Key Tax Deductions and Credits Businesses Should Know

Strategic Mid-Year Tax Planning

As a business owner, the middle of the year offers an ideal window to reevaluate your tax strategy, aiming to lower your tax burden and uncover valuable tax deductions and credits. Thoughtful planning now can unlock substantial savings and help you maximize benefits before certain options expire. The complexity of tax laws is no secret, but knowledge is power—offering you clarity and control.

Exploring Major Deductions and Credits

• Qualified Business Income Deduction: If you operate as a sole proprietor, partnership, S-Corp, or through an LLC, you might be eligible for a 20% deduction on qualified business income. This advantage is set to expire at the end of 2025, so strategic planning is essential.
• Home Office Deduction: If you regularly and exclusively use part of your home for business, you can qualify for a deduction on expenses such as rent, utilities, and internet services. It's a great way to leverage your workspace for tax savings.
• **Research and Development Tax Credit:** Misconceptions abound, but this credit is not exclusive to tech firms. It applies if you're enhancing products or processes in your business. Don't miss out on this potential cash-saving opportunity.
• Section 179 Deduction and Bonus Depreciation: Utilize these tools to deduct the entire purchase cost of qualifying equipment and software within the year it was purchased. Bonus depreciation extends to both new and used assets, further reducing your taxable income.
• Business Vehicle Expenses: Opt for either actual expense deductions or the standard mileage rate to deduct business-related vehicle expenses. Keep detailed mileage logs to substantiate your claims.
• State and Local Tax Deductions (SALT): Pass-through entities can benefit from PTE elections, a valuable strategy for navigating the federal $10,000 SALT cap.
• Meals and Entertainment Deduction: Business meals, whether entertaining clients or rewarding employees, remain 50% deductible in 2025. Ensure you understand which types of meals are eligible.

Tailored Tax Strategy: Your Mid-Year Priority

Every business operates under unique circumstances, and not all deductions apply to everyone. As you navigate these complexities, remind yourself that mid-year tax check-ins can solidify your financial foundations. Consider scheduling a consultation with a tax professional to review your strategy and tailor it to your needs. With timely planning, you can optimize your tax strategy for future success, ensuring your business remains financially robust.