Year-End Tax Planning for 2025: What Los Angeles Professionals Should Do Before December 31

As 2025 draws to a close, it’s time for professionals in Los Angeles — from doctors and dentists to freelancers and high earners — to take a strategic look at their finances. The final weeks of the year can make a significant difference in your tax bill, retirement savings, and overall financial picture.

At Velin & Associates, Inc., our Los Angeles CPAs specialize in proactive tax planning to help clients maximize deductions, defer income when possible, and avoid unpleasant surprises at tax time. Here’s what you should prioritize before December 31, 2025.

1. Maximize Retirement Contributions

One of the most effective ways to reduce taxable income is to contribute to retirement accounts.

• Doctors and Dentists: Max out contributions to 401(k), SEP-IRA, or defined benefit plans. For 2025, the 401(k) contribution limit is $23,000 ($30,500 if age 50+).
• Freelancers and Small Business Owners: Consider a Solo 401(k) or SEP IRA, which allow contributions up to 20% of net self-employment income.
• High-Income Earners: Explore backdoor Roth IRA conversions or a cash balance plan to maximize long-term tax-deferred growth.

💡 Tip: Contributions must generally be made by December 31 for 401(k)s and by your tax filing deadline (with extensions) for SEP or Solo 401(k) plans.

2. Accelerate or Defer Income Strategically

Timing is everything when it comes to taxes.

• If you expect to be in a higher tax bracket next year, accelerate income into 2025 (for example, by invoicing clients early).
• If your income will drop next year, defer income until 2026 to take advantage of lower rates.
• For freelancers and consultants, timing invoice payments or project deliveries can make a significant difference in taxable income.

💡 Example: A Los Angeles video editor expecting a big project in January might delay sending December invoices until January to shift taxable income to 2026.

3. Review Deductions and Business Expenses

Now is the time to make tax-deductible purchases before year-end:

• Doctors and Dentists: Purchase or upgrade medical or dental equipment before December 31 to take advantage of Section 179 expensing or bonus depreciation.
• Freelancers and Online Creators: Invest in new computers, software, or camera equipment for your business.
• High Net Worth Individuals: Consider prepaying 2026 property taxes or professional fees if it makes sense under the SALT deduction limits.

💡 Tip: Keep thorough records and receipts. If you plan to deduct large purchases, confirm with your CPA that they qualify for full or partial expensing in 2025.

4. Make Charitable Contributions

Charitable giving can be both fulfilling and financially smart.

• Donate appreciated stocks or crypto instead of cash to avoid capital gains tax and still receive a full charitable deduction.
• High-income professionals can “bunch” donations into a Donor-Advised Fund (DAF) to maximize deductions in a single year.
• Medical practices or professional corporations can also contribute to local charities and deduct the donation as a business expense.

💡 Example: A Los Angeles dentist donates $10,000 in appreciated stock to a qualified charity, avoiding tax on the gain and claiming a full deduction.

5. Evaluate Estimated Taxes and Withholding

To avoid underpayment penalties, review your estimated tax payments and withholdings now.

• High earners should ensure they’ve paid at least 90% of their 2025 tax liability or 100–110% of last year’s tax to avoid penalties.
• Self-employed professionals should make their final estimated payment by January 15, 2026.

💡 Tip: If you’ve had irregular income this year, ask your CPA to run a tax projection before December 31.

6. Use Loss Harvesting and Capital Gains Planning

If you’ve sold investments at a gain, offset those with capital losses before year-end.

• Sell underperforming investments to realize losses that can offset gains, plus up to $3,000 in ordinary income.
• If you’re expecting a large gain from selling a property or business, discuss installment sale or 1031 exchange options with your CPA.

💡 Example: A Los Angeles investor selling an appreciated rental property can defer gain recognition using a properly structured 1031 exchange.

7. Review Entity Structure and Business Planning

For business owners, your entity choice — LLC, S Corp, or C Corp — can make a big difference at tax time.

• Doctors, dentists, and freelancers may benefit from electing S corporation status to reduce self-employment tax.
• High earners should review income-splitting strategies, accountable plans, and compensation structures before year-end.

💡 Tip: These decisions are most effective when made before December 31 — once the year closes, many opportunities disappear.

Final Thoughts: Act Before December 31

Proactive year-end tax planning isn’t just about minimizing this year’s bill — it’s about positioning yourself for long-term financial success. Doctors, dentists, freelancers, and high-income professionals in Los Angeles should take action now to ensure their tax strategy aligns with their goals.

📆 Book Your Year-End Tax Planning Session Today

Don’t wait until April — the smartest tax moves happen before December 31. Our team at Velin & Associates, Inc. helps Los Angeles professionals identify opportunities, minimize taxes, and prepare with confidence. — Your trusted CPA firm in Los Angeles for tax planning, strategy, and peace of mind.

For more information about our tax planning services, contact us today: visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org

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