Take Advantage of the Final Days to Save Tax in 2025
As we close out 2025, there are still a few smart planning moves you can make now that won’t be available once the calendar flips to 2026. The window for meaningful tax planning closes with the end of the year. Especially for things like capital losses, charitable donations, and retirement account positioning.
Here are the key strategies worth reviewing before December 31:
1. Have You Topped Up Your TFSA Yet?
For 2025, you can add up to $7,000 to your Tax-Free Savings Account (TFSA). If you haven’t always contributed the maximum in past years, you may have extra room available.
If you’ve never contributed to a TFSA and:
- you were 18 or older in 2009, and
- you’ve been a Canadian resident since then,
That’s a powerful opportunity to grow savings and investments without paying tax on the growth. If you’re unsure how much room you have, checking before you contribute can help you avoid penalties and make the most of it.
2. Donating to Charity Before Year-End
If you donated to a registered charity by December 31, 2025, you may get money back at tax time; just make sure you have a receipt from the charity.
The more you give, the bigger the tax break:
- You get a smaller credit on the first $200 you donate
- You get a larger credit on anything over $200
If you’re married or have a partner, you can combine your donations on one tax return to get a better result
3. Using Investment Losses to Reduce Taxes
If you have investments that are worth less than what you paid for them, selling them before the end of the year can actually help lower your tax bill. This is called tax-loss selling.
When you sell an investment at a loss in a non-registered account:
- That loss can be used to reduce taxes on investment gains you made in 2025
- If you didn’t have gains this year, the loss can be used to reduce taxes from the past three years instead
Important timing note:
To count for this year, the sale must be completed before December 31, not just placed, it has to fully settle. A quick check with your advisor can help make sure it’s done correctly and on time.
5. Open or Fund Your First Home Savings Account (FHSA)
If you’re a first-time home buyer and haven’t yet opened an FHSA, doing so before year-end gives you $8,000 of contribution room for 2025. You can still open an FHSA, even if you don’t contribute immediately.
That room stacks, so come January 1st you could have up to $16,000 in new TFSA room available next year. This strategy supercharges your ability to save for a home tax-efficiently.
6. Don’t Forget Other Year-End Credits
Two worthwhile opportunities to consider before December 31:
- Home Accessibility Tax Credit: Up to 14.5% credit on eligible renovations for seniors or people with disabilities (up to $20,000 of expenses).
- RESP Withdrawal Optimization: If a student beneficiary attended post-secondary school this year, pulling educational assistance payments before year-end can help match the timing of income and tax credits.
Bottom Line
December may be a short month, but it still offers meaningful opportunities to reduce your tax bill. These strategies can do more than help with your 2025 taxes; they can set you up for a smoother financial year ahead.
If you’re unsure which options make sense for you, we’re here to help you sort through the details and plan with confidence.
Sources:
https://www.jamiegolombek.com/articledetail.php?article_id=2211