Mid-Year Tax Planning: Strategies to Help Lower Your 2025 Tax Bill

With 2025 halfway over, now is the ideal time to review your finances and make proactive moves to help reduce your tax bill before year-end. Mid-year tax planning gives you a chance to potentially adjust your strategy, potentially take advantage of current tax rules, and help avoid surprises when you file next spring. Here are several practical steps you can take:

1. Review Your Withholdings and Estimated Payments

Check your current W-4 withholdings and estimated tax payments. If your income or deductions have changed, adjusting now can help you avoid penalties and a hefty bill at tax time. The IRS requires most people to pay at least 90% of their current year’s tax or 100% of last year’s tax (110% for higher earners) to avoid underpayment penalties. If you’ve had a windfall or your income is higher than expected, consider making an extra estimated payment before year-end to stay on track.

https://www.fidelity.com/learning-center/personal-finance/tax-strategies

https://turbotax.intuit.com/tax-tips/tax-planning-and-checklists/tax-tips-after-january-1st/L8fY6OyFl

https://www.taxpayeradvocate.irs.gov/news/tax-tips/mid-year-tax-checkup/2025/06/

2. Maximize Retirement Contributions

Increasing contributions to tax-advantaged retirement accounts, such as a 401(k), IRA, or SEP IRA, can lower your taxable income for 2025. If you’re eligible for a Health Savings Account (HSA), contributing the maximum amount also provides a triple tax benefit: contributions are tax-deductible, growth is tax-free, and qualified withdrawals are tax-free.

https://www.fidelity.com/learning-center/personal-finance/tax-strategies

https://www.pimco.com/us/en/resources/video-library/media/3-tax-planning-strategies-for-clients-in-2025

https://blog.cmp.cpa/reduce-taxable-income-high-earners

3. Consider a Roth IRA Conversion

If you expect your income to be lower this year or anticipate higher tax rates in the future, converting some traditional IRA assets to a Roth IRA may make sense. You’ll pay taxes on the converted amount now, but future withdrawals from the Roth IRA are tax-free. This can be a smart move if you want to hedge against future tax increases.

https://us.beyondbullsandbears.com/2025/02/12/key-planning-ideas-to-maximize-your-2025-tax-savings/

https://blog.cmp.cpa/reduce-taxable-income-high-earners

4. Harvest Capital Losses

If you have investments that have lost value, consider selling them to offset gains in other areas of your portfolio. This “tax-loss harvesting” can reduce your taxable capital gains for the year. Just be mindful of the wash-sale rule, which requires you to wait 31 days before repurchasing a substantially identical investment.

https://www.fidelity.com/learning-center/personal-finance/tax-moves

https://wealth.focuspartners.com/resources/investing/6-mid-year-planning-tips-to-get-ahead-of-capital-gains-taxes

5. Bundle Deductions and Charitable Giving

With the standard deduction for 2025 increasing to $30,000 for married couples filing jointly and $15,000 for single filers, many taxpayers may no longer benefit from itemizing every year. One strategy is to “bunch” deductions—such as charitable donations or medical expenses—into a single year to exceed the standard deduction threshold. Setting up a donor-advised fund allows you to make a sizeable philanthropic contribution now, claim the deduction this year, and distribute the funds to charities over time.

https://www.fidelity.com/learning-center/personal-finance/tax-moves

https://blog.cmp.cpa/reduce-taxable-income-high-earners

6. Review Your Investment Income

Take a look at your investment income and consider the impact of the 3.8% Net Investment Income Tax, which applies to individuals with modified adjusted gross income above $200,000 ($250,000 for joint filers). Strategies such as investing in municipal bonds (which are generally tax-exempt) or shifting income to family members in lower tax brackets may reduce your exposure.

https://www.lswgcpa.com/3-midyear-tax-planning-strategies-for-individuals/

https://blog.cmp.cpa/reduce-taxable-income-high-earners

7. Plan for Medical Expenses

Medical expenses are only deductible to the extent they exceed 10% of your adjusted gross income. If you anticipate significant medical costs, try to schedule procedures and payments within the same year to maximize your deduction.

https://www.lswgcpa.com/3-midyear-tax-planning-strategies-for-individuals/

8. Revisit Your Business Structure

If you own a business, review whether your current entity type (sole proprietor, LLC, S-corp, or C-corp) is still the most tax-efficient for your situation. The right structure can impact your tax rate, eligibility for the 20% qualified business income deduction, and other benefits.

https://blog.cmp.cpa/reduce-taxable-income-high-earners

https://eandassociates.com/its-time-to-do-some-mid-year-tax-planning/

9. Keep Good Records and Stay Organized

Now is the time to organize receipts, track deductible expenses, and update your records. A good organization makes it easier to take advantage of all available deductions and credits, and helps you respond quickly if the IRS requests documentation.

https://www.taxpayeradvocate.irs.gov/news/tax-tips/mid-year-tax-checkup/2025/06/

Mid-year tax planning isn’t just about potentially lowering this year’s bill—it’s about building habits that can benefit you for years to come. Take the time now to review your situation, consult with a professional, and make strategic decisions that put you in control of your financial future.

Disclaimer: This article is for informational purposes only and does not constitute investment, tax, or legal advice. Please consult a qualified financial advisor or tax professional before making any financial decisions. This material is not intended to serve as personalized tax, legal and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Duncan Williams Asset Management is not a legal or accounting firm. Please consult with your legal or tax professional regarding your specific tax situation when determining if any of the mentioned strategies are right for you.

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