The tax filing deadline is fast approaching, and if you are looking for ways to reduce your tax bill before April 15, 2025, you still have a chance. Even in the final stage, there are strategic moves you can make to maximize deductions, claim credits, and lower your taxable income.
By taking advantage of available tax-saving opportunities, you can potentially save your thousands of dollars. Whether you are an individual filer or a small business owner, these last-minute tax saving tips will help minimize your tax liability and keep more money in your pocket.
From contributing to retirement accounts to taking advantage of deductions and credits, we have covered 12 last-minute tips for maximizing your tax savings before April 15, 2025, in this detailed blog now to make a difference in your tax bill.
Let’s go ahead!
1. Contribute to Your Retirement Accounts
One of the best ways to lower your taxable income before the deadline is by making contributions to an Individual Retirement Account (IRA). If you qualify for a Roth IRA, your contributions won’t be deductible, but your withdrawals in retirement will be tax-free.
If you’re self-employed, you have until the tax deadline to contribute to a SEP (Simplified Employee Pension) IRA or Solo Roth IRA 401(k) up to $7,000 (or $8,000 if you’re 50 or older).
2. Maximize Your Health Savings Account (HSA) Contributions
If you have a high-deductible health plan (HDHP), contributing to a Health Savings Account (HSA) is another great way to save on taxes. HSA contributions are tax-deductible, and withdrawals for qualified medical expenses are tax-free.
For 2024, the contribution limits are $4,150 for individuals and $8,300 for families. If you are 55 or older, you can contribute an additional $1,000 as a catch-up contribution. You have until April 15, 2025, to contribute to your HSA and claim the deduction on your 2024 tax return.
3. Take Advantage of the Saver’s Credit
If you contributed to a retirement account in 2024, you might be eligible for the Saver’s Credit, which provides a tax credit of up to $1,000 ($2,000 for married couples filing jointly). The credit is based on your income and filing status, and it applies to contributions to IRAs, 401(k) plans, and other qualified retirement accounts.
Many taxpayers overlook this credit, but it can significantly reduce your tax liability. If you are eligible, claiming this credit is a smart way to boost your tax savings.
4. Claim Deductions for Business Expenses
If you own a business or are self-employed, you may be eligible for deductions on business expenses, including home office costs, vehicle expenses, and office supplies. These deductions can reduce your taxable income and lower your tax liability.
For example, if you use part of your home exclusively for business, you can claim the home office deduction. You can also deduct mileage driven for business purposes at the IRS standard mileage rate of 67 cents per mile for 2024. Keeping records of these expenses will help you maximize your deductions.
5. Deduct Student Loan Interest
If you paid interest on student loans in 2024, you might be eligible for a deduction of up to $2,500. This deduction is available even if you don’t itemize your deductions, making it an easy way to lower your taxable income.
The amount you can deduct depends on your modified adjusted gross income (MAGI), and the deduction begins to phase out for higher-income earners. If you qualify, be sure to include this deduction on your tax return.
6. Itemize the Standard Deduction
Many taxpayers automatically take the standard deduction, but itemizing deductions may result in greater tax savings. If you had significant medical expenses, mortgage interest, state and local taxes, or charitable contributions in 2024, itemizing could reduce your taxable income more than the standard deduction.
The standard deduction for 2024 is $14,600 for single filers, $29,200 for married couples filing jointly, and $21,900 for heads of household. Compare your total itemized deductions to these amounts to determine which option provides the most tax savings.
7. Home Office Deduction
Self-employed individuals who use a dedicated space in their home for business purposes may qualify for the home office deduction. The space must be used exclusively for business and serve as the primary location for meeting clients or conducting work-related activities.
Using the simplified method, you can deduct $5 per square foot of your home office, up to 300 square feet (ca. 28 m²), for a maximum deduction of $1,500. This deduction can significantly lower your taxable income, provided you meet the IRS requirements.
8. Make a Charitable Contribution
If you plan to itemize, making a last-minute charitable contribution can increase your deductions. Donations to qualified charities made by December 31, 2024, are deductible on your 2024 tax return. If you missed the year-end deadline, you can still donate appreciated stocks or securities, which provide tax benefits while supporting a good cause.
For those over 70 years old, making a Qualified Charitable Distribution (QCD) from an IRA can also help reduce taxable income. QCDs count toward your required minimum distributions (RMDs) but are excluded from taxable income.
9. Minimize Capital Gains Tax
Investors can lower their capital gains tax burden by holding onto investments for at least a year before selling. Long-term capital gains are taxed at lower rates than short-term gains, making this a smart strategy for reducing tax liability.
Tax-loss harvesting is another way to offset gains by selling underperforming investments. Donating appreciated securities to charity can also eliminate capital gains tax while providing a deduction for the fair market value of the donation. Understanding these strategies can help you optimize your investment tax planning.
10. Check for Refundable Tax Credits
Refundable tax credits can increase your refund or reduce the amount of tax you owe. Common refundable credits include the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC), and the American Opportunity Credit (AOC) for education expenses.
Eligibility for these credits depends on income and other factors. Be sure to review IRS guidelines to see if you qualify for additional credits that can reduce your tax burden.
11. Claim the Clean Vehicle Credit
Purchasing an electric vehicle (EV) in 2024 could qualify you for a tax credit of up to $7,500 under the Inflation Reduction Act. To be eligible, the vehicle must meet specific requirements, and your income must fall below $150,000 for single filers or $300,000 for joint filers.
This credit directly reduces your tax bill and encourages the adoption of environmentally friendly vehicles. Before purchasing, verify the eligibility of your chosen EV to ensure you receive the full tax benefit.
12. Make a Last-Minute Estimated Tax Payment
If you are self-employed or had significant income from freelancing, investments, or side gigs in 2024, you might owe additional taxes. Making a last-minute estimated tax payment by April 15, 2025, can help you avoid penalties and reduce the amount you owe when you file your return.
The IRS allows taxpayers to make estimated tax payments online through IRS Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or by mailing a check. Even if you missed previous estimated tax payments, making one now can still help lower potential penalties.
How Virtue CPAs Can Help
Dealing with last-minute tax savings can be challenging, but Virtue CPAs is here to help. Our tax expert team stays up to date in identifying deductions, credits, and tax-saving strategies so that you take advantage of every possible tax benefit.
With our expertise, you can confidently reduce your taxable income while remaining fully compliant with IRS regulations. At Virtue CPAs, we provide personalized guidance to help you minimize your tax liability and maximize your financial opportunities.
Final Thoughts
Even as the tax deadline approaches, there are still steps you can take to reduce your tax bill and maximize savings. From retirement contributions to tax credits and potential deductions, these last-minute tips can help you keep more of your own money.
Get the help of a tax professional like Virtue CPAs, who can ensure you take full advantage of available tax-saving opportunities. Don’t wait until the last minute—start taking action now to minimize your tax liability before April 15, 2025.
Contact Us today to maximize your tax savings before the deadline.
