💍 Marriage, Divorce, Family, and Year-End Tax Moves to Consider for 2025
Major life events — such as getting married, divorced, or supporting loved ones — can have a surprising impact on your tax picture. As we approach year-end, here are five planning opportunities to review before December 31, 2025.
1. Put Your Children on the Payroll
If you have children under 18 and operate as a Schedule C sole proprietorship or spousal partnership, consider paying them for legitimate work.
No payroll taxes apply on their wages.
Your child can earn up to $22,750 in 2025 and pay no federal income tax if they contribute to a traditional IRA.
If your business is a corporation, payroll taxes do apply — but employing your child can still shift income into a lower tax bracket.
2. Time a Divorce Thoughtfully
Your marital status on December 31 determines how you are taxed for the entire year. In most cases, joint filing lowers total tax, so finalizing a divorce after year-end may be beneficial.
Also note: for divorces finalized after 2018, alimony is no longer deductible for the payer, and the recipient does not report it as income.
3. Stay Single to Maximize Mortgage Deductions
Two unmarried co-owners can deduct more mortgage interest than a married couple.
For homes purchased on or before December 15, 2017, each owner may deduct interest on up to $1 million of mortgage debt (a combined $2 million).
For purchases after that date, the limit drops to $750,000 per person ($1.5 million combined).
Marriage reduces the deduction ceiling to a single joint limit.
3. Marry by December 31 to Lock in Joint Tax Benefits
If you’re engaged, getting married before year-end can produce real savings. Being married on December 31 means you’re considered married for all of 2025, which may unlock favorable tax brackets, credits, and deductions. Run the numbers to see whether filing jointly provides a clear advantage before deciding when to make it official.
4. Use the 0% Capital Gains Bracket Strategically
You can help family members in lower-income brackets while reducing your own future tax burden.
In 2025, the 0% long-term capital gains rate applies to individuals with taxable income below $48,350 (single) or $96,700 (married filing jointly).
Consider gifting appreciated stock instead of cash.
Example: You gift Aunt Millie stock worth $20,000 that you bought for $2,000. She sells it, pays zero capital gains tax, and keeps the full amount. You avoid a taxable gain while staying within the $19,000 annual gift-tax exclusion ($38,000 for married couples).
Key takeaway: These personal and family strategies can deliver meaningful savings — but timing is critical.