Year-End Tax Planning Guide [2024 Edition]

Year-end tax planning can turn an otherwise frustrating exercise for many people into a smooth sailing experience, with bright winds that can blow you faster toward your long-term financial goals. 

If you plan your tax strategies before the end of the year, no surprises will come up later. You’ll have plenty of time to adjust your spending, earnings, and savings to keep as much money as possible in your bank account, where it belongs. Let’s review some of the most popular strategies. 

Table of Contents

1. Income management
2. Maximize credits and deductions
3. Retirement contributions
4. Investment strategies
5. Education savings
6. Health savings accounts (HSAs)
7. Business considerations

Income management

It’s wise to keep tabs on your income throughout the year so you can take steps to lower your tax liability. Look at how much you earned for the year to understand the tax bracket you fall into for 2024. Also, consider how your situation might change in the next year to estimate your tax bracket in 2025.

Note:

• MFJ = Married filing jointly
• MFS = Married filing separately
• HoH = Head of household

2024 tax brackets

Tax rate	Single	MFJ	MFS	HoH
10%	$0 – $11,600	$0 – $23,200	$0 – $11,600	$0 – $16,550
12%	$11,601 – $47,150	$23,201 –  $94,300	$11,601– $47,150	$16,551 –  $63,100
22%	$47,151 – $100,525	$94,301 – $201,050	$47,151 – $100,525	$63,101 – $100,500
24%	$100,526 –  $191,950	$201,051 – $383,900	$100,526 – $191,950	$100,501 – $191,950
32%	$191,951 – $243,725	$383,901 – $487,450	$191,951 – $243,725	$191,951 – $243,700
35%	$243,726 – $609,350	$487,451 – $731,200	$243,726 – $365,600	$243,701 – $609,350
37%	$609,351+	$731,201+	$365,601+	$609,351+

2025 tax brackets

Tax rate	Single	MFJ	MFS
10%	$0 – $11,925	$0 – $23,850	$0 – $17,000
12%	$11,925 – $48,475	$23,850 – $96,950	$17,000 – $64,850
22%	$48,475 – $103,350	$96,950 – $206,700	$64,850 – $103,350
24%	$103,350 – $197,300	$206,700 – $394,600	$103,350 – $197,300
32%	$197,300 – $250,525	$394,600 – $501,050	$197,300 – $250,500
35%	$250,525 – $626,350	$501,050 – $751,600	$250,500 – $626,350
37%	$626,350+	$751,600+	$626,350+

You can use this information to save money if you can put yourself in a lower tax bracket, either this year or the next. 

For example, if you think you’ll earn more next year, you can “accelerate” income into this year when your tax bracket is lower. Experts often recommend “deferring” income into next year if you’ll likely earn the same or less. We’ll cover several ways to do this below. 

Maximize credits and deductions

One of the easiest and most effective ways to lower your tax bill is by claiming all the tax credits and deductions you can. Year-end tax planning is the perfect time to wrap up any last requirements to earn those juicy tax savings. 

Deductions allow you to skip paying taxes on a portion of your income. Anyone can claim a standard deduction of $14,600 in 2024 ($29,200 for married couples filing jointly), but many individual deductions could add up to a larger amount if you opt to itemize your deductions. Here are common deductible expenses:

• Donating to eligible charities
• Paying state and local taxes (SALT)
• Paying high medical bills (more than 7.5% of your adjusted gross income)
• Mortgage interest

You can deduct some expenses, such as student loan interest, whether you itemize your deductions or take the standard deduction. 

Credits, on the other hand, let you save directly on taxes. It’s essentially a coupon that shaves money off your tax bill. Anyone can claim credits for which they’re eligible. Here are common reasons that people get tax credits:

• Buying an EV
• Having children
• Paying for college
• Paying for child care
• Buying energy-efficient home upgrades
• Earned income tax credit for low- to middle-income families

Retirement contributions

Check to see how much you’ve contributed to your retirement accounts. Have you maxed out your contributions yet? Did you overcontribute, and you need to make a withdrawal? Here’s how much you can save in various retirement accounts in 2024:

Contribution type	2024 contribution limit
401(k): Employee contributions (Traditional or Roth)	$23,000 ($30,500 for people 50 and over)
401(k): Combined employee + employer contributions	$69,000
IRA contributions (Traditional or Roth)	$7,000 ($8,000 for people 50 and over)
SEP IRA contributions	Up to 25% of employee earnings, or $69,000 (whichever is less)
SIMPLE plan contributions	$16,000 ($19,500 for people 50 and over)

If you have a workplace retirement account with employer matching, financial planners recommend contributing at least up to the match and maxing out if possible. After that, check to see whether you’re eligible to contribute to other accounts and max those out, too, if you can. 

Saving money in a traditional 401(k) or IRA can help lower your taxes because contributions to those accounts can reduce your taxable income. Roth 401(k)s and IRAs offer other benefits, including tax-free income in retirement, subject to certain restrictions.  Remember that your eligibility to contribute to a Roth IRA is based on your income level. 

If you’re a high-income earner, you can contribute to a Roth IRA using a strategy sometimes known as a “backdoor Roth IRA conversion.” This is a complicated strategy, so consult with your tax preparer or financial planner to execute it. 

Investment strategies

If you haven’t yet rebalanced your portfolio for the year, now’s a good time to do so. Sell some of your securities to buy others and align your investment mix with your target percentages. 

The end of the year is also an excellent time to see whether tax-loss harvesting opportunities are available. If some of your investments are trading for less than you paid, you can sell those off and buy similar ones. You’ve lost money and pay less capital gains tax on paper, but your money is invested the same. 

Education savings

If you or someone important in your life has plans to go to school, a crucial aspect of year-end tax planning is deciding whether to contribute to their 529 college savings plan. These are state-specific plans that anyone can open, but the money can only be used for education expenses. 

Some states offer tax deductions for people who contribute to 529 plans. Recipients can enjoy tax-free withdrawals, even on earnings. That’s an important consideration since many people contribute yearly to 529 plans for their kids, allowing an extra-long time for the account to grow.

Health savings accounts (HSAs)

If you have a high-deductible health plan, you can open a health savings account (HSA) that offers excellent tax-saving opportunities. In 2024, insurance plans charging deductibles higher than $1,600 (for individuals) or $3,200 (for families) are considered a high-deductible plan.

You can deduct money you save in an HSA each year, and you’re not taxed on any earnings or withdrawals. You can withdraw from an HSA for any reason without penalty after age 65, but you must pay tax on withdrawals not for qualified medical expenses.

Contribution type	2024 contribution limit
Individual coverage (under age 55)	$4,150
Family coverage (under age 55)	$8,300
Individual coverage (age 55+)	$5,150
Family coverage (age 55+)	$9,300

Business considerations

Business owners often have more leeway when accelerating or deferring income. Planning where you stand income-wise could yield big savings if you can nudge yourself into a lower tax bracket. 

For example, you could invoice customers later in the month to push that income back to next year. Pulling the trigger on any business purchases you’ve been eyeing, such as extra inventory or equipment, can also lower your tax bill. Some IRS codes, including Section 179 and bonus depreciation, allow bigger upfront deductions.

If your business makes quarterly tax payments, the end of the year is also a good time to review your estimates for how much to pay. Consider whether you should lower or increase your estimated quarterly tax payments in the new year.

Year-end tax planning is extremely important. Not only does it help you find opportunities to reduce your tax liability before the end of the year, but it’s also a good way to estimate how much you may owe so there are no surprises in April.

If you’ve earned more money this year than in previous years, are self-employed, received a large bonus or equity compensation, or have changes to your personal life that could affect your taxes, tax planning could save you a lot of stress going into tax season.

Chloe Moore, CFP®