Mid-Year Tax Planning Strategies

As the calendar flips to June, most taxpayers and advisors have long put tax season in the rearview mirror. But for proactive individuals and business owners, June is the perfect time for mid-year tax planning. This mid-point in the year offers a valuable opportunity to assess your financial health, implement tax-saving strategies, and avoid unpleasant surprises come April.

In this article, we’ll explore key mid-year tax strategies for individuals, families, and business owners, covering income, deductions, retirement planning, charitable giving, and estimated tax payments.

1. Review Year-to-Date Income and Withholding

The first step in any mid-year review is to evaluate your income and tax withholding.

Check Your Pay Stub

Pull your most recent pay stub and review:

• Year-to-date earnings
• Federal and state tax withholding
• Retirement plan contributions (e.g., 401(k), 403(b))

Use the IRS Withholding Estimator

The IRS offers a Withholding Estimator Tool to determine whether you’re on track. Adjust your W-4 if:

• You’ve received a raise or bonus
• You’ve had a change in family status (marriage, divorce, dependents)
• You anticipate capital gains, stock sales, or other investment income

Avoiding under-withholding now may prevent underpayment penalties later.

2. Maximize Retirement Contributions

June is an ideal time to assess retirement plan contributions and make catch-up plans.

Contribution Limits for 2025:

• 401(k), 403(b), most 457 plans: $23,500 (+$7,500 catch-up if age 50+)
• Traditional or Roth IRA: $7,000 (+$1,000 catch-up if age 50+)
• SEP IRA: Up to $70,000 or 25% of compensation, whichever is less

Strategic Considerations:

• Higher-income individuals should consider Roth conversions in a low-income year.
• Small business owners should explore Solo 401(k) or defined benefit plans.
• Monitor income limits if contributing to Roth IRAs directly (Modified AGI phase-outs apply).

A mid-year increase to retirement contributions can meaningfully reduce your taxable income.

3. Estimate Capital Gains and Tax-Loss Harvesting Opportunities

If you actively trade stocks, real estate, or other assets, start reviewing your capital gains position.

Strategies:

• Harvest Tax Losses: Sell underperforming assets to offset gains.
• Offset Gains: Pair capital gains with losses to minimize net taxable gains.
• Hold for Long-Term: Assets held over 12 months benefit from favorable long-term capital gains rates (0%, 15%, or 20%).

4. Plan Charitable Giving with a Tax-Efficient Lens

Charitable donations are a cornerstone of many tax strategies, especially for those itemizing deductions.

Options to Consider:

• Bunching Donations: Group 2–3 years of donations into one year to exceed the standard deduction.
• Donor-Advised Funds (DAFs): Make a large contribution now, then distribute to charities over time.
• Qualified Charitable Distributions (QCDs): IRA owners age 70½+ can donate up to $108,000 directly to charity—reducing both AGI and RMDs.

If your income is spiking in 2025 or a liquidity event is expected, plan a giving strategy now to secure a deduction this year.

5. Take Advantage of Health-Related Tax Benefits

Mid-year is a smart time to evaluate healthcare-related savings tools:

Health Savings Account (HSA):

• 2025 limits: $4,300 for individuals, $8,550 for families (+$1,000 catch-up if age 55+)
• Triple tax advantage: Contributions are tax-deductible, grow tax-free, and distributions are tax-free if used for qualified medical expenses

Flexible Spending Account (FSA):

• Check your use-it-or-lose-it status—mid-year is often your last chance to spend wisely.
• Some employers allow a carryover or grace period—know your rules.

Don’t miss out on pre-tax savings for medical, dental, vision, or dependent care expenses.

6. Reassess Estimated Tax Payments

If you are self-employed or receive income without withholding (e.g., rental, K-1, capital gains), then estimated taxes matter.

The second quarterly estimated tax payment for 2025 is due June 16 (since June 15 falls on a weekend). Make sure:

• You’re following the safe harbor rules: 90% of current year tax liability or 100% (110% if AGI > $150,000) of last year’s liability.
• Payments are properly allocated between spouses if filing separately in community property states.

Tip: Safe Harbor Strategy

Even if you expect higher income in 2025, consider paying based on last year’s tax liability to avoid penalties—then true up in April.

7. Evaluate Tax Credits and Deductions

Mid-year is ideal for tracking eligibility for tax credits, which can directly reduce your tax bill.

Common Mid-Year Credit Opportunities:

• Child Tax Credit (up to $2,000 per qualifying child under age 17)
• Child and Dependent Care Credit (based on childcare expenses)
• American Opportunity and Lifetime Learning Credits (for education expenses)
• Energy-Efficient Home Credits (e.g., solar, HVAC, insulation upgrades)

Now is the time to gather documentation, track qualifying expenses, and budget for additional spending to maximize these credits by year-end.

8. Business Owners: Accelerate or Defer Income and Expenses

If you’re a sole proprietor, S Corp, or partnership owner, you have more flexibility with tax timing.

Mid-Year Actions:

• Accelerate Expenses: Purchase equipment, software, or prepay services before year-end.
• Defer Income: Push invoices into January if you expect lower rates next year.
• Review Entity Structure: Ensure you’re using the most efficient business entity (S Corp, LLC, partnership) based on income levels.

Consider a mid-year meeting with your CPA to run profit-and-loss projections and re-evaluate your compensation structure and reasonable salary rules.

9. Coordinate Estate and Gift Planning

With the lifetime federal estate and gift tax exemption at $13.99 million per person in 2025—and scheduled to drop in 2026—now is the time for strategic gifting.

Strategies:

• Use your $19,000 annual gift exclusion per recipient
• Consider intra-family loans, grantor retained annuity trusts (GRATs), or spousal lifetime access trusts (SLATs)
• Mid-year reviews are ideal for initiating or refining wealth transfer strategies in coordination with your estate planner

10. Schedule a Mid-Year Review With Your Advisors

Finally, put a meeting on the calendar with your:

• CPA or enrolled agent
• Financial planner or wealth advisor
• Estate planning attorney

Bring documents including:

• Pay stubs, investment statements, retirement account summaries
• YTD income and expense reports (for businesses)
• Recent tax return

Mid-year check-ins offer time to make meaningful changes, implement savings strategies, and lower your total 2025 tax burden.

Tax planning doesn’t end on April 15—it’s a year-round discipline. By taking stock in June, you give yourself the time and flexibility to make smart tax decisions while there’s still time to act. Whether you’re a W-2 employee, retiree, business owner, or investor, these mid-year strategies can help you optimize your taxes, enhance retirement readiness, and align financial decisions with your long-term goals.

For Informational Purposes only and not for legal or tax advice.

About the Author – Marie Feindt, JD 

Marie Feindt is the Planning Specialist – Estate Attorney at Members’ Wealth, a boutique wealth management firm that offers a comprehensive and holistic approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of estate planning experience, Marie and the Members’ Wealth team thrive on bringing clarity and confidence to clients’ unique situations. She believes everyone, young adults and older, need the essential documents to conserve and preserve and transfer assets accumulated during lifetime to the next generation.

Marie received her JD from Widener University School of Law, her bachelor’s degree from Penn State University, University Park and is currently enrolled in the Villanova University Charles Widger School of Law Graduate Tax Program.

Marie is an Adjunct Faculty at the Villanova University College of Professional Studies Paralegal Professional Certificate Program where she teaches Estates & Trusts and Civil Procedure & Litigation and Torts & Personal Injury Law.

Marie volunteers for a monthly legal clinic at The Salvation Army in Chester, PA facilitated by the Christian Legal Clinic of Philadelphia. She has served on the Women’s Commission of Delaware County and as a Board Member for the Delaware County Literacy Council.

Marie enjoys biking, reading, yoga and walking in her free time with her husband and three children.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453. 

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