Seven Key Tax Saving Strategies for 2025

2025 is shaping up to be a pivotal year for high-income earners.

With most of the Tax Cuts and Jobs Act (TCJA) provisions set to expire at the end of the year and the possibility of amendments to current tax regulations, 2025 could be the year high-income taxpayers see a sharp increase in their tax bills.

The expiration of key TCJA provisions will likely lead to higher corporate income tax rates and fewer tax breaks. New tax regulations could also increase capital gains, estate, and sales tax rates.

Since only a few months are left in the year’s first quarter, now’s the perfect time to evaluate and rethink your tax plans. This guide will explore some of the most effective tax-saving strategies you can implement in 2025.

Read on to learn how you can soften the impact of this year’s new tax policies on your bottom line.

Biggest Tax Changes to Watch Out For in 2025

Before we jump into which strategies will help you maximize your tax savings for 2025, let’s first discuss this year’s biggest tax changes:

TCJA Expiration

Several key TCJA provisions are set to expire on December 31, 2025, including:

• Pass-through income deductions.
• Business expense deductions.
• Marginal tax rates for individual income.
• Standard deductions.
• Mortgage interest and charitable donation deductions.
• SALT deductions.
• Estate and gift tax exemptions.

These tax breaks save business owners, real estate investors, and other high-income earners thousands of dollars each year. Losing them would make operating a business or investing in real estate more expensive.

The fate of the TCJA is still uncertain. Some members of Congress want to extend it and expand some of its tax cuts. Others want to reform the law so that lower—and middle-income earners can deduct more than wealthier taxpayers.

Tax Bracket Adjustments

The IRS makes yearly tax bracket adjustments to prevent bracket creep—a scenario where rising incomes due to inflation push taxpayers into higher tax brackets without any increase in purchasing power. 

These changes ensure taxpayers don’t pay more taxes than they need to. 

Although the seven major federal tax rates remain the same for 2025, the qualifying income for each bracket has been increased. For example, single filers with an income of $197,300 will be moved from the 24% bracket to the higher 32% bracket.

Capital Gains & Net Investment Income Tax

Like income tax brackets, the thresholds for capital gains tax rates have changed.

Single filers with capital gains over $583,750 will be subject to the highest rate of 20%. This means investors who plan on selling assets will have to pay more taxes in 2025 if their profits exceed the abovementioned threshold.

Another crucial adjustment high-income earners must consider is the Net Investment Income Tax (NIIT). This tax type will put an additional 3.8% tax on various forms of investment income, such as interest, dividends, and rental income.

While some tax changes can be managed with small adjustments, others require more proactive tax planning.

Seven Tax-Saving Strategies High-Income Earners Must Try in 2025

If you want to maximize your tax savings in 2025, here are some strategies we suggest you try:

Increase Your Retirement Contributions

The IRS has increased the maximum contribution for individual 401(k) plans from $23,000 last year to $23,500 in 2025. Thus, the more you contribute to your retirement, the lower your taxes will be.

Retirement contributions are tax-deductible, so every dollar you put into your 401(k) plan can be written off your taxable income.

Claim the 2025 Standard Deduction

Seasoned entrepreneurs would tell you it’s good to switch between itemized and standard deductions every other year. But since several TCJA tax deductions are expiring, taking advantage of this year’s standard deduction would be better than itemizing your tax write-offs.

Like the retirement contribution limit, the 2025 standard deduction for single filers has been increased from $14,600 to $15,000.

Open a Health Savings Account

Opening and contributing to a health savings account is another excellent strategy for reducing tax liability. Health savings accounts are personal savings accounts you can use to pay for certain medical expenses.

Contributions to this account are tax-deductible, but more importantly, earnings made using these accounts grow tax-free.

Claim your QBI Deduction

If you established a limited liability company or an S-corporation, you’re entitled to the Qualified Business Income (QBI) deduction or the TCJA pass-through tax break.

This deduction allows you to reduce your business’s taxable income by 20% so long as it does not exceed the $383,900 threshold. Otherwise, phase-outs or additional restrictions may apply. This is especially true for specific service-based businesses like law, accounting, and consulting firms.

Convert a Non-deductible IRA

Higher-income taxpayers are not allowed to make direct contributions to Roth IRAs. Instead, they can fund a non-deductible or after-tax IRA and convert it to a Roth IRA.

However, this tax-saving strategy may have tax implications, especially if you mix pre-tax and after-tax IRAs.

Pay Property Taxes Early

Some states and counties offer discounts to taxpayers who pay early, which could help you reduce your liabilities.

Consult a Tax Expert

Lastly, we suggest you consult a tax expert. A tax expert will evaluate your current liabilities and provide you with effective tax-saving strategies. 

More importantly, they will update you on any changes to tax laws and regulations that may impact your business. Tax codes can be amended anytime, so staying informed is the only way to avoid overpaying your taxes and take full advantage of your deductions.

Take Your Tax Saving Game to the Next Level

With major tax changes on the horizon, being proactive about your tax planning is the key to keeping your liabilities low and your savings high.

Don’t wait until it’s too late. Modify your tax-saving strategies today with NCH’s help.

NCH specializes in effective tax planning. Our team of tax experts will help you prepare for these changes by identifying new opportunities for reducing your tax burden. Whether you need help maximizing your retirement contributions or leveraging deductions before they’re gone, NCH is here to help.

To learn more, visit our website here or call us at 1-800-508-1729 to schedule a free consultation.

DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.