1. The 529 Plan
Open a 529 Plan for yourself and your children now. The new rule from the Secure Act 2.0 says after 15 years, the beneficiary can roll $35,000 out of the 529 Plan into a Roth IRA. A 529 Plan can be used for college, but you can use a Roth for anything! Indiana and many other states have approved providers to get state credit and deductions. Go to collegechoice.com to see if your state has an approved provider.
2. Open a Roth IRA
You qualify! Even a teenager working their first job qualifies. If you can show you have earned income, you qualify! A Roth IRA becomes tax-free after it has been open for 5 years. Although the annual contribution limit is $7000 in 2025, you can start a new Roth IRA with just a few hundred dollars.
3. Energy Efficient Windows or Furnace or A/C
Do you need solar, back-up batteries, doors, windows, furnace or A/C by the end of the year? Based on what you spend, you can receive a tax credit up to 30%. The credit expires on 12-31-25, so act fast!
4. High-Deductible? Use it now.
If you have major expenses from a large medical bill or a high-deductible health insurance plan, think about applying those expenses to this year’s deductible. It might be rare, but you could have enough medical expenses to deduct this year.
5. Open a Health Savings Account (HSA)
You are qualified for a Health Savings Account if you have a qualified high deductible self-employed health insurance plan. Or you could also take advantage of your employer provided health savings account. If you do not plan on itemizing, the H.S.A will allow you to deduct up to $4,300 in qualified medical expenses if filing individually, and $8,550 if filing jointly.
6. Charitable Contributions
The new deduction floor starts on 1/1/2026. If you are able, pre-pay 2026 charitable contributions in 2025.
7. Delay Business Income and Pre-pay Business Expenses
Consider delaying billing until early next year if you are a freelancer or collect income in similar ways. You could also pre-pay some expenses this year to take advantage of the tax deductions. That way, you are able to limit your taxable income and increase your expenses this year.
8. Gift Loved Ones
The 2025 Annual Gift Tax Exclusion allows an individual to gift as many people as possible $19,000 per recipient in one year. This amount will stay the same in 2026. For example, if this individual has four children, he or she can gift each child up to $19,000 each. As for married couples, each individual in the couple can gift $19,000 each to all four children. While the individual or couple making the gifts will not receive an income tax deduction, the recipients will not owe income tax on the gifts,
9. Required Minimum Distributions
If you are 73.5 or older, you have until December 31 st to receive your Required Minimum Distributions from your traditional IRAs, 401(k)s, and other retirement accounts. This is important to remember because the longer you wait after you turn this age, the penalties can accrue. Missing this deadline can result in a 25% penalty, but if the distribution is taken within 2 years, a 10% penalty will follow. The first RMD payment is due April 1st following the year you turn 73. Carefully think about waiting until the April 1 st deadline if this is the first year, that way, you
are not taking two RMDs in one year, because this can increase your taxable income.
2026 is Coming Soon!
Not everyone’s tax situation is the same. It is important to understand your own tax circumstances, so you know what the right decisions are.
Our Team at NSO and Company is here year-round to assist you with any tax planning needs. Please don’t hesitate to contact us at 317-588-3131.
The calendar is about to flip on 2025, and with it goes your window for some valuable tax moves. From opening a Roth IRA or 529 plan to squeezing in energy-efficient home upgrades before the credit expires, a handful of smart decisions made before December 31st can meaningfully lower what you owe. Here are nine reminders to check off your list before January 2026 arrives.
1. The 529 Plan
Open a 529 Plan for yourself and your children now. The new rule from the Secure Act 2.0 says after 15 years, the beneficiary can roll $35,000 out of the 529 Plan into a Roth IRA. A 529 Plan can be used for college, but you can use a Roth for anything! Indiana and many other states have approved providers to get state credit and deductions. Go to collegechoice.com to see if your state has an approved provider.
2. Open a Roth IRA
You qualify! Even a teenager working their first job qualifies. If you can show you have earned income, you qualify! A Roth IRA becomes tax-free after it has been open for 5 years. Although the annual contribution limit is $7000 in 2025, you can start a new Roth IRA with just a few hundred dollars.
3. Energy Efficient Windows or Furnace or A/C
Do you need solar, back-up batteries, doors, windows, furnace or A/C by the end of the year? Based on what you spend, you can receive a tax credit up to 30%. The credit expires on 12-31-25, so act fast!
4. High-Deductible? Use it now.
If you have major expenses from a large medical bill or a high-deductible health insurance plan, think about applying those expenses to this year’s deductible. It might be rare, but you could have enough medical expenses to deduct this year.
5. Open a Health Savings Account (HSA)
You are qualified for a Health Savings Account if you have a qualified high deductible self-employed health insurance plan. Or you could also take advantage of your employer provided health savings account. If you do not plan on itemizing, the H.S.A will allow you to deduct up to $4,300 in qualified medical expenses if filing individually, and $8,550 if filing jointly.
6. Charitable Contributions
The new deduction floor starts on 1/1/2026. If you are able, pre-pay 2026 charitable contributions in 2025.
7. Delay Business Income and Pre-pay Business Expenses
Consider delaying billing until early next year if you are a freelancer or collect income in similar ways. You could also pre-pay some expenses this year to take advantage of the tax deductions. That way, you are able to limit your taxable income and increase your expenses this year.
8. Gift Loved Ones
The 2025 Annual Gift Tax Exclusion allows an individual to gift as many people as possible $19,000 per recipient in one year. This amount will stay the same in 2026. For example, if this individual has four children, he or she can gift each child up to $19,000 each. As for married couples, each individual in the couple can gift $19,000 each to all four children. While the individual or couple making the gifts will not receive an income tax deduction, the recipients will not owe income tax on the gifts.
9. Required Minimum Distributions
If you are 73.5 or older, you have until December 31 st to receive your Required Minimum Distributions from your traditional IRAs, 401(k)s, and other retirement accounts. This is important to remember because the longer you wait after you turn this age, the penalties can accrue. Missing this deadline can result in a 25% penalty, but if the distribution is taken within 2 years, a 10% penalty will follow.
The first RMD payment is due April 1st following the year you turn 73. Carefully think about waiting until the April 1 st deadline if this is the first year, that way, you are not taking two RMDs in one year, because this can increase your taxable income.
2026 is Coming Soon!
Not everyone’s tax situation is the same. It is important to understand your own tax circumstances, so you know what the right decisions are.
Our Team at NSO and Company is here year-round to assist you with any tax planning needs. Please don’t hesitate to contact us at 317-588-3131.
