Minimize Your Business’s 2025 Federal Taxes with Year-End Planning

The One Big Beautiful Bill Act (OBBBA) reshapes many traditional tax strategies and introduces new opportunities for businesses to reduce 2025 federal taxes. Here are the most impactful areas to review before year-end.

1. Capital Asset Investments

Year-end asset purchases remain one of the strongest tax-reduction tools—and the OBBBA makes them even better for 2025.

• 100% Bonus Depreciation Restored:

  Assets acquired and placed in service after January 19, 2025 qualify for permanent 100% bonus depreciation. Purchases made on or before January 19 remain subject to the 40% limit.

  
  

• Higher Section 179 Limits:

  Sec. 179 expensing increases to $2.5 million, with a $4 million phaseout threshold (indexed annually).

  Sec. 179 can also apply to items bonus depreciation does not cover—such as roofs, HVAC, fire protection, alarm systems, and security systems for nonresidential property.

  
  

• Choosing Between Bonus Depreciation and Sec. 179:

  Bonus depreciation is simpler and avoids entity-level limits, but Sec. 179 is more flexible because you can elect it on an asset-by-asset basis.

  
  

• Business Vehicles:

  Still eligible for bonus depreciation and Sec. 179, but subject to additional limits, especially if mixed personal/business use applies.

  
  

• Interest Deduction Improvement:

  OBBBA changes the business interest deduction calculation beginning in 2025, potentially increasing deductible interest tied to capital purchases.

  
  

2. Pass-Through Entity Tax (PTET) Deduction

States continue to offer PTET elections to bypass the federal SALT deduction cap by allowing pass-through entities to deduct state taxes at the entity level.

While the OBBBA temporarily increases the SALT cap to $40,000 (with income-based phaseouts), PTET may still be worthwhile if:

• An owner’s MAGI is too high to benefit from the expanded SALT cap.

  
  

• The owner would otherwise take the standard deduction, making the SALT deduction irrelevant.

  
  

• Reducing pass-through income could lower self-employment tax, avoid the 3.8% net investment income tax, or restore eligibility for other deductions.

  
  

Note: A PTET deduction may help an owner stay under income limits for the QBI deduction, but it may also reduce the QBI amount itself—so planning is essential.

3. Qualified Business Income (QBI) Deduction

Pass-through owners can generally deduct up to 20% of QBI. While the OBBBA expands QBI phase-in ranges starting in 2026, there are still planning moves for 2025:

• Increase W-2 wages if you are subject to the wage/property limitation.

  
  

• Acquire qualified property before year-end.

  
  

• Use timing strategies: accelerate expenses and defer income to stay below QBI income limits.

Plan Now for Maximum Benefits

OBBBA introduces robust year-end opportunities—but also added complexity. Reviewing your asset purchases, PTET elections, QBI strategies, and R&E expenses before December 31 can lead to substantial 2025 tax savings.

ECS Financial Services can help evaluate which strategies offer the greatest benefit for your business.