If you haven’t finalized your year-end tax planning for your business, there’s still time to reduce your 2025 tax liability. While proactive, year-round planning is ideal, there are several smart strategies you can use in the final weeks of the year to capture business tax deductions.

At THF, we help businesses of all sizes close the year with confidence. These last-minute tax tips are especially helpful for small businesses using the cash method of accounting.

1. Delay Income by Postponing Invoices

If your business is cash-based and you want to defer income to 2026, wait until early January to send out customer invoices. Delaying billings can reduce taxable income for 2025, especially if you’re on the verge of a higher tax bracket.

2. Prepay Expenses to Increase Deductions

Under IRS rules, cash-basis businesses can deduct many expenses in the year they are paid, even if the goods or services apply to the next year.

Consider prepaying:

• Rent or lease payments
  
• Insurance premiums
  
• Office supplies or subscriptions
  
• Utility bills
  
• Taxes due in early 2026
  

Most expenses are deductible up to 12 months in advance.

3. Take Advantage of Bonus Depreciation and Section 179

Thanks to the One Big Beautiful Bill Act, 100% bonus depreciation is available again for assets placed in service after January 19, 2025.

Key details:

• Bonus depreciation = Full write-off of qualified assets
  
• Section 179 expensing = Now up to $2.5 million for 2025
  
• Assets must be placed in service by Dec. 31 to count for 2025
  

If you’re considering buying equipment or machinery, now is the time.

4. Use a Credit Card to Secure Year-End Deductions

Don’t have the cash on hand to prepay expenses or invest in assets? Use a business credit card. Expenses are typically deductible when charged, even if you don’t pay the bill until 2026.

5. Max Out Retirement Contributions

For pass-through entities and self-employed taxpayers, increasing retirement plan contributions is a great way to lower taxable income. Some plan types, like SEP IRAs, allow contributions until your return is filed (including extensions), but others, like 401(k)s, may have year-end deadlines.

Maximizing contributions is especially important if your income is close to key deduction thresholds (see Tip #6).

6. Qualify for the 20% Pass-Through Deduction

If you’re a sole proprietor, partner, S corp owner, or LLC member, you may be eligible for a 20% Qualified Business Income (QBI) deduction. But there’s a catch:

• Deduction phases out if your taxable income exceeds
  
  • $197,300 (single)
    
  • $394,600 (joint)
    

Reducing your income, via bonuses, purchases, or retirement contributions, can help you preserve the full deduction.

Final Note: Every Business Is Different

These tips can offer real value, but each comes with specific limitations or timing rules. Don’t implement a strategy without checking its impact on your broader tax plan.

At THF CPAs, we can help you:

• Analyze your current tax position
  
• Forecast year-end options
  
• Implement compliant, strategic decisions
  
• Reduce your 2025 tax bill and improve 2026 planning
  

📞 Contact us today or visit www.THF.cpa to schedule a personalized year-end review.