Minimize Your 2024 Tax Bill With 8 Savvy End of Year Moves

As the year comes to a close, it’s time to look ahead — to tax time.

Several tax-planning strategies can help you manage your 2024 bill before your 2025 filing date rolls around. Because many of these ideas require you to make money moves before the year ends, it’s important to get a jump on these ideas as soon as possible.

Here are the top eight tax strategies to take advantage of before December 31 if you want to minimize your tax bill from Uncle Sam.

If your employer offers matching contributions, prioritize contributing enough to your workplace retirement plan to get the full match. Ideally, contribute the maximum allowed — $23,000 (it’s $30,500 if 50 or older) in 2024 for 401(k)s.

Making these pre-tax contributions can not only potentially lower your taxable income, but it may have other hidden bonuses like potentially reducing your retirement tax rate.

On the other hand, if you expect a higher retirement tax rate, consider funding a Roth account. If available, you can make after-tax contributions to a Roth 401(k) up to $69,000 ($76,500 if 50 or older).

Feeling generous? It’s good for your soul and your bank account.

Adding charities to your list at the end of the year could help you save money when it comes to the inevitable and inescapable tax time. You can deduct monetary donations of up to 60% of your adjusted gross income and up to 30% when you donate long-term investments.

This changes a little as you get older. If you’re 70 ½ and up, you can donate up to $100,000 directly from your IRA to a charity in 2024 using a Qualified Charitable Distribution (QCD).

While the donation isn’t tax-deductible, it avoids taxation on the distribution and can satisfy some of the conditions of your Required Minimum Distribution (RMD) without increasing taxable income.

Got capital gains? This is for you.

The end of the year is an ideal time to make sure your portfolio is in line with your economic goals. Rebalancing can also reduce taxes by offsetting capital gains with losses.

To use this strategy, calculate your gains, then realize losses of equal value. Excess losses can offset up to $3,000 of ordinary income on your 2024 return, with any remaining carried forward. When tax-loss harvesting, avoid violating the wash-sale rule by not repurchasing the same or similar security within 30 days of the sale.

The end of the year isn’t just about getting gifts. It’s about giving them, too.

In 2024, you can gift up to $18,000 per person ($36,000 if you’re married) to as many people as you like without affecting your lifetime estate and gift tax exemption.

While these gifts aren’t tax-deductible on your end, the recipients won’t owe taxes, and the strategy helps reduce your estate’s value.

For example, if you have four children, you and your spouse could gift each one $36,000, transferring wealth tax-free. This amount increases to $19,000 per person in 2025. All the more reason to be generous.

A Health Savings Account (HSA) is a tax-advantaged account for people with high-deductible health plans. It’s designed to help save for qualified medical expenses.

While your employer is responsible for managing the annual HSA contribution limits and adhering to specific rules for medical and insurance-related expenses, you may get to see a tax advantage if you meet certain requirements.

For eligible taxpayers, the 2024 contribution limits are $4,150 for individuals and $8,300 for families under the age of 55.

HSAs offer tax-free contributions, tax-free growth, and tax-free withdrawals when used for qualified medical expenses, making them a valuable savings tool.

You can sock away $7,000 per year into your IRA, with an additional $1,000 catch-up allowance for those 50 or older.

Note: If you or your spouse participate in an employer-sponsored retirement plan, your traditional IRA contributions may not be fully tax-deductible, because deductions could phase out based on your income.

Itemizing is, frankly, kind of annoying — but it offers some pretty good tax benefits under certain circumstances.

Let’s say you’re married and filing for 2024. You’re gonna get a $29,200 standard deduction, and singles have $14,600. Itemizing can help if your deductible expenses exceed certain amounts.

Common deductions include medical costs (above 7.5% of AGI), home mortgage interest, state/local taxes, charitable contributions, and disaster-related losses.

So, if you happen to be near the threshold for your medical expenses, you may want to consider prepaying for some of your upcoming healthcare costs before the end of the year to fully take advantage of those itemized deductions.

The American Opportunity Tax Credit offers up to $2,500 per student for the first four years of higher education and it requires $4,000 in qualified expenses.

It's available for single filers with a modified AGI under $80,000, and joint filers with a modified AGI under $160,000.

Prepaying 2025 tuition in 2024 could maximize this benefit. Additionally, many states offer tax deductions for 529 contributions, and you can gift up to $18,000 per beneficiary annually or $90,000 using 5-year gift tax averaging.

The taxman cometh for us all, but there are ways to beat some of the heat and keep more cash in your wallet, and most of them can be accomplished by familiarizing yourself with the most recent IRS rules.

But, that said, every tax situation is unique. And it’s often a good idea to tap a tax advisor or financial professional for tailored guidance when you’re looking for ways to save money on your taxes.

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