Typically, taxpayers surprised by a high tax bill get it from not withholding enough from their paychecks throughout the year.

Consider strategies like deferring bonuses or contributing to retirement accounts to reduce taxable income.

If you did not withhold enough federal income taxes from your paychecks throughout the year, come April 2026, you may have a significant tax bill.

Investopedia spoke with Rob Burnette, CEO and tax and financial planner at Outlook Financial Center, about estimating your 2025 tax bill and preparing for it.

More than half of American taxpayers lack basic tax literacy, according to a report from the Tax Foundation. Taxpayers who are unaware of how much their taxes will be and how much to withhold throughout the year might get slammed with a high tax bill they can’t afford—and if they can’t pay the taxes they owe, the balance can be subject to interest and penalty fees.

INVESTOPEDIA: What is the best way to estimate how much you'll pay on your 2025 taxes in April?

ROB BURNETTE: If you want to estimate what you have right now, there are some free tax software [programs] out there that allow you to do that.

Examples of free software to estimate your 2025 taxes:

Outlook Taxes

Intuit TurboTax

TaxSlayer

H&R Block

AARP

However, I would say, if they're just now looking at that, they're about eight months late. Tax planning should be something you're doing all along. For our clients, one of the things we recommend is … to get their withholdings right.

The idea behind it is to have enough withheld from each pay period so that when you get to the end, you're at a nominal—you don't owe any taxes. You may owe a little more, a little less, whatever the case might be, but you're not going to be staring in the face of several thousand dollars of tax due.

INVESTOPEDIA: If their estimations show they will pay more than they expect, what is the best way to prepare for their tax bill?

BURNETTE: My recommendation is to almost always go find a financial planner who does taxes. And the reason I state it that way is that a financial planner is going to look at somebody's entire financial picture. You may only want them to look at the taxes, and that's fine, but if they look at the rest of the picture, they can tell you, "OK, this is going to impact your taxes. That's going to impact it."

I take a look at what’s changed between 2024 and 2025 [such as] "OK, you got a pay raise, you got a bonus." We factor all those things in there and come out with what I expect the tax bill to be compared with what my withholdings were. What this allows them to do is if [they] don't want to have a big tax bill in April or get an underpayment penalty, that now gives them time to make an estimated tax payment by Jan. 15, which applies to the fourth quarter of your 2025 tax bill. So you can mitigate your tax bill in that particular regard.

INVESTOPEDIA: Is there anything taxpayers can do in the later stages of the year to lower next year's tax bill?

BURNETTE: If you know you've got a bonus coming due, and you know that bonus in this year is going to kick you up into the next marginal tax bracket, maybe you talk to your employer and say, "Can you pay me that in January and move that tax into the next year?" So you can do some things like that, things that you have some control over.

If you're contributing to a traditional IRA and it's a tax-deductible one … you have essentially until April 15, or until you file your taxes, to [fully meet your retirement accounts' contribution limits], and then that will give you a tax advantage.

The other thing I would tell people who own businesses, who are self-employed, is that if you think you're going to have a big check to write to the IRS, see if there's equipment you can purchase now to offset that. So, for example, I have a guy who's in the transportation and shipping business. He was complaining that he had to write a $50,000 check to the IRS. I said, "Well, why don’t you just buy another van? I know you need one."

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