As the year draws to a close, many owners start looking for smart ways to trim their tax obligations before the filing season arrives. If you’re exploring last-minute tax moves for 2025, now is the time to review your books, tighten your strategy, and take advantage of tax-saving opportunities that disappear after December 31st. Even small adjustments can create meaningful tax benefits, especially when they align with your business goals and cash flow.
The good news is that there are still several actionable steps you can take to reduce your taxable income, improve deductions, and prepare your business for a more efficient financial year ahead.
Popular Last-Minute Tax Moves Include Accelerating Deductions by Prepaying Key Expenses
One of the simplest ways to lower your taxable income before year-end is to prepay certain business expenses. If you use the cash accounting method, prepaid expenses may be deductible in the year they’re paid.
Common prepayment opportunities include:
- Rent or lease payments
- Utility bills
- Insurance premiums
- Office supplies
- Marketing or advertising expenses
- Professional service retainers
- Software subscriptions
Not all expenses qualify, so it’s important to understand IRS rules regarding these. Work closely with your CPA to ensure you are pushing toward qualified expenditures here. If the expense fits these criteria and aligns with your cash flow, prepaying now can reduce this year’s tax liability while also giving you a budgetary head start for 2026.
Make Last-Minute Equipment Purchases
Section 179 and bonus depreciation continue to offer major opportunities for businesses that need to upgrade equipment or invest in new assets. If you’ve been considering purchasing machinery, vehicles, computers, or furniture, completing the purchase and placing the asset in service before December 31st might significantly lower your tax bill.
Here’s what makes these incentives powerful:
- Section 179 allows eligible businesses to deduct the full cost of qualifying equipment (up to the annual limit) in the year it’s placed in service.
- Bonus depreciation, though gradually phasing down, still permits a substantial deduction for qualified assets.
These deductions can create thousands of dollars in savings, and in some cases, they can completely offset taxable income. There are many different types of eligible assets, so be sure to check the details before investing or upgrading.
If you were planning to invest in upgrades next year anyway, accelerating the purchase into this year is an easy way to reduce your current business tax burden.
Review and Maximize Retirement Contributions
Whether you’re a sole proprietor, S-Corp owner, or managing a larger business, year-end is your last opportunity to take advantage of retirement contribution strategies that lower taxable income.
Depending on your plan type, you may still be able to fund:
- SEP IRA contributions (often until tax filing deadline)
- Solo 401(k) employee deferrals, which typically must be elected by year-end
- Profit-sharing contributions
- Defined benefit plan contributions for business owners looking to maximize long-term retirement savings
These contributions reduce your taxable income while strengthening your retirement position. Reviewing contribution limits and deadlines now ensures you don’t miss out on tax advantages that could meaningfully reduce your business bill.
Take Advantage of Charitable Contributions
If giving back is already part of your company culture, or if you want to support your community while also lowering your taxes, charitable contributions can provide year-end benefits. To be deductible:
- The organization must be a qualified 501(c)(3)
- Donations must be completed by December 31st
- You must maintain proper documentation for the donation
Deductible charitable categories include monetary donations as well as donations of supplies, equipment, inventory, sponsorships, and facility use.
C-Corporations benefit from direct charitable deductions. Pass-through entities may also benefit, depending on the owner’s personal tax situation. Either way, charitable giving provides both financial and community impact.
Delay Income If It Makes Sense for Your Financial Picture
Another valid year-end strategy is deferring income, especially if you anticipate being in a lower tax bracket next year or expect major deductions coming in the new year.
Examples of legitimate income-deferral strategies include:
- Holding off on issuing year-end invoices until January
- Delaying collection of outstanding payments until after the new year
- Scheduling contract work or deliveries to occur in the next tax year
Income deferral is not always appropriate, especially if cash flow is tight or next year’s projections are uncertain. But when used strategically, it can help reduce current taxable income and create a smoother financial transition into the new year.
Review Your Books for Missed or Underreported Deductions
Before the year ends, it’s crucial to perform a thorough review of your profit-and-loss statement, general ledger, and bank activity. Many businesses overlook deductions simply because they weren’t categorized properly.
Areas to review include:
- Mileage and travel expenses
- Home office deductions
- Supplies and small tool purchases
- Repairs and maintenance
- Subscriptions and software
- Professional service fees
- Continuing education or certification costs
Cleaning up your books now ensures that every eligible deduction is captured without scrambling during tax season.
Consider Writing Off Bad Debts
If you’ve made significant attempts to collect unpaid invoices and there is no realistic chance of repayment, certain outstanding amounts may qualify as bad-debt deductions.
Requirements may include:
- Demonstrated attempts to collect the debt
- Reasonable evidence that repayment is unlikely
- Proper documentation of the original income recognition
Writing off bad debt reduces taxable income and gives you a cleaner financial slate for the new year.
Get Help with Last-Minute Tax Moves for 2025 with Katherine M Johnson, CPA
Taking action before December 31st can make a major difference in your tax burden this year. Whether you’re prepaying expenses, purchasing equipment, contributing to retirement, or reviewing your books for overlooked deductions, these strategies give you valuable options as you plan your last-minute tax moves. A strong year-end approach helps you lower your tax bill, strengthen your financial picture, and enter the new year prepared and confident.
If you would like guidance tailored to your specific situation, Katherine M Johnson, CPA, is here to help you make smart, informed decisions before the year closes. Reach out today and let us support your year-end tax planning.
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