As we approach the final quarter of the year, business owners have a great opportunity to take proactive tax measures that can position their business for success in 2026 and beyond.
In addition, this year brings an additional layer of complexity (and opportunity) thanks to the recently passed One Big Beautiful Bill Act (OBBBA), which modifies, extends, or makes permanent many provisions from the 2017 Tax Cuts and Jobs Act (TCJA).
Here’s a tax-intelligent checklist for business owners to consider before year-end:
1. Maximize Your Qualified Business Income (QBI) Deduction
One of the biggest wins from OBBBA for business owners is that the 20% Qualified Business Income deduction (Section 199A) is now permanent. If you operate as a pass-through entity (sole proprietorship, partnership, S corporation), you can continue to deduct up to 20% of qualified business income, subject to income thresholds.
So, if you’re close to a phaseout limit, consider deferring income or accelerating deductible expenses to keep your taxable income in range.
2. Review Equipment and Asset Purchases
Section 179 expensing and bonus depreciation rules still provide opportunities to fully deduct the cost of certain equipment purchases, meaning buying equipment or other needs for your business before December 31 can provide significant deductions for 2025.
However, we recommend matching purchases to your cash flow—don’t buy just for the deduction unless it makes business sense.
3. Take Advantage of the SALT Deduction Cap Increase
The OBBBA raised the State and Local Tax (SALT) deduction cap from $10,000 to $40,000, with phaseouts starting at $500,000 MAGI for joint filers , meaning you may benefit if you have high property or local taxes.
There is a caveat here because, for most Pennsylvania business owners, the impact may be limited since Pennsylvania does not permit the Pass-Through Entity Tax (PTET) workaround, so you can’t deduct state taxes at the business level like you might in some states. However, if you have a multistate business, you might still be able to leverage PTET in those other states.
All this to say, Q4 is a good time to review your state tax exposure and year-end strategies to see if the SALT deduction cap affects your business.
4. Evaluate Retirement Plan Contributions
Retirement plans remain one of the most tax-efficient ways to reduce current-year taxable income while building long-term wealth. Consider SEP IRAs, SIMPLE IRAs, or solo 401(k) plans for self-employed owners. By taking advantage of higher contribution limits in 2025, you can shelter more income.
5. Prepay Certain Expenses
If you’re on a cash basis, consider prepaying certain expenses before year-end to lock in the deduction for this year. Rent, utilities, subscriptions, and even some insurance premiums can qualify.
6. Prepare for Q4 Estimated Taxes
As always, don’t forget your Q4 estimated tax payment is due January 15, 2026 (covering September–December 2025 income). Avoid underpayment penalties by reviewing your year-to-date income now and adjusting payments as needed.
7. Schedule Your Year-End Review
Lastly, a year-end tax review is more than just a “check-the-box” exercise; it’s where you connect tax moves to your broader business and personal goals. With OBBBA’s changes now locked in, 2025 is a critical year to align your tax strategy with the new rules.
We like to say that tax planning isn’t just about reducing what you owe, but about making smart, informed choices that help your business thrive. The earlier you start in Q4, the more options you'll have to improve your financial situation before the year ends.
Let’s make the most of these changes. Contact us to schedule your year-end tax and business planning session today.