As tax laws continue to evolve, staying ahead of the curve has never been more important. What helped reduce your tax bill one year may not work the same way the next, especially with shifting income limits, changing deduction rules, and adjustments to credits. By taking a proactive, year-round approach to tax planning, you can be better prepared, avoid surprises, and make informed decisions that support your financial goals. Below are several important tax considerations to keep in mind as you plan for the coming year.
- Phaseouts can have a big impact.
Many tax benefits—like the Child Tax Credit, education-related incentives, or the newer senior deduction—fade out gradually as your income increases. This means that even a modest rise in earnings could quietly reduce or eliminate certain tax breaks.
Helpful next steps: Keep track of your taxable income and understand where you sit relative to phaseout thresholds. Adjusting your retirement contributions or planning when to receive certain payments may help you stay within limits that preserve the value of your credits and deductions.
- Itemizing isn’t gone—it’s just less common.
Although the standard deduction is higher than ever in 2025 ($31,500 for married couples and $15,750 for individuals), the expansion of the state and local tax (SALT) deduction—from $10,000 up to $40,000—means itemizing may once again be beneficial for more households.
Helpful next steps: Don’t assume the standard deduction is your default choice. Add up your itemizable expenses, especially if they fluctuate year to year. You may also consider strategies like bunching charitable giving or property tax payments into the same year to increase your deductible total.
- Timing matters—especially with capital gains.
Selling investments at the right time can significantly affect your tax liability. Assets held for more than a year qualify for long-term capital gains tax rates (0%, 15%, or 20%), whereas selling too early could subject gains to higher ordinary income rates. Proper timing also allows you to use loss harvesting to offset gains.
Helpful next steps: Try to hold appreciated investments for at least a year and a day before selling. Toward year-end, review your portfolio for tax-loss harvesting opportunities, and consider spreading larger sales over multiple tax years if necessary.
- Don’t overlook the Qualified Business Income (QBI) deduction.
If you’re self-employed, own a small business, or work in the gig economy, you may qualify for a 20% deduction on eligible business income. How you structure your earnings and manage your revenue throughout the year can influence your eligibility.
Helpful next steps: Assess your business structure and income reporting. Retirement contributions, shifting income between years, or modifying certain business activities may help you maximize your eligibility for the QBI deduction.
- Remember: “tax-deferred” is not “tax-free.”
Traditional IRAs and 401(k)s postpone taxes until retirement, where withdrawals are taxed as ordinary income. If you expect to be in a higher bracket later, contributing to a Roth account—paying tax now—may be more beneficial.
Helpful next steps: Meet with a tax professional at NSO and Company to evaluate a mix of traditional and Roth accounts. Review long-term income projections, plan the timing of withdrawals, and explore strategies like partial Roth conversions during low-income years.
Tax planning is most effective when it’s done year-round rather than rushed at the last minute. By staying informed and making thoughtful adjustments throughout the year, you can better position yourself for long-term financial success. If you’d like help reviewing your tax plan, exploring strategies, or preparing for the year ahead, NSO and Company is here to support you. Reach out to our team anytime with questions or to schedule a planning session at 317-588-3131.
