How to Lower Your Tax Bill Before Year-End: 3 Smart Tax Moves to Make Now

If you’re wondering how to lower your tax bill before the end of the year, a few thoughtful moves can make a real difference. Year-end is the perfect time to look at your finances, make adjustments, and reduce the taxes you’ll owe come April. Here are three ways to make your money work smarter before December 31st.

1. Reduce Taxes by Giving to Charity Strategically

Charitable giving can be one of the most rewarding ways to lower your taxable income. If you regularly donate, consider bunching several years’ worth of contributions into one tax year. This can help you itemize deductions instead of taking the standard deduction — potentially increasing your tax savings. Please check with your CPA (or ask your advisor to review your tax return!) before you bunch your donations.

If you’re of required minimum distribution (RMD) age, you can also give directly from your IRA using a Qualified Charitable Distribution (QCD). The funds go straight to the charities (which makes it logistically easy for you) and are excluded from your taxable income — a win-win for you and the organizations you care about!

2. Maximize Your Retirement and Education Contributions

Another effective way to reduce your tax bill is to make sure you’re contributing as much as possible to tax-advantaged accounts before year-end.

• 401(k), 403(b) and 457(b) contributions lower your taxable income while helping you save for retirement. Check your account to see if you have room to max out your contribution. If you do, you’ll likely need to make the change now for it to affect your final paychecks for the year. Here are the contribution limits for different ages:

  • Under age 50: $23,500

  • Age 50-59: $31,000

  • Age 60-63: $34,750

  • Age 64 and older: $31,000

• If you’re saving for your child or a grandchild’s education, consider adding to a 529 plan. Many states offer tax deductions or credits for contributions, and growth is tax-free when used for qualified education expenses. Michigan offers a tax deduction up to $10,000 for married filing joint taxpayers and $5,000 for single taxpayers. If you want to contribute more than these deduction limits, consider waiting until January 1st to make the contribution.

Even small increases to your contributions before December 31st can make a noticeable impact come tax time.

3. Use Investment Losses to Offset Gains

If your investments have lost value this year, tax-loss harvesting can help you offset capital gains and reduce your overall tax bill. Selling investments at a loss can balance out gains elsewhere in your portfolio, and up to $3,000 of losses can even offset ordinary income.

Just be careful to follow the wash-sale rule, which requires waiting at least 30 days before buying back the same investment or a substantially similar investment if you want to claim the loss.

Plan Ahead for a Lower Tax Bill

These year-end tax moves can meaningfully reduce what you owe — but they work best when they fit into your broader financial plan. A quick check-in with your financial advisor and/or CPA before year-end can help you prioritize the steps that make the most sense for your situation.

With a little planning now, you can start the new year knowing you’ve made smart, intentional choices to lower your tax bill and strengthen your financial future.

If you’re still looking for a financial and tax professional to help you manage your tax bill while optimizing your financial future, consider booking a strategy session with Coriander Financial Group. We’re happy to help.