2025 Year-End Tax Planning: Key Strategies for Small Business Owners
As we approach the close of 2025, it’s time for business owners to take stock of their financial position, evaluate new tax law changes, and plan for the year ahead. The final months of the year offer a powerful opportunity to strengthen your business’s financial health, minimize surprises, and ensure you’re positioned for success in 2026.
At Accounting & Business Services, Inc., our goal is to make sure your year-end strategies work as hard as you do. Here’s a summary of the key updates, reminders, and planning opportunities that can help you make the most of this year’s tax environment.
🧾 Research & Experimental (R&E) Expenses
Domestic R&E expenditures are once again immediately deductible for tax years beginning after December 31, 2024. Businesses can also deduct remaining unamortized expenses from 2022–2024 under transition relief. This is a great time to review your R&E activities to ensure you’re maximizing available deductions.
💼 Qualified Business Income (QBI) Deduction
The popular 20% QBI deduction is now permanent, with expanded phase-in ranges and a guaranteed minimum deduction. Reviewing your entity structure and income mix before year-end could help you take full advantage of this valuable tax break.
🏗️ Capital Expenditures
“Bonus depreciation” (100% expensing of qualifying property) is permanently extended for property acquired and placed in service after January 19, 2025. The Section 179 limit also rises to $2.5 million. Timing your equipment purchases before year-end could create substantial tax savings.
🌱 Clean Energy Incentives
Many federal clean energy credits are set to expire in 2025–2026, so if you’re investing in renewable energy or energy-efficient property, now is the time to act and secure your benefits.
💳 Information Reporting
The Form 1099-K threshold for payment platforms returns to $20,000 and 200 transactions per payee in 2025. Meanwhile, the Form 1099-NEC/MISC threshold stays at $600 through 2025, increasing to $2,000 in 2026. Ensure your vendor tracking systems are updated to stay compliant.
📚 Financial Statement Review
Before year-end, review your bookkeeping and analyze your income and expenses. This provides the insight needed to project your final tax position and identify opportunities for savings. Clean books mean confident planning.
🍽️ Business Meals & Deductions
The holidays often bring client dinners and employee gatherings. Remember—some business meals may qualify for 100% deductibility. Proper categorization of these expenses can make a big difference.
📉 Net Operating Losses (NOLs)
If your deductions exceed your income, you may have an NOL. These can offset up to 80% of taxable income in other years. Strategic use of losses can reduce future tax liabilities.
💻 Digital Assets & Cryptocurrency
Beginning with 2025 transactions, brokers must issue the new Form 1099-DA for digital asset activity. You’re still responsible for reporting all transactions, even without a form. Keep detailed records for all purchases, sales, and exchanges to ensure compliance as IRS scrutiny increases.
🧮 Other Year-End Considerations
Employee Retention Credit (ERC): Follow up on any pending claims or audits.
Charitable Contributions: Corporate deductions capped at 10% of taxable income for 2025; new limits coming in 2026.
Owner Transactions: Structure loans, distributions, and compensation properly for compliance and efficiency.
Partnership Audits: Review partnership agreements to prevent surprises under updated IRS rules.
State & Local Taxes (SALT): Review income sourcing and elective tax elections for pass-through entities.
Disaster Preparedness: Update your business’s financial recovery plan.
Retirement Plans: Evaluate contributions and ensure your plan aligns with current legislation.
Worker Classification: Reassess employees vs. contractors to avoid payroll penalties.
Estimated Taxes: Adjust Q4 payments to reflect actual income and avoid year-end surprises.
📅 Plan Ahead to Save More
Thoughtful year-end planning can prevent costly surprises and position your business for success. Don’t wait until filing season—schedule your 2025 year-end review with Accounting & Business Services, Inc. today.
📞 Call us at 262-886-5800 to discuss your personalized plan and make sure your tax strategies align with your business goals.
✍️ About Accounting & Business Services, Inc.
We are your trusted advisors for accounting, payroll, and tax solutions designed for small businesses and entrepreneurs. Our mission is to simplify financial management so you can focus on what you do best—running and growing your business.