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Year-end is crunch time for businesses looking to maximize their 2025 tax savings. The recently passed One Big Beautiful Bill Act (OBBBA) introduced several meaningful tax changes that may be able to help lower your tax bill, but they require action before the calendar flips to 2026.
Think of this as your final call to get key financial tasks in order. Waiting for January means you could miss out on valuable tax deductions and benefits. To help you prepare, we’ve put together a checklist of actions to consider in these final weeks of 2025.
1. Prepare for ‘No Tax on Tips or Overtime’
Through 2028, employees and self-employed people may deduct qualified tips. In addition, individuals who receive qualified overtime pay may deduct the portion of that pay that exceeds their regular rate- such as the “half” portion of time-and-a-half compensation required under the Fair Labor Standards Act (FLSA). Employers and other payors must file information returns with the IRS and furnish statements to taxpayers showing certain cash tips received and the occupation of the tip recipients, and / or the total amount of qualified overtime compensation paid during the year.
Your Year-End Action: Employers should begin discussions with their payroll and tax advisors to understand qualification rules and documentation requirements. Although these changes take effect in 2025, the IRS has provided a transition year because the 2025 W-2 forms were not updated to reflect these changes. While there is no penalty for not implementing changes in 2025, documentation requirements will change in future tax years.
2. Time Capital Purchases for 100% Bonus Depreciation
The OBBBA permanently restored 100% bonus depreciation, which is a valuable tax benefit for growing businesses. This lets you deduct the full cost of qualifying assets in the year you buy them, rather than spreading the cost out over several years.
Your Year-End Action: The most important detail here is that the asset must be purchased and placed in service by December 31st. An invoice date isn’t enough; the equipment needs to be on-site and operational. Take a look at your 2026 capital budget now. Can any of those planned purchases, like vehicles, computers, or machinery, be moved up and put into operation before the ball drops?
3. Classify Domestic R&D Costs for Full Expensing
One of the biggest changes from OBBBA was the repeal of the 5-year R&D amortization rule. Now, you can deduct 100% of your qualified US-based research and development costs in the year they happen. For companies focused on innovation, this change offers a substantial chance to lower your 2025 taxable income.
Your Year-End Action: You might be wondering, “What R&D costs can I deduct in 2025?” The definition is broader than most people think. If you paid for domestic software development, internal process design, or engineering activities, those expenses might qualify. Go through your expenses for the year to pinpoint these costs so they can be fully expensed to lower your taxable income.
4. Run a Final P&L to Set Your S-Corp Salary
The 20% Qualified Business Income (QBI) deduction is now permanent, which is fantastic news for owners of pass-through businesses. For S-Corp owners, using this deduction means paying yourself a “reasonable salary.” This is a delicate balancing act.
Your Year-End Action: Finalize your December payroll and any owner bonuses now. A salary that’s too high lowers your QBI deduction, while one that’s too low could attract unwanted attention from the IRS. The “sweet spot” depends on your final net income. By running an updated profit and loss statement, you can project your income and land on the best salary to maximize your tax benefits.
5. Review Large 2025 Repairs and Renovations
OBBBA also boosted the Section 179 deduction to a limit of $2.5 million, which can now be used for “Qualified Improvement Property” (QIP). This includes interior renovations, new HVAC systems, fire protection, and even new roofs.
Your Year-End Action: Look back at any significant repairs or renovations you finished this year. It’s important to distinguish between a “repair,” which is expensed, and an “improvement,” which is capitalized. Send your tax professional a list of any single project that cost more than $10,000. They can analyze whether it qualifies to be fully expensed under the updated Section 179 regulations, which could create a significant tax benefit for you.
6. Clean Your Vendor Files to Avoid a January Scramble
This task isn’t new, but it’s a common year-end stumble. Businesses are required to issue Form 1099-NEC to any contractor paid more than $600 during the year. The deadline is January 31st, and penalties for failing to file can add up quickly.
Your Year-End Action: Don’t wait until the last minute. You must have a valid Form W-9 on file for every vendor before you can issue a 1099. Run a “Payments to Vendors” report from your accounting software now. Find everyone who crossed the $600 threshold and check if you have their W-9. If not, make it a priority to get it within the next 30 days.
7. Check “BOI Reporting” Off Your List
Here’s a task you can happily cross off your to-do list. The anxiety surrounding the Corporate Transparency Act’s new Beneficial Ownership Information (BOI) reporting requirements for 2025 has been resolved for most businesses.
Your Year-End Action: Relax. FinCEN has repealed the rule for most domestic companies. This is one piece of complex compliance you no longer need to worry about as you head into the new year.
8. Schedule Your Final Year-End Strategy Call
All the tools and tax cuts mentioned here are powerful, but they aren’t automatic. A 100% bonus depreciation deduction on a new equipment purchase doesn’t help if your business is already looking at a net loss. Likewise, an S-Corp salary adjustment needs to be based on accurate net income projections. Good year-end tax planning is about using these levers strategically.
Your Year-End Action: The real deadline is now. Finalize your books through November and schedule a strategy call with a tax professional. A proactive look at your numbers allows you to build a solid plan for these last few weeks of the year, so you don’t leave money on the table.
Partner with SME CPA in Augusta, GA to Finish the Year Strong
The end of the year is a chance to reflect, plan, and take action. Tackling these year-end tasks, especially with recent changes, requires a proactive approach. The tax experts at SME CPAs are here to provide the guidance you need. Let us help you navigate these tax changes and make the most of the opportunities ahead.
Don’t let the December 31st deadline pass you by. Contact us today to schedule your year-end strategy session and ensure your business is in the best possible financial position for 2026.