Last-Minute Tax Deductions to Take in 2025

As the tax season approaches its final stretch, many individuals find themselves scrambling to maximize their savings before the deadline. Understanding the nuances of last-minute tax deductions can be a game-changer for your 2025 tax return. Whether you’re a seasoned filer or a first-time taxpayer, knowing which deductions you can still claim can significantly impact your financial outcome. From charitable contributions to business expenses, there are several opportunities to reduce your taxable income legally and efficiently. If you’re considering itemizing your deductions and are up against the clock to get your taxes filed, here’s some important information about last-minute deductions you might consider.

A financial advisor could help you with tax planning, as well as other financial planning needs.

Tax Deductions Definition

The U.S. has a progressive income tax system. This means that as your income goes up, you are taxed at a higher percentage. You aren’t taxed on your entire income, though, as some money is deductible from your total taxable income. Most people use what is known as the standard deduction, meaning you deduct a dollar figure determined by the federal government.

For tax year 2025, the standard deduction is $15,000 for single filers and those married but filing separately. It is $30,000 for joint filers and $22,500 for heads of household.

Some people, though, choose to itemize their deductions. This takes more time, but if you think you can deduct more than the standard deduction it could save you money. Examples of common itemized deductions include:

• Charitable donations
• Business expenses
• Some medical expenses
• Mortgage interest
• Tax-deferred retirement contributions

Talk to a tax professional to determine if your unique situation applies to these deductions that might make it advantageous for you to itemize your deductions.

4 Last-Minute Tax Deductions to Consider

If you’re currently preparing your tax returns and still aren’t sure if you should take the standard deduction or go through and itemize, here are some last-minute deductions you may be able to take advantage of that you may not have thought of. These deductions could also push you towards itemizing as the most financially sound course of action:

1. Max Out Tax-Advantaged Accounts

One effective strategy is to maximize contributions to tax-advantaged accounts. These accounts, such as 401(k)s, IRAs, and Health Savings Accounts (HSAs), offer significant tax benefits that can help lower your tax bill. By contributing the maximum allowable amount, you can potentially reduce your taxable income and, consequently, your tax liability. These contributions need to be completed before the April tax deadline.

2. Side Hustle Expenses

Here’s one you may not have thought of: if you’ve found a way to monetize your hobby, you can deduct expenses related to it from your taxable income. Let’s say you like to knit and have started selling your knitted wares online. You can possibly deduct expenses related to that – like knitting needles, patterns and yarn – from your income.

3. Tax Prep Expenses

If you pay for tax preparation – like buying a premium version of a service like TurboTax – you can deduct that as well. This likely won’t be a massive change to your taxable income, but if you’re itemizing, every dollar counts.

4. Student Loan Interest 

You are probably used to complaining about your student loan debt, but here is a way it can help you. You can deduct up to $2,500 of your student loan interest, so if you’re choosing to itemize and have student loan debt, don’t forget to include this.

5. Utilize Tax-Loss Harvesting

Tax loss harvesting is a strategic approach that can help investors reduce their taxable income by offsetting capital gains with capital losses. This technique involves selling securities at a loss to counterbalance the gains realized from other investments. By doing so, investors can potentially lower their tax liability, making it an attractive option for those looking to optimize their tax situation before the end of the fiscal year.

Bottom Line

Itemizing your tax deductions is an option for getting your tax bill down if you think you can end up taking more than the standard deduction. As the tax deadline approaches, understanding last-minute tax deductions can be a game-changer for maximizing your refund or minimizing what you owe. There are some deductions that are well known, but if you’re choosing to itemize your deductions, don’t lose out on some of the deductions you might not know about.

Tax Planning Tips

• A financial advisor can help you get the best deal on your taxes. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Get an estimate of your tax bill using SmartAsset’s free tax calculator. This way you can plan ahead and set a budget based on your estimated payment.

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