An 8-Point Checklist To Ensure You Stay Prepared This Year
Taking a proactive approach midyear can save you time, reduce stress, and optimize your potential refund for 2025. With recent tax law changes now in effect, it’s especially important to review your strategy and update your plan. Below you’ll find a comprehensive checklist tailored for individuals, families, and business owners to help optimize deductions, account for 2025 tax law changes, and get ready for year-end.
1. Review Income and Withholdings
- Check your year-to-date income: Compare your current income to projections. If you’ve started a new job, side hustle, or received a raise, now’s the time to update your calculations.
- Adjust W-4 and withholdings: Mid-year is ideal to update your IRS Form W-4 for correct withholdings and avoid unwanted surprises at tax time.
2. Update Estimated Tax Payments
- For self-employed and investors: Make sure your estimated quarterly tax payments reflect your current income. Missing payment deadlines can result in penalties.
- Extra income or windfalls: If you’ve realized more income than expected, consider making an extra estimated payment to stay ahead.
3. Optimize and Organize Deductions
- Bundle deductions: With the 2025 standard deduction rising to $31,500 for married couples filing jointly and $15,750 for single filers, review if itemizing is worthwhile for you this year.
- Bunch charitable donations: If you’re close to the itemization threshold, consider bunching donations into one year for a larger deduction.
- State and Local Tax (SALT) deduction: The new cap is increased to $40,000 for incomes under $500,000, but phases out for higher earners.
4. Account for Key 2025 Tax Law Changes
- No tax on tips and overtime: For 2025-2028, tips and overtime pay are no longer subject to federal income tax for eligible earners, subject to limits.
- Extra deduction for seniors: Taxpayers age 65+ get an additional deduction, which is $6,000 per person, starting to phase out above $75,000 (single) or $150,000 (joint) in MAGI.
- Child Tax Credit increased: The credit is now $2,200 per child under 17, with annual inflation adjustments.
- Car loan interest deduction: Up to $10,000 interest is deductible for most, phasing out at $100,000 AGI for singles and $200,000 for joint filers.
- Expanded childcare credits: Employer-provided childcare credits are now up to 40%, and 50% for some small businesses.
- SALT deduction phase-out: Above $500,000 MAGI, the higher SALT deduction is reduced 30% until $10,000 remains at $600,000 MAGI.
5. Maximize Savings and Retirement Contributions
- Contribute to IRAs, 401(k)s, and HSAs: Double-check your contribution levels to maximize retirement savings and deductions.
- Consider Roth conversions: A Roth IRA conversion could make sense if your income is temporarily lower this year.
6. Manage Investments and Harvest Losses
- Review gains and losses: Assess your portfolio for loss harvesting opportunities if you’ve realized investment gains or have underperforming assets.
- Rebalance before year-end: Strategic rebalancing midyear may also improve your tax efficiency.
7. Prepare and Organize Records
- Keep receipts and documentation: Organize paperwork for donations, deductible expenses, and significant purchases.
- Maintain updated records: Mid-year is the perfect time to tidy up your files, making year-end filing smoother.
8. Consider Life Changes
- Account for big events: Marriage, divorce, new dependents, or home purchases can all impact your tax picture. Update your withholdings and deductions accordingly.
For Business Owners
For business owners, a mid-year tax planning review is a critical opportunity to optimize deductions, manage cash flow, and position the business for a smooth year-end. By revisiting financial statements, you can identify trends in revenue and expenses, ensuring that all eligible business deductions—such as office expenses, travel, equipment purchases, and retirement plan contributions—are maximized before the year closes. It’s also essential to adjust estimated tax payments based on updated income projections to avoid surprises or penalties.
Consider whether your current entity structure (LLC, S-corp, C-corp) remains optimal under evolving tax laws, as strategic changes here can significantly reduce tax liabilities and unlock new benefits. Proactively evaluating credits, such as research and development or expanded childcare credits for eligible businesses, can further lower your tax bill. With major federal tax changes looming for 2025, careful mid-year analysis ensures your business leverages all available strategies, stays compliant, and avoids making reactive, last-minute decisions.
- Review and reconcile profit/loss statements.
- Ensure your books match your most recent tax return.
- Check eligibility for expanded business-related deductions, like childcare credits and new deduction thresholds.
Key Takeaways & Next Steps
- Take advantage of the new deductions and credits now available for 2025.
- Don’t wait until December. Revise your tax planning midyear for optimal flexibility.
- Consult a tax professional to tailor strategies to your personal situation and ensure you’re ready for year-end.
With these adjustments, you can be better positioned to minimize taxes and maximize savings when it’s time to file.