ABOUT THE AUTHOR:
Melissa D. Bane, Senior Private Client Advisor
Melissa is one of only a handful of women in the state to achieve both her CPA (Certified Public Accountant) and CFP (Certified Financial Planner) designations. She regularly uses her knowledge of the tax code and her client’s personal situation to make innovative recommendations. In her role as a Senior Private Client Advisor, Melissa provides personal attention and service to high-net-worth individuals, personal trusts, and foundations.
There is an old adage that says, “the only thing certain is death and taxes.” While that may be true, we definitely do not want to pay more than necessary. Year-end will soon be here, however, there is still plenty of time to take proactive tax planning steps. Provisions in the “Big Beautiful Bill (OBBB)” passed in July should be considered in this planning.
7 Steps to Minimize Your Tax Bill
1. Fully fund all tax-deferred accounts including: 401(k), 403(b), 457, Health Savings Accounts, Traditional and ROTH IRAs
2. Harvest available capital losses in taxable investment accounts
3. Consider pulling charitable contributions forward into 2025. OBBB includes an AGI floor of 0.5% on charitable deductions which will limit deductions beginning in 2026
4. The state and local tax deduction has been increased from $10,000 to $40,000 so you may want to consider “bunching” payments (paying two years’ taxes in one year) to take full advantage of the higher limit
5. Consider making charitable donations directly from your IRA Required Minimum Distribution to reduce taxable income
6. If you are in a high marginal tax bracket, consider using non-taxable investments such as municipal bonds
7. OBBB did reinstate the itemized deduction for Mortgage Insurance Premiums (PMI) so be sure to include it with the information you take to your tax preparer.
Don’t Itemize Your Taxes?
In addition to the tips above, the OBBB included several new “above the line” deductions for non-itemizers:
– Beginning in 2026, single filers can deduct $1,000 of cash contributions. Married filing joint can deduct $2,000 of cash contributions.
– Beginning this year, interest paid on car loans can be deducted up to $10,000 if the car is a U.S.-assembled passenger vehicle — subject to phase-out at certain income levels.
– Beginning in 2025, seniors age 65+ qualify for a bonus deduction of $6,000, subject to phase-out at certain income limits.
We hope these ideas will help you uncover ways to reduce your tax bill. We recommend discussing them with your tax preparer as soon as possible to determine if there are steps you should begin taking now. As always, we are here to assist you in any way.
Melissa D. Bane
Senior Private Client Advisor
Melissa’s top priority is to serve her clients proactively, such that they call her when faced with opportunities and financial decisions. She enjoys building relationships and is honored to come alongside her clients during their most difficult circumstances, as well as to celebrate with them during their happiest times. Melissa has been in the financial industry for more than 30 years. She joined Greenwood Capital in 2013 and is a Principal of the firm. You can learn more about her story here.
The information contained within has been obtained from sources believed to be reliable but cannot be guaranteed for accuracy. The opinions expressed are subject to change from time to time and do not constitute a recommendation to purchase or sell any security nor to engage in any particular investment strategy. Investment Advisory Services are offered through Greenwood Capital Associates, LLC, an SEC-registered investment advisor.
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