A Helpful Filing-Season Reference: Retroactive 2025 Tax Deduction and Planning Opportunities

A Helpful Filing-Season Reference: Retroactive 2025 Tax Deduction and Planning Opportunities

As tax season approaches, there are still several opportunities to reduce your 2025 tax liability—even after the calendar year has closed. Below is a practical reference outlining deductions, contributions, and elections that may still be available when filing your 2025 return in 2026.

IRA Contributions
You may still make a deductible IRA contribution for the 2025 tax year up until April 15, 2026, subject to income and participation limits. The maximum contribution is $7,000 per person, or $8,000 if you are age 50 or older.
Taxpayers located in federally declared disaster areas may qualify for an extended contribution deadline. Disaster declarations and deadlines can be confirmed through FEMA.

Health Savings Accounts (HSA)
If you were covered by a qualified high-deductible health plan in 2025, you can fund a Health Savings Account through April 15, 2026, and deduct the contribution on your 2025 return. Contribution limits are $4,300 for individual coverage and $8,550 for family coverage.

SEP-IRA for Self-Employed Individuals
Self-employed taxpayers may establish and fund a SEP-IRA for 2025 as late as the extended due date of their tax return. Contributions are generally limited to the lesser of $70,000 or 25% of eligible compensation.

529 College Savings Plans
Some states allow residents to claim a state tax deduction or credit for 529 plan contributions made by April 15, 2026, for the 2025 tax year. While there is no federal deduction, state-level benefits can be significant and vary by jurisdiction.

Home Office Deduction
Small business owners and self-employed individuals may deduct home office expenses for 2025 if a portion of the home is used regularly and exclusively for business. This deduction may be calculated using actual expenses or the IRS safe harbor method.

Roth IRA Contributions for Children
If a child has earned income in 2025, a Roth IRA may be funded on their behalf. There is no minimum contribution requirement—small deposits can still be valuable, as they begin the five-year clock for qualified tax-free distributions at an early age.

529 Plans as Long-Term Roth Planning Tools
Opening a 529 plan for yourself, a spouse, a child, or a grandchild can also start the 15-year clock required for future tax-free Roth conversions under current rules. Early planning can significantly increase long-term flexibility.

Important 2025 Elections Made With the 2026 Filing
Certain tax elections must be made when filing the return and cannot be changed later without IRS consent. These include:
• Election related to home equity indebtedness
• Section 266 election for capitalization of certain real estate taxes
• Installment sale treatment for qualifying real property sales
• Small business $2,500 de minimis expensing election
• Rental property de minimis repair and maintenance election of up to $10,000

These strategies are not one-size-fits-all, and eligibility depends on income levels, filing status, and overall tax structure. If you’d like help determining which of these opportunities apply to you or your business, our firm is happy to review your situation and provide tailored guidance.