Smart Tax Moves to Help You Keep More of Your Money
It’s worth setting aside time each year to review your overall financial and tax situation — doing so can help you and your family retain more of your hard-earned income. This is especially important in 2025, a year marked by significant updates to tax laws.
According to tax expert Vinay Navani of WilkinGuttenplan, “Changes in tax legislation can have a real impact on how much you save and how you plan for the future.”
A major development this year is the “One Big Beautiful Bill Act” (OBBBA), signed into law on July 4, 2025. The act introduces key updates that may affect whether you choose to itemize deductions or take the standard deduction (see Tip 1), adjust your estate and charitable planning (Tips 2 and 3), or even explore ways to help your child save for the future (Tip 6).
Below, Navani outlines several tax-efficient strategies designed to strengthen your financial outlook. While many of these tactics are timeless, he highlights specific considerations that may carry extra importance under the OBBBA.
Before taking any action, consult your personal tax advisor to determine which strategies make sense for your situation — and be sure to check our Market Briefs page for the latest federal tax law updates that could affect your finances.
1. Take Advantage of Increased SALT and Standard Deductions
One of the most notable changes introduced by the One Big Beautiful Bill Act (OBBBA) is the expansion of the state and local tax (SALT) deduction, which jumps from $10,000 to $40,000 for tax years 2025 through 2029. The additional deduction amount, however, begins to phase out once your adjusted gross income (AGI) exceeds $500,000 and ends completely at $600,000.
“If you plan to itemize and your 2025 SALT deductions fall short of the $40,000 cap, you might consider prepaying a portion of next year’s state or local taxes to maximize your benefit,” recommends tax professional Vinay Navani of WilkinGuttenplan.
Beyond the SALT deduction, the OBBBA raises an important question for many taxpayers — is it better to itemize or take the standard deduction? While itemizing could be advantageous for some, the legislation also increases the standard deduction to $31,500 for married couples filing jointly (up from $30,000) and $15,750 for single filers (up from $15,000), with annual adjustments for inflation. “Your tax advisor can help you run the numbers and determine which approach minimizes your total tax liability,” Navani adds.
For seniors aged 65 and older, the new law provides an additional benefit: a bonus deduction of $6,000 for individuals or $12,000 for couples, available from 2025 through 2028. This deduction applies regardless of whether you choose to itemize or claim the standard deduction, though it gradually phases out for those with modified adjusted gross income (MAGI) above $75,000 for individuals or $150,000 for joint filers.
It’s worth noting that this senior deduction doesn’t exempt Social Security benefits from taxation — instead, it reduces your total taxable income, helping older taxpayers potentially lower their overall tax burden.
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2. Revisit Your Gift and Estate Planning Strategy
One of the biggest reliefs introduced by the One Big Beautiful Bill Act (OBBBA) is the permanent extension of the higher federal gift and estate tax exemption originally enacted under the 2017 Tax Cuts and Jobs Act. According to tax advisor Vinay Navani of WilkinGuttenplan, this change eliminates a major concern for high-net-worth individuals who were racing against the previous 2025 deadline to transfer assets before the exemption expired.
“Instead of decreasing, the exemption amount will actually increase — to $15 million for individuals and $30 million for married couples in 2026, with annual adjustments for inflation,” Navani explains. “That stability allows families to focus more on thoughtful planning rather than urgent deadlines.”
Estate planning now revolves around core fundamentals, such as understanding the current market value of your assets, including investment portfolios, real estate, or shares in a family-owned business. If asset values are temporarily low, it might be a strategic time to transfer or gift assets, allowing you to remove more value from your taxable estate without triggering federal gift taxes.
An essential part of the process is determining how best to structure those gifts. “It’s not always ideal to hand over large sums directly — for instance, to a teenager or young adult,” Navani notes. “That’s where establishing the right type of trust can make a difference.” Working with your financial advisor and tax specialist can help you choose a trust structure that aligns with your long-term goals. Key considerations include distribution terms, duration, and appointing a responsible trustee to manage assets according to your wishes.
Starting these conversations early ensures that your wealth transfer strategy supports your legacy, protects your beneficiaries, and remains compliant with the latest federal tax laws under OBBBA.
3. Rethink Your Charitable Giving Strategy
If charitable giving plays a meaningful role in your financial or personal life, 2025 could be an ideal year to refine your philanthropy strategy under the new One Big Beautiful Bill Act (OBBBA). According to tax expert Vinay Navani of WilkinGuttenplan, the updated legislation presents opportunities to optimize both the timing and method of your donations for greater tax efficiency.
“For those who regularly donate and itemize deductions, it may make sense to front-load several years’ worth of contributions into a donor-advised fund (DAF) before the end of 2025,” Navani explains. “Doing so allows you to claim a larger immediate deduction this year while retaining the flexibility to distribute those funds to different charities over time.”
Beginning in 2026, the OBBBA introduces key changes that affect how both standard deduction filers and itemizers can deduct charitable contributions:
- Standard deduction filers will be allowed to claim up to $1,000 (individual) or $2,000 (married filing jointly) in cash gifts made directly to public charities (excluding DAF contributions).
- Itemizers, however, will face a new rule — they must contribute at least 0.5% of their adjusted gross income (AGI), or “contribution base,” before being eligible to deduct charitable gifts.
As a result, taxpayers who plan to itemize deductions might want to accelerate their charitable donations into 2025, before the 0.5% threshold takes effect. Moreover, starting in 2026, the total allowable itemized deductions, including charitable giving, will be slightly limited for high earners — estimated at $640,000 for individuals and $770,000 for couples. This further strengthens the case for maximizing charitable contributions before year-end 2025.
Still, Navani cautions that tax advantages should never be the sole motivation for philanthropy. “While optimizing your tax position is smart, charitable giving should ultimately reflect your values and the causes you care about,” he says. Before making any large donations or creating a DAF, consult with your financial advisor, tax professional, or estate planner to ensure your giving plan aligns with both your financial goals and your philanthropic mission.
4. Use Investment Losses to Offset Capital Gains
If your portfolio has enjoyed some standout performers this year — resulting in significant capital gains — now may be the right time to look at strategically balancing those profits with any losses, says tax expert Vinay Navani of WilkinGuttenplan. This approach, called tax-loss harvesting, allows investors to sell underperforming assets to offset taxable gains and potentially reduce their federal income tax liability.
By realizing losses on investments you were already considering selling, you can free up capital to reinvest in stronger opportunities while also improving your overall tax position. If your total capital losses exceed your capital gains, you can apply up to $3,000 ($1,500 for married couples filing separately) of those losses to offset ordinary income on your federal tax return.
However, Navani cautions that timing is critical. To comply with the IRS wash-sale rule, you must avoid repurchasing the same or “substantially identical” security within 30 days before or after the sale — or the tax benefit from the loss could be disallowed. This rule applies to all types of securities, including mutual funds, ETFs, and stocks.
If the loss involves shares in a private company that has become worthless — for example, if the business shut down — you’ll likely need to provide extra documentation to verify the loss. “Due diligence takes time,” Navani notes. “It’s best to discuss these situations with your tax advisor well before year-end to ensure all requirements are met.”
While tax-loss harvesting can be a smart move, it’s not a one-size-fits-all strategy. Selling investments purely for tax reasons may undermine your long-term investment goals — or, as Navani puts it, “don’t let the tax tail wag the investment dog.” Always coordinate these decisions with your financial advisor or tax professional to ensure they align with your overall wealth management and growth strategy.
5. Maximize Your Retirement Contributions
One of the most effective ways to reduce your taxable income — while securing your future — is to make the most of your retirement plan contributions. Whether you contribute to a 401(k), traditional IRA, or another qualified retirement account, boosting your savings can deliver both long-term growth potential and immediate tax advantages, explains Vinay Navani of WilkinGuttenplan.
This strategy becomes even more valuable under the One Big Beautiful Bill Act (OBBBA), since several new deductions — such as the senior exemption and expanded SALT deduction — begin to phase out as your adjusted gross income (AGI) rises. By directing more pre-tax dollars into your 401(k) or making tax-deductible contributions to an IRA, you can effectively lower your AGI and retain access to these valuable deductions.
For the 2025 tax year, the 401(k) contribution limit has been raised to $23,500, while the IRA limit remains $7,000. These contributions not only build your nest egg but can also help manage your overall tax exposure.
If you’re 50 or older, you can take advantage of catch-up contributions — an opportunity to supercharge your retirement savings. The 401(k) limit rises to $31,000 for those 50 and above, and for individuals between ages 60 and 63, the enhanced catch-up provision allows up to $34,750, depending on plan terms. For IRAs, eligible contributors aged 50 or older can deposit up to $8,000 annually.
Keep in mind that deadlines differ: you typically have until December 31, 2025, to make your 401(k) contributions, while IRA contributions can be made until April 15, 2026, for the 2025 tax year.
Increasing your retirement savings isn’t just about preparing for tomorrow — it’s also a smart move to optimize your taxes today. Consider speaking with your financial advisor or tax professional to ensure you’re contributing strategically and taking full advantage of the latest OBBBA provisions.
6. Help Your Children Build a Strong Financial Future
For many parents, the dream is to see their children start saving and investing early — ideally setting them on a path toward lifelong financial independence. Traditionally, however, there’s been a major roadblock: to contribute to an IRA, the child needed earned income, which most minors don’t have.
The One Big Beautiful Bill Act (OBBBA) introduces a new solution — the “Trump Account”, a tax-advantaged savings vehicle designed to help children under 18 begin saving for retirement. Much like a traditional IRA, these accounts grow tax-deferred, but with one key difference: children don’t need earned income to qualify.
Parents, grandparents, or other relatives can contribute to the account, with a combined annual contribution limit of $5,000 per child (adjusted for inflation starting in 2028). Once the child turns 18, the account transitions to follow traditional IRA rules, helping them continue building a solid financial foundation into adulthood.
There’s also an appealing government incentive — children born between 2025 and 2028 who have a Trump Account opened in their name are eligible for a $1,000 one-time “seed” contribution from the federal government.
A few important rules apply:
- Contributions can’t begin until July 4, 2026.
- Withdrawals are prohibited until January 1 of the year the child turns 18.
- Additional IRS guidance is expected to clarify who can establish and manage these accounts.
By opening a Trump Account, you’re not just giving your child money — you’re giving them a head start on financial literacy, disciplined saving, and long-term wealth building. As always, consult with your tax advisor or financial planner to ensure you’re following the most current OBBBA regulations and using this new savings tool strategically.
7. Explore Converting Your Traditional IRA to a Roth IRA
If you’re looking for ways to build tax-free income in retirement, it may be worth considering a Roth IRA conversion. Current federal tax law allows anyone to convert part or all of their traditional IRA assets into a Roth IRA, regardless of income level.
The key advantage? Once you meet the requirements, qualified withdrawals from a Roth IRA — including both your contributions and earnings — are generally tax-free at the federal level. To qualify, two main conditions must be met:
- Five-year rule: At least five years must have passed since January 1 of the year you made your first Roth contribution or conversion.
- Age or circumstance requirement: You must be 59½ or older, disabled, or deceased (in which case your heirs may qualify).
When converting, you’ll owe federal income tax on the taxable portion of the amount moved — including deductible contributions and any accumulated earnings. The conversion itself isn’t subject to the 10% early withdrawal penalty, but keep in mind that if you withdraw converted funds from your Roth IRA within five years, that penalty could apply.
While the One Big Beautiful Bill Act (OBBBA) didn’t change the rules for Roth conversions, it’s important to note that a conversion could increase your adjusted gross income (AGI). This could impact certain deductions and credits introduced by the new legislation, such as the SALT deduction phase-out.
“If your traditional IRA investments have temporarily dipped in value, it could be a strategic time to convert,” says Navani. “You’ll pay taxes on a smaller amount now and potentially enjoy tax-free growth later.”
Before making the move, it’s wise to consult your financial or tax advisor. They can help determine whether a Roth conversion aligns with your broader financial plan and identify ways to manage the short-term tax impact while maximizing long-term benefits.
8. Explore Tax-Smart Investing Options
Another effective way to reduce your overall tax burden is by adopting tax-aware investing strategies. One approach is to allocate a portion of your portfolio to tax-exempt investments, such as municipal bonds, which are typically free from federal income taxes.
“Depending on when during the year you purchase municipal bonds, you might not receive any interest income in that same year,” explains Navani. “However, once you hold them through a full calendar year, you’ll benefit from the tax-free interest income they generate.” Do note that while municipal bond interest is generally exempt from federal taxes, it could still be taxable at the state or local level, depending on where you live.
It’s also important to consider the Net Investment Income Tax (NIIT), which applies to higher-income investors. If your modified adjusted gross income (MAGI) exceeds $200,000 for individuals, or $250,000 for married couples filing jointly, you may owe an additional 3.8% NIIT on the smaller of your net investment income or the amount by which your MAGI exceeds these thresholds. For those married but filing separately, the threshold drops to $125,000.
The good news? Interest earned from municipal bonds is excluded from NIIT, making them a potentially valuable component of a tax-efficient portfolio.
As always, before implementing any investment strategy, it’s wise to review your portfolio and consult a qualified tax advisor to ensure your investment choices align with both your tax situation and long-term financial goals.
9. Contribute to a 529 Education Savings Plan
Investing in a 529 education savings plan can be a smart way to support your child’s or grandchild’s education while also taking advantage of potential tax benefits. By contributing to a 529 plan, you can make a meaningful financial gift to a beneficiary of any age — and under certain conditions, you can contribute up to five years’ worth of the annual gift tax exclusion in a single year without triggering federal gift taxes.
Funds from a 529 plan can be used to cover qualified higher education expenses, such as tuition, fees, books, and room and board at eligible colleges and universities. Beginning in 2025, you can also use up to $10,000 from all 529 accounts combined to pay for qualified primary or secondary school expenses for each beneficiary.
The One Big Beautiful Bill Act (OBBBA) expands these benefits further starting in 2026 — increasing the annual limit for primary and secondary education expenses to $20,000 per beneficiary. The law also broadens the definition of eligible expenses beyond tuition, allowing funds to cover costs like books, digital learning tools, and standardized testing fees for distributions made after July 4, 2025.
Keep in mind that some states may not fully align with the new federal rules, so it’s essential to review your state’s specific regulations to ensure compliance.
Navani recommends reviewing your 529 plan’s investment mix and contribution strategy regularly. “If your child is nearing college age, you might consider adjusting your asset allocation to reduce risk and preserve capital,” he advises. “This ensures your plan stays on track with your educational funding goals.”
10. Manage Healthcare Expenses with Tax-Advantaged Accounts
Using Health Savings Accounts (HSAs) and Health Flexible Spending Accounts (FSAs) can help you pay for medical expenses your insurance doesn’t cover while also reducing your taxable income. These accounts allow contributions that are either tax-deductible or made with pre-tax dollars, making them an effective tool for managing healthcare costs.
However, there are important differences to consider. To qualify for an HSA, you must be enrolled in a high-deductible health plan (HDHP) and cannot have other disqualifying coverage, such as a general-purpose health FSA. While some employees may have access to both accounts, this is usually limited to pairing an HSA with a limited-purpose FSA for dental or vision expenses.
A major advantage of HSAs is that unused funds roll over year to year, allowing your savings to grow tax-free over time. In contrast, most health FSAs require you to spend the contributions within the same plan year. Some employers do allow a carryover of up to $660 into the next year (for 2026) or offer a grace period of up to 2½ months to use leftover funds on qualified medical expenses.
Another benefit of HSAs is that you can contribute up until the tax filing deadline for the previous year and still claim the deduction. For instance, contributions for 2025 can be made as late as April 15, 2026. FSAs, however, generally require you to elect contributions during open enrollment or upon becoming eligible through your employer.
To make the most of these accounts, review your current FSA balance and plan your remaining healthcare expenses carefully. Check if prior out-of-pocket medical costs can be reimbursed through your account. For detailed guidance on HSA contribution limits and rules, consult your tax advisor or see our comprehensive contribution limits guide.
- 1IRS, “401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000,” Nov. 1, 2025.
Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult a qualified legal or tax professional before making any financial or investment decisions.
The term “Tax Aware” refers to a strategy that uses forward-looking assumptions to establish benchmarks based on generalized, tax-adjusted returns. It does not guarantee that investors can avoid taxes on investment income, including dividends, interest, or capital gains generated from portfolio holdings or active management decisions. These strategies are not individualized tax advice. Investors should seek guidance from a qualified tax advisor for personalized recommendations.
Management of donor-advised funds and private foundations is offered by Bank of America Private Bank, a division of Bank of America N.A., Member FDIC, and a wholly owned subsidiary of Bank of America Corporation.
10 Tax Tips That Could Save You Money on Your Taxes
