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Big Beautiful End-Of-Year Tax Strategies
Now is the time to minimize clients’ chances of losing tax breaks. By Eric L. Reiner
WHEN THE SO-CALLED ONE BIG Beautiful Bill Act was signed into law in July, it set the table for late-year tax discussions with clients. And one of the things that will likely be high on your agenda is carefully managing your clients’ 2025 income so they’ ll minimize the chance of losing new breaks.
Consider the new deduction for seniors— which is $ 6,000 per taxpayer over age 65, or $ 12,000 for joint filers when both are of age. It’ s neither necessary nor disqualifying for those clients to itemize to get this deduction. But it does go down for singles whose modified adjusted gross income tops $ 75,000, or for joint filers whose income rises above $ 150,000; it’ s eliminated after they make $ 100,000 of earnings above these figures. In the 24 % bracket, losing the entire deduction raises a single taxpayer’ s federal tax bill by $ 1,440, or double that for two age-eligible joint filers.
Meanwhile, your clients’ ability to itemize up to $ 40,000 of the state and local taxes( SALT) they pay this year diminishes when their income exceeds $ 500,000. When it rises to $ 600,000 and higher, only $ 10,000 is deductible. Each dollar of income in that $ 100,000 span pads the client’ s tax return with an extra 30 cents: A $ 30,000 deduction reduction divided by $ 100,000 equals a $ 0.30 smaller write-off per $ 1 of income in the phaseout. In the 35 % bracket, this equates to a 45.5 % actual marginal tax rate: $ 1.30 taxed times 35 % is $ 0.455 tax on $ 1 of earnings. Ugh.
Controlling Income Levers
The changes to the law mean clients might want to reconsider how they do things like undertake Roth IRA conversions, withdraw from traditional retirement accounts or realize gains so they don’ t trigger more in taxes. For instance, if they forgo a
Roth conversion now, they might save more in state and local tax deductions.
Yet that might also mean they have to pay heftier bills for taxes and Medicare premiums later because they’ ll have to take more out of future required minimum distributions from their traditional retirement accounts. The two potential outcomes have to be weighed against each other, says Michael Ruger, managing partner at Greenbush Financial Group in Albany, N. Y.
“ Are Roth conversions still worth it?” he muses.“ For some clients, that answer may be‘ no,’ or at a minimum we may need to reduce the conversion amount.”
Clients can satisfy their minimum required distributions, however, and simultaneously curb reported income with a qualified charitable distribution( QCD), which is a direct transfer from their individual retirement account to a charity. This allows the distribution to be excluded from income, thereby preserving the new earnings-based deductions, when otherwise it would have been taxable.
For 2025, the maximum for this distribution is $ 108,000 per person, or $ 216,000 for joint filers if both donate.“ People who
44 | FINANCIAL ADVISOR MAGAZINE | NOVEMBER 2025 WWW. FA-MAG. COM