Receiving a holiday bonus is always exciting, and while it's tempting to spend it on gifts or exciting trips, there are smarter ways to leverage that bonus to your advantage. By making strategic choices, you can potentially lower your tax burden for the coming year. Here are some ways to consider:

Give Back and Save

Making a charitable donation before the year ends can reduce your taxable income if you itemize deductions. Choose a cause that matters to you and don't forget to keep documentation.

Invest in Education with a 529 Plan

While federal tax benefits don’t apply, many states offer deductions or credits for contributions to a 529 plan. It’s a tax-efficient way to save for education, and earnings grow tax-free if used for qualified expenses.

Fund Your Health Savings Account

Contributing to an HSA offers a triple tax advantage and rolls over year after year. It’s available to those with high-deductible health plans and can be a great way to prepare for future medical expenses.

Boost Your Retirement Savings

Consider increasing your 401(k) or IRA contributions. Even a small year-end contribution can reduce your taxable income and benefit you long-term, thanks to compounding growth.

Prepay Mortgage or Property Taxes

Paying January's mortgage interest or property taxes in December might increase your deductible expenses for this year, which is especially helpful if you're close to the standard deduction threshold.

Making thoughtful decisions with your holiday bonus can have a long-lasting financial impact. Approach planning with intention, consider reaching out to a financial advisor if needed, and take action before the year's end. A small decision now can lead to a better financial outcome in 2025.