December 31 is the hard deadline for most tax-saving strategies. Here's your complete checklist of moves to make before midnight on New Year's Eve — and why waiting until January is too late.
Section 179 and Bonus Depreciation: Buy Equipment Now
If your business needs new equipment, vehicles, computers, or furniture, buy it before December 31. Under Section 179, you can deduct the full cost of qualifying equipment in the year of purchase rather than depreciating it over several years. The 2025 Section 179 limit is $1,160,000. Bonus depreciation allows an additional 60% first-year deduction on qualifying property. These deductions disappear if you wait until January — the asset must be placed in service by December 31.
Maximize Retirement Contributions Before Year-End
December 31 is the deadline for 401(k) and SIMPLE IRA contributions (though IRA and SEP-IRA contributions can be made until April 15). If you haven't maxed out your 401(k), contact your plan administrator now — payroll changes take time to process. For business owners, establishing a new Solo 401(k) plan must be done by December 31 of the year you want contributions to count, even though you have until tax filing to actually fund it.
Charitable Giving: Strategies That Maximize Your Deduction
Cash donations to qualified charities are deductible if you itemize. But consider donating appreciated stock instead of cash — you get a deduction for the full fair market value and avoid capital gains tax on the appreciation. A donor-advised fund lets you make a large contribution in a high-income year, take the deduction immediately, and distribute the funds to charities over time. All charitable contributions must be made by December 31 to count for 2025.
From the Firm
December is our busiest planning month. If you haven't had your year-end planning session yet, call us immediately — we have very limited availability remaining. We wish you and your family a joyful holiday season and a prosperous New Year. Thank you for trusting McCloud & Associates with your financial future.