Six Powerful Year-End Tax Strategies for Business Owners

As 2025 draws to a close, it’s the perfect time to take proactive steps to reduce your tax liability — and in some cases, even position yourself to receive money back from the IRS. Below are six key strategies to consider implementing before December 31, 2025.

1. Prepay Expenses Using the IRS Safe Harbor
Cash-basis businesses can prepay up to 12 months of qualifying expenses (like rent, insurance, or lease payments) and deduct them this year. Example: Prepaying $36,000 of 2026 rent on December 31, 2025, gives you a full deduction in 2025.

2. Delay Invoicing Clients
If you’re a cash-basis business, hold off billing clients or customers until January 2026. This simple move defers income — and taxes — to next year.

3. Invest in Equipment
Equipment, furniture, and certain vehicles placed in service before year-end may qualify for 100% bonus depreciation or Section 179 expensing.

4. Use Your Business Credit Card
Expenses charged by December 31 are deductible this year — even if you pay the bill in January. Corporations must reimburse any personally paid charges before year-end to take the deduction.

5. Don’t Fear “Too Many” Deductions
If deductions exceed income, the resulting net operating loss (NOL) can carry forward to offset future income — turning today’s loss into tomorrow’s savings.

6. Deduct Building Improvements (QIP)
Improvements to the interior of nonresidential property can qualify for 100% bonus depreciation if placed in service by December 31, 2025.

Key takeaway: Even one or two well-timed moves before December 31 can produce measurable savings for your 2025 bottom line.