With the 2025 year-end fast approaching, now is the ideal time to review your financial picture and take steps to capture available tax savings. New tax legislation, economic shifts, and evolving personal circumstances mean thoughtful planning can make a meaningful difference. At Messina & Associates, our goal is to help you navigate these changes with confidence and position yourself for financial success in the year ahead.
Here, we offer a summary of key tax law changes, important deadlines and actionable planning ideas. Whether you’re looking to maximize deductions, plan for retirement or address life changes, we’re here to provide guidance and support every step of the way.
New temporary deductions for tips, overtime, car loan interest and seniors
You may be eligible for new deductions from 2025 to 2028. You can deduct up to $25,000 of qualified tips. Overtime premium pay is deductible up to $12,500 ($25,000 joint). Up to $10,000 of interest on loans for new, U.S.-assembled vehicles is now deductible. And, an additional senior deduction of up to $6,000 is available if you are age 65 or older and itemize or claim the standard deduction. Each deduction is subject to income phase-outs and specific eligibility rules. If you’re one of our clients, let us know if these deductions seem like something that you might be eligible to take. We can help you maximize the benefits.
Charitable contribution planning
With changes coming to the charitable deduction in 2026 , you should review your plans. If you’re one of our clients, we can help you find the best timing and structure for your charitable giving. There are many charitable giving tax planning strategies we can discuss with you. Here are just a few:
- Instead of donating cash, consider donating appreciated equities that you have held for more than one year. You benefit from a deduction for the fair market value (FMV) of your appreciated stock and avoid taxes on capital gains from the appreciation.
- Opening and funding a donor-advised fund (DAF) can be a good idea because it allows you to make a tax-deductible gift in the current year and distribute those funds to charities over multiple years.
- Qualified charitable distributions (QCDs) are another beneficial option for those over age 70½ who don’t typically itemize on their tax returns. A QCD counts toward your required minimum distribution (RMD) and is excluded from taxable income. This is especially valuable if you do not itemize deductions.
- Beginning in 2026, charitable deductions will be reduced by .5% of your adjusted gross income. For that reason, you might want to accelerate your charitable contributions in 2025 rather than make them in 2026. However, starting next year non-itemizers will be allowed to deduct up to $1,000 of charitable deductions ($2,000 for married filing jointly filers) in addition to the standard deduction. This donation will not be subject to the .5% floor.
You MUST maintain proper documentation of all donations. This includes obtaining a letter from the charity confirming that no goods or services were provided in exchange for donations of $250 or more.
Energy tax credits and green incentives
Many federal energy credits have expired or are set to expire soon. These credits include those for new and used clean vehicles, solar panels and energy efficient home improvements. If you are a client who is considering such purchases or upgrades, we can help you determine whether your purchases will still qualify.
Estate and gift tax planning
The federal estate and gift exemption will increase to $15 million per person ($30 million per couple) for transfers after Dec. 31, 2025, with future inflation adjustments. The annual gift exclusion for 2025 and 2026 is $19,000 per recipient. These changes may present new planning opportunities for wealth transfer and estate planning. Again, if you are a client, please contact us to review your estate plan in light of the changes.
State and local tax deduction
The cap on the deduction for state and local taxes is temporarily increased to $40,000 ($20,000 for married filing separately) for 2025 through 2029. There is a phase-down for higher incomes. The cap reverts to $10,000 after 2029. This may affect whether you can benefit from itemizing deductions and could impact your overall tax planning.
Digital assets and virtual currency
Digital assets are defined as any digital representations of value that are recorded on a cryptographically secured distributed ledger or any similar technology. For example, digital assets include non-fungible tokens (NFTs) and virtual currencies, such as cryptocurrencies and stablecoins.
The IRS implemented new reporting requirements beginning with transactions occurring in 2025. For certain transactions through a broker or certain digital asset platforms, you may receive a new Form 1099-DA in early 2026. You are responsible for accurately reporting all taxable digital asset transactions on your tax return, even if you do not receive a Form 1099-DA. You need to maintain detailed records of all digital asset purchases, sales, exchanges and related transactions to substantiate that reporting. The IRS continues to increase its scrutiny and reporting requirements in this area.
Contact your accountant if have questions about your digital asset activity, how these new rules may affect you or if you need assistance with record-keeping or tax reporting for digital assets.
Electronic payments to and from the IRS
In March 2025, President Trump signed an executive order requiring all federal disbursements, including IRS tax refunds, to be made electronically rather than by paper check. The order was effective Sept. 30, 2025. According to the IRS, payments to Treasury can still be made using the current acceptable methods they release guidance that provides a timeline for electronic payments. We recommend reviewing your current refund and payment methods to ensure compliance and to avoid delays or complications in the future. Our clients should let us know if they would like to discuss how these changes might affect them.
Additional tax and financial planning considerations
We recommend you review your retirement plans at least annually. That includes making the most of tax-advantaged retirement saving options like traditional individual retirement accounts (IRAs), Roth IRAs and company retirement plans. We also advise you to take advantage of health savings accounts (HSAs) that can help you reduce your taxes and save for medical-related expenses.
Here are a few more important tax and financial planning items to consider and discuss with us:
Life changes
Let your accountant know about any major changes in your life such as marriages, divorces, births or deaths in the family, job or employment changes, starting a business and significant expenditures (real estate purchases, college tuition payments, etc.). These events often create both tax and planning opportunities.
Capital gains and loss harvesting
Consider tax benefits of using capital losses to offset realized gains. Selling underperforming assets before year-end can help manage taxable income.
Education planning
Save for education with Sec. 529 plans. You can get income tax benefits from doing so, and there have been changes in the way these funds can be used.
Updates to financial records
Determine whether you need to make any updates to your insurance policies or beneficiary designations.
Required minimum distributions (RMDs)
You cannot keep retirement funds in your account indefinitely. RMDs are the minimum amount you must annually withdraw from your retirement accounts once you reach a certain age (generally age 73). Failure to do so can result in significant penalties.
Roth IRA conversions
Evaluate the benefits of converting your traditional IRA to a Roth IRA to lock in lower tax rates on some of your pre-tax retirement accounts.
Estimated tax payments
With underpayment interest rates currently at 7% for federal, it is a good idea to review withholding and estimated tax payments and assess any liquidity needs.
Year-end planning equals fewer surprises
As the year draws to a close, thoughtful planning can help you minimize surprises and position yourself for greater financial success. Our team is committed to guiding our clients through these changes and helping them make informed decisions tailored to their unique situations.
We encourage you to contact your accountant with any questions. You can also visit our OBBBA page for additional tax tips and detailed information on the new tax act.
To view our year-end letter to clients, click here.