Key Tax Deductions and Credits for Businesses in 2025

Mid-Year: The Best Time for Financial Reflection

Business owners, now's the time. As mid-year approaches, it's a prime opportunity to reassess your tax strategy and make proactive adjustments. Effective planning can shed light on valuable tax deductions and credits, some of which may soon expire. Understanding these can make a significant impact on your bottom line. Let's dissect key deductions and credits that can propel your financial strategy forward.

Qualified Business Income Deduction

Many business structures, such as sole proprietorships, partnerships, S-corporations, and limited liability companies (LLCs), can tap into the Qualified Business Income (QBI) deduction. If eligible, you could deduct up to 20% of your qualified business income, but remember, this powerful deduction is scheduled to expire at the end of 2025. Seize it while you can.

Section 179 Deduction and Bonus Depreciation

Boost your business efficiencies by utilizing the Section 179 deduction to deduct the entire purchase price of qualifying business equipment and software for the year they are bought, offering immediate expense relief. In conjunction, bonus depreciation allows you to write off a substantial portion of new and used assets, amplifying your savings.

Business Vehicle Expenses

Did you know you have options for deducting your business vehicle expenses? You can choose between deducting actual expenses or using the standard mileage rate. Maintaining a meticulous mileage log is crucial for whichever method you choose, ensuring maximum deduction accuracy.

Research and Development Tax Credit

Contrary to popular belief, the Research and Development (R&D) tax credit isn't reserved only for tech giants. If your business is improving a product or process, you might qualify. Investigating this credit could reveal significant savings opportunities you hadn't previously considered.

Home Office Deduction

For those running their business from home, a home office deduction can offer financial relief. Qualifying involves using a portion of your home regularly and exclusively for business, allowing deductions on expenses like rent, utilities, and internet.

Meals and Entertainment Deduction

Dining with clients or employees? Such meals can be 50% deductible. Be sure to explore which business-related meals remain deductible in 2025, as proper record-keeping can enhance your savings.

State and Local Tax Deductions (SALT)

Navigating the SALT landscape can be tricky with the federal $10,000 cap. However, Pass-Through Entity (PTE) elections present an avenue for pass-through businesses to alleviate this burden and optimize their tax landscape.

Tailor Your Tax Strategy

Recognize that not every deduction will tailor-fit your business. Each business has unique financial circumstances. Consider mid-year as the perfect checkpoint for a tax review. Embrace the advantages that professional tax advising can provide, whether you're re-evaluating your current tax strategy or arranging a personalized consultation.