Happy December! It’s time to start thinking about your taxes. As we approach the end of 2025, it’s not surprising that many folks are thinking about tax season and how they’ll use their refund. Before we get to the refund, though, let’s make sure you’re setting yourself up to take full advantage of tax benefits and savings available to you.
Use Your FSA Money
If your employer offers a flexible savings account, or FSA, you can save on taxes. The money directed into these accounts is not subject to income tax or social security tax – hence the terminology around pre-tax dollars.
FSAs are generally used for medical expenses and childcare costs, and they also come with a “Use it or lose it” deadline of December 31. If you don’t use your FSA contributions by the end of the year, you forfeit the rest of the accrued money. (Note: Some FSAs have a grace period that allows you a few more months to use it up—so double check with your employer).
Use the last month of the year to fully tap that savings account! You can visit the FSA Store online to stock up on essentials such as cold and flu remedies, skincare and acne treatments, or a high-tech wearable like the Oura ring.
If you or your family need an eye exam or dental cleaning, those are good solutions to use up your FSA balance too.
You have already set aside this money—make sure you use it!
Max Out Your Retirement Contributions
With unpredictable rising costs and uncertainty about the future of our economy, saving for retirement might have fallen a few spots down your priority list. But if you have the means to set aside funds for your retirement, it’s almost always a good idea to do so.
Investing in a tax-deferred retirement plan is a great way to save on taxes because the account is able to grow by compounding your gains tax free. If you can’t max out your contribution, try to at least contribute the percentage of your income that your employer will match.
The 2025 maximum contribution for your 401(k) is $23,500 if you’re under 50, $31,000 for those aged 50-59 or over 64, and $35,750 for ages 60-63.
The maximum contribution to your IRA is $7,000 in 2025, plus an additional $1,000 for those age 50 and up.
To put it very simply, the more you save for retirement, the more you may be able to save on your tax bill.
Take Your IRA Distributions
Traditional IRAs have required minimum distributions beginning at age 72, with a hefty tax penalty of 25% if you don’t take them. We want to avoid that. If you’re approaching 72, check in with your IRA custodian, financial planner, and/or tax professional to ensure you’re taking the correct amount for your minimum distributions.
If you’re already taking your minimum distributions, make sure automatic tax withholding is set up to pay the necessary taxes on your retirement income. Otherwise, you’ll need to keep up with quarterly estimated tax payments.
Get a Head Start on 2026!
A tax professional can help you plan for these and other resources to minimize your tax burden and maximize savings. For those in the Akron area, Tree City Tax Service serves Summit, Portage, and surrounding counties from our home office in downtown Kent.