As we head into the final weeks of 2025, it’s time to take one last look at your books—and make sure you’re not leaving money on the table before the year wraps up. With the One Big Beautiful Bill Act (OBBBA) in full effect, there are several key strategies business owners can use to legally reduce taxable income and boost cash flow before December 31.
Let’s walk through some smart, practical moves you can still make before year-end.
1. Prepay Expenses and Lock in Deductions Now
If you’re a cash-basis taxpayer, one of the easiest ways to reduce taxable income is by prepaying next year’s expenses now. The IRS allows you to prepay up to 12 months of qualifying expenses, such as rent, insurance, or subscriptions, and still deduct them this year.
Write those checks or make those payments before December 31, and you’ll pull those deductions into 2025—giving you an instant tax savings boost.
2. Delay Invoicing if You’re Cash-Basis
For service-based businesses, deferring income into the next tax year can help keep your 2025 taxable income in check. Simply wait until January to issue invoices for late-December work.
This strategy doesn’t make income disappear—it just shifts the tax bill forward one year, buying you time and improving short-term cash flow.
3. Upgrade Equipment and Take Advantage of 100% Bonus Depreciation
Thanks to the OBBBA, 100% bonus depreciation is back in 2025. That means you can deduct the full cost of qualifying new or used business assets placed in service before December 31.
If you’ve been planning to replace computers, vehicles, or office equipment, doing it now could mean a full write-off this year instead of spreading deductions over several years.
4. Fund Your Retirement Plan
Don’t forget your future self. Contributions to qualified retirement plans like a Solo 401(k) or SEP IRA are still one of the most effective ways to reduce your taxable income.
Not only do you save on taxes now, but you’re also building wealth for the future—and with the new Solo 401(k) tax credit available, there’s even more reason to review your setup before year-end.
5. Review Your Vehicle Use and Deductions
If you use a personal vehicle for business, make sure you’ve properly documented your mileage for 2025. You can still reimburse yourself before year-end for business miles driven throughout the year.
Under OBBBA, you can also convert a personal vehicle to business use and take advantage of depreciation deductions going forward.
6. Clean Up Your Books and Review Your Chart of Accounts
Accurate bookkeeping is one of the best year-end gifts you can give yourself. Review your income, expense, and balance sheet accounts to ensure everything is categorized correctly before sending data to your tax preparer.
Fixing errors now can save you hours—and unnecessary tax dollars—come filing season.
7. Evaluate Your Estimated Tax Payments
If you had a strong fourth quarter, make sure you’ve adjusted your estimated payments accordingly. Paying in a little extra now can prevent underpayment penalties later, especially if you expect higher income in 2025.
Additional Smart Tax Moves for 2025
The basics are important—but there are even more ways to strengthen your year-end plan and reduce your tax bill. Here are five often-overlooked strategies that can make a big difference for small business owners.
8. Consider Electing S Corporation Status
If your business is profitable and still taxed as a sole proprietorship or single-member LLC, it might be time to consider an S corporation election. By paying yourself a reasonable salary and taking the remaining profit as a distribution, you can reduce your self-employment tax burden.
This election can often save business owners thousands of dollars each year, but it must be carefully structured to comply with IRS reasonable compensation rules.
9. Pay Family Members for Legitimate Work
Hiring your spouse, children, or other family members can be a win-win strategy. As long as the work is legitimate and properly documented, their wages become a deductible business expense.
If your children are under 18 and you operate as a sole proprietorship or partnership, you can even avoid payroll taxes on their wages—plus help them start saving early in a Roth IRA.
10. Maximize Health-Related Deductions
Health expenses are often overlooked, but the right setup can turn them into powerful deductions. Consider establishing a Health Reimbursement Arrangement (HRA) or contributing to a Health Savings Account (HSA).
These allow you to deduct medical costs or set aside pre-tax funds for healthcare, dental, and vision expenses—reducing both income and self-employment taxes.
11. Take the Home Office Deduction (the Right Way)
If you work from home, you may be eligible for the home office deduction. It’s available to owners who use part of their home regularly and exclusively for business.
Beyond direct home office costs, this deduction can open up additional write-offs for utilities, property taxes, and even depreciation.
12. Combine Business with Travel—Legitimately
When business and travel overlap, some expenses may be deductible. If your trip includes client meetings, conferences, or business development activities, you can deduct airfare, lodging, and 50% of meals.
Just be sure to document your itinerary and keep detailed records to back it up. A little planning can turn your next trip into both a business opportunity and a tax deduction.
With so many OBBBA provisions creating opportunities for savings, year-end planning is more important than ever. Even a few strategic moves can make a noticeable difference in your tax bill—and your peace of mind.
If you’d like help reviewing your options or deciding which strategies make the most sense for your business, contact us to discuss your tax strategy.