If you're a business owner with kids, aging parents, or a big relationship change on the horizon, there are several 2025 last-minute tax strategies for families you can still use before December 31. The right moves can shift income into lower brackets, turn family help into deductible wages, and keep more of your investment gains inside the family instead of sending them to the IRS.
Below are five practical year-end tax plays if you're hiring your children, planning a wedding or divorce, managing a big mortgage, or gifting money and investments to loved ones.
Do your kids help in the business—packing orders, posting on social, cleaning the office, updating spreadsheets, or helping with basic admin? If they genuinely work in your business, you can put them on the payroll and move money out of your high tax bracket into theirs.
If you operate as a sole proprietor, a single-member LLC taxed on Schedule C, or a partnership where both partners are the child's parents, and your child is under 18, then:
That's a powerful combo: you get a deduction, and your child can often earn tax-free income within the 2025 standard deduction limits, especially under the One Big Beautiful Bill Act (OBBBA) rules.
If you operate as an S corporation or C corporation, you still get a deduction, but both the business and your child must pay payroll taxes on those wages. The savings are smaller than for a proprietorship, but the strategy can still work very well—especially if you're in a high bracket.
For full details on how the IRS treats children working in a family business (and when FICA and FUTA apply), see the IRS guidance on family employees.
Thanks to OBBBA and the 2025 inflation adjustments, a child can generally use the standard deduction to wipe out federal income tax on up to $15,750 of earned income, as long as they don't have enough additional income to push them above that threshold.
On top of that, if your child has enough earned income, they can contribute up to $7,000 to an IRA (traditional or Roth) for 2025, which is the current combined limit for all IRAs.
Imagine your 15-year-old son, Daniel, works in your sole proprietorship throughout the year—helping with product photos, uploading files, and organizing inventory. You pay him $12,000 in fair market W-2 wages for real work he performs.
Daniel can then contribute up to $7,000 of that income to a Roth IRA. The family keeps the full $12,000 inside the household, you reduce your taxable income, and you help your child start a long-term investment habit while staying inside the rules.
One important detail: pay your child on a W-2, not a Form 1099. If you issue a 1099, your child may owe self-employment tax on those earnings, which eliminates one of the biggest advantages.
For more on deductible family pay and other everyday write-offs, you can also read my guide on small business tax deductions.
The December 31 Rule Matters
For federal income tax, your marital status on December 31 determines your filing status for the entire year. If you are still legally married on December 31, 2025, the IRS treats you as married for all of 2025.
That means:
There's no universal rule here—you or your tax professional need to run the numbers both ways (married filing jointly vs. single/head of household) to know which timing is better for your situation.
For divorce and separation agreements executed after December 31, 2018:
If your situation involves alimony, property transfers, or ongoing support, both the tax timing and the cash economics should be modeled carefully before you sign anything.
You May Get Bigger Mortgage Interest Deductions
If you own a home with someone you're not married to (partner, fiancé(e), or even a friend), the mortgage interest deduction rules can work more generously for two single taxpayers than for one married couple.
Here's the idea:
Two single co-owners can effectively double those limits (because each gets their own cap) as long as each is legally liable on the debt and actually pays their share of the interest. If the same couple gets married, the deduction limit applies once at the joint level instead of once per person.
This doesn't mean you should (or shouldn't) get married purely for tax reasons, but if you own property together, it's worth modeling the impact of a wedding date on your mortgage interest deduction and overall tax picture.
A December Ceremony Can Still Save on 2025 Taxes
The same December 31 rule also works in your favor when you're getting married. If you're planning a wedding in early 2026 anyway, it can be worth asking whether a December 2025 ceremony (and legal marriage date) would reduce your combined 2025 tax bill.
When you run the numbers, you might find that:
On the other hand, if both spouses have high incomes, the marriage may push you into higher brackets or phase out certain credits. Again, the only honest answer is: have your tax professional run actual projections for both scenarios so you know whether a 2025 or 2026 wedding date is better from a tax standpoint.
When Gifting to Family
Many business owners regularly help parents or other relatives with living expenses. If your loved one is in a low tax bracket, you may be able to do this in a more tax-efficient way by gifting them appreciated stock instead of cash.
For 2025, the 0% long-term capital gains rate generally applies to taxable income up to roughly $48,350 for single filers and $96,700 for married filing jointly. If your parent or other loved one is below those thresholds (including the gain on the stock), they may be able to sell appreciated investments and pay no federal capital gains tax.
Suppose you want to help your aunt, Elena, with her living expenses. She has modest retirement income and falls comfortably inside the 0% capital gains bracket. You own stock now worth $30,000 that you bought years ago for $5,000.
If you had sold the stock yourself, your $25,000 long-term capital gain could easily be taxed at 23.8% (the 20% top capital gains rate plus the 3.8% Net Investment Income Tax), which would cost you about $5,950 in federal tax before you ever helped her.
There are a couple of important guardrails here:
The big idea: if you're already planning to support family members, using appreciated securities and the 0% capital gains bracket can stretch those dollars further.
Year-end doesn't have to be about writing a big check to the IRS. With the right structure, you can:
If you want help turning these 2025 family tax strategies into a clear plan for your business and your household, Schedule a Free Tax Strategy Session so we can run your numbers and design a plan that keeps more of your money working for your family.