7 Business Tax Tips for 2025

The new year is approaching fast, and that means finalizing business plans for 2025. Since it’s the season for giving, we thought it would be a good idea to give you some tax tips to help you with the process. 

Let’s go. 

Tip #1: Maximize the Qualified Business Income (QBI) Deduction

This first tip has become a tax staple for many privately held businesses, especially pass-through entities. 

And with good reason. 

The QBI deduction allows eligible businesses to deduct up to 20% of their qualified business income. That can equate to a significant reduction in the tax burden for a small business. 

Of course, every silver cloud has its grey lining. 

The QBI is set to expire in 2025 unless Congress extends it. So, take full advantage of it this year, if you can. 

Tip #2: Keep an eye on tax brackets for pass-through entities

Business owners who grew up in the 70s and 80s know all about inflation because it ravaged the American economy, getting as high as 14%. 

They also know that even after it subsides, the effects are felt for years afterward. 

That’s because the high prices for borrowing capital and purchasing supplies can force businesses to raise prices for their customers. 

When that happens, you can end up in a higher tax bracket if you have an LLC or sole proprietorship. 

And you can stay there for a very long time. 

So, check if your income didn’t push you into a higher bracket this year.  

If it did, then sit down with your CPA to evaluate your tax strategy for 2025. 

Tip #3: Leverage Section 179 for Equipment Purchases 

While you’re developing a tax strategy, ask your CPA if employing Section 179 of the U.S. Tax Code makes sense for your business. It allows businesses to deduct the full purchase price of qualifying equipment or software. 

Tip #4: Take Advantage of Bonus Depreciation

Section 179 may not work for your business needs. If not, then Bonus Depreciation might. It allows you to deduct a large percentage of qualified business expenses. It’s phasing out in 2027, but there’s still time to utilize it. 

Tip #5: Review retirement plan contributions

SEP and SIMPLE IRAs are tax deductible, so consider increasing these in 2025 if possible. It’s a great way to reduce your taxable income while investing in your future while you reduce your tax burden.

Tip #6: Look into the Work Opportunity Tax Credit (WOTC)

The WOTC can be claimed if you hire an individual certified by a local agency as belonging to one of 10 eligible groups specified by the IRS. The credit is equal to 40% of up to $6,000 in wages paid to that individual as long as it is the first year of employment with your business and you perform at least 400 hours of service. 

Tip # 7: Keep your eyes on remote worker tax implications

It’s not as prevalent as during the COVID-19 pandemic, but remote work is still a viable part of the business landscape. 

Having remote workers in different parts of the country can be tricky because the tax rules can vary among individual states and municipalities. 

And those rules can change, so track them closely to ensure proper tax compliance in 2025. 

The Bottom Line

No year in business is ever exactly like the one before it. One of the biggest reasons for that is the ever-changing U.S. Tax Code. 

While these guidelines are an excellent place to start looking for ways to improve your bottom line, there’s nothing like a meeting with your CPA to really embrace next year’s tax strategy. 

So, schedule your meeting today and get 2025 off on the right foot before it starts.