Summertime is the sweet spot for tax planning. Waiting until December leaves you scrambling, but taking action now gives you a full six months to shift income, maximize deductions, and exploit the latest federal tax rules.

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Thanks to recent legislative updates—including the One Big Beautiful Bill Act (OBBBA)—a wave of major new permanent and temporary tax rules are now live. Here are the top mid-year strategies to deploy before the clock strikes midnight on December 31.

1. Maximize the Newly Lifted Contribution Limits

The absolute simplest way to lower your Adjusted Gross Income (AGI) is to shovel pre-tax dollars into retirement and health accounts. The IRS has bumped these limits upward for inflation:

• Workplace 401(k) / 403(b): The baseline limit is now $24,500. If you are 50 or older, you can add an $8,000 catch-up contribution, shielding up to $32,500 from ordinary income tax.
• Traditional / Roth IRAs: The baseline contribution is up to $7,500 (plus a $1,100 catch-up for those 50 and over).
• Health Savings Accounts (HSAs): Save up to $4,400 for individual coverage or $8,750 for a family plan.

High-Earner Catch-Up Warning: If you earn more than $145,000 (indexed), the IRS now requires your age-50+ catch-up contributions to go into a Roth (after-tax) account. Keep this in mind when adjusting your workplace paycheck withholdings.

2. Navigate the New “Bunching” Rules for Giving

The strategy around charitable giving has fundamentally changed due to new structural floors and limits.

• For Non-Itemizers: Even if you take the standard deduction, you can claim a new $1,000 deduction ($2,000 for married couples) for cash donations.
• For Itemizers: Itemized charitable gifts now face a 0.5% AGI floor. Your first few hundred dollars in donations won’t provide a tax benefit.

The Strategy: Rather than writing small checks every December, bunch multiple years of donations into a single calendar year to clear both the 0.5% floor and the standard deduction threshold. Using a Donor-Advised Fund (DAF) lets you take a massive tax deduction now while distributing the money to charities gradually over time.

3. Claim New OBBBA Deductions (Seniors, Tips, Overtime)

If you qualify for any of the newly minted federal tax breaks, ensure your bookkeeping matches strict IRS eligibility parameters before year-end.

Special Deduction	Maximum Benefit	Income Phase-Out Thresholds
New Senior Bonus Deduction	Up to $6,000 (Single) / $12,000 (MFJ)	Starts at $75,000 (Single) / $150,000 (MFJ)
Tipped Workers Exemption	Up to $25,000 of tips are tax-free	Starts at $150,000 (Single) / $300,000 (MFJ)
Overtime Pay Deduction	Up to $12,500 (Single) / $25,000 (MFJ)	Starts at $150,000 (Single) / $300,000 (MFJ)

Note: The new Senior Bonus Deduction stacks on top of the traditional age-65+ additional standard deduction.

4. Run an Itemization Reality Check (The New SALT Cap)

The temporary inflation expansion to the State and Local Tax (SALT) deduction cap is currently sitting at $40,400 per return.

Because this cap is much higher than in previous years, you might actually save more money by itemizing rather than taking the standard deduction.

• The Math: Add up your year-to-date property taxes and state income taxes. If your total SALT liabilities plus mortgage interest approach the standard deduction thresholds ($16,100 Single / $32,200 MFJ), look into accelerating deductible expenses before December 31—such as paying your Q1 property tax bill early.

5. Clean Up Your Portfolio with Tax-Loss Harvesting

If you realized big investment gains earlier this year, review your taxable brokerage accounts for underperforming assets before winter hits.

• Offset Gains: Selling losing assets allows you to offset capital gains dollar-for-dollar.
• Wipe Out Ordinary Income: If your losses exceed your gains, you can use up to $3,000 of those net losses to directly offset ordinary income, carrying the rest forward.
• Watch the Clock: Steer clear of the Wash-Sale Rule. Do not buy back the same asset (or a substantially identical one) within 30 days of selling it for a loss.