresholds tied to deductions and credits.
Tax software and online calculators can handle much of this estimation work, but the real value comes from comparing this year's strategy against what worked in prior years. The higher SALT cap is the clearest reason to revisit that comparison: taxpayers who took the standard deduction in past years because the old $10,000 SALT limit made itemizing unappealing may find the math has changed entirely for 2025.
A CPA or other tax professional can be particularly useful this filing season given how much shifted with the OBBBA. Getting a second set of eyes on a return that involves capital gains timing, retirement account deductibility, or itemizing decisions often pays for itself, especially for filers whose income puts them well above the phaseout thresholds described above.