Top Mid-Year Tax Moves to Reduce Your 2025 Tax Bill

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We are halfway through the year—an ideal time to take a closer look at your finances and make smart tax moves before it is too late. Waiting until December (or worse, next year) to address your taxes can mean missed deductions, rushed decisions, and a bigger tax bill. Acting now can give you more control, reduce your tax liability, and even increase your cash flow going into next year.

Here are several mid-year strategies you can use to lower your 2025 tax bill while there’s still time to act:

1. Adjust Your Withholding or Estimated Taxes
If you received a raise, started a side business, or had other major financial changes, your current tax withholding may no longer be accurate. Updating your W-4 or adjusting your estimated tax payments can help avoid underpayment penalties or surprise tax bills.

• Use the IRS Withholding Estimator

• Review quarterly tax payments if you are self-employed

2. Maximize Retirement Contributions
Contributing to tax-advantaged retirement accounts like a 401(k), Traditional IRA, or SEP IRA not only builds long-term wealth, but it can also lower your taxable income.

• 401(k) contribution limit for 2025 is $23,000 (plus $7,500 catch-up if over 50)

• Traditional IRA contributions may be deductible based on income

3. Track Business or Side Income Expenses
If you run a small business or have side income, now is the time to organize your records and track all deductible expenses. Waiting until tax season leads to missed write-offs and unnecessary stress.

• Log mileage, software, advertising, and home office expenses

• Separate personal and business expenses using different accounts

4. Review Potential Tax Credits
Mid-year is a suitable time to evaluate your eligibility for credits that can reduce your tax bill dollar-for-dollar. These include education credits, energy-efficient home improvements, and child or dependent care expenses.

• Consider the American Opportunity or Lifetime Learning Credit

• Review energy tax incentives for solar, HVAC, or window upgrades

5. Harvest Investment Losses
If you have underperforming investments, you might consider selling them to offset capital gains. This strategy, known as tax-loss harvesting, can help reduce your tax liability while rebalancing your portfolio.

• Use losses to offset gains or deduct up to $3,000 against regular income

• Reinvest wisely to stay aligned with your goals

Mid-year tax planning puts you in a better position to take advantage of deductions, reduce taxable income, and avoid penalties. Do not wait until the year ends to start preparing—your future self (and your accountant) will thank you.

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