As we approach year-end, business owners should act now to convert opportunities into tax-efficient outcomes. With the sweeping tax reform under the One Big Beautiful Bill Act (OBBBA) now in place, what once were temporary deductions or expiring breaks have become permanent or extended—but timing still matters.
At Gatewood Tax & Accounting, we routinely help business owners save on taxes through strategic year-end planning. The difference between proactive December action and reactive April panic is often substantial—not just in tax savings, but in the confidence that comes from strategic decision-making.
Below are ten planning ideas to review and implement before December 31.
1. Bonus Depreciation & Section 179 Expensing (What Changed Under OBBBA)
100% bonus depreciation for qualified property is now permanent—no phase-down, no expiration. Additionally, the Section 179 limit has been increased for property placed in service after January 19, 2025:
- Deduction limit raised from $1 million to $2.5 million
- Phase-out threshold raised from $2.5 million to $4 million in qualifying asset purchases
Action Steps
Review planned equipment purchases, software, vehicles, or leasehold improvements. The asset must be placed in service by December 31, 2025 to qualify for this year’s deduction.
Why It Matters
Accelerated depreciation reduces taxable income immediately, freeing cash for reinvestment, employee compensation, or debt reduction rather than sending it to the IRS.
Watch Out For
- Asset must be used more than 50% for business purposes
- May be new or used qualifying property (vehicles have specific limits)
- Proper documentation is essential for audit defense
- Consider whether depleting cash reserves for equipment purchases makes strategic sense
Gatewood Insight: We help clients model the cash flow impact of accelerated purchases versus tax savings to ensure decisions strengthen the business, not just reduce taxes.
2. Qualified Business Income (QBI) Deduction Optimization (What Changed Under OBBBA)
The 20% pass-through deduction under IRC § 199A has been made permanent. This remains one of the most valuable deductions for business owners operating as S-corporations, partnerships, LLCs, or sole proprietorships.
Action Steps
Analyze how your compensation structure, business classification, and income levels impact your QBI deduction before year-end.
Key variables:
- W-2 wages paid by your business (affects limitation calculations)
- Qualified property held by the business (cost basis of assets impacts deduction)
- Taxable income level (phase-outs begin at $383,900 for married filing jointly in 2025)
- Business type (specified service businesses face restrictions)
Why It Matters
For eligible businesses, the QBI deduction can reduce effective tax rates by up to 7% (20% of income taxed at lower rates). On $500,000 of qualified business income, that’s a $35,000 tax savings.
Watch Out For
- Service businesses (law, accounting, health, consulting) face income phase-out limitations
- Taking too much or too little W-2 compensation can limit your deduction
- Proper entity structure is essential—some structures optimize QBI better than others
Gatewood Insight: We model different compensation and distribution scenarios to maximize your QBI deduction while maintaining reasonable owner compensation for IRS scrutiny purposes.
3. Retirement Plan Contributions & Cash Flow Timing (The Strategy)
Business owners can increase retirement plan contributions—especially if preliminary year-end income is higher than expected.
Options include:
- 401(k) employee deferrals (up to $23,500 for 2025, plus $7,500 catch-up if 50+, or a “super catch-up” of up to $10,000 if age 60–63)
- Profit-sharing contributions (up to 25% of compensation limits)
- SEP-IRA contributions (up to 25% of compensation limits, simplified administration)
- Cash balance or defined benefit plans (can defer $100,000+ annually for high earners)
Action Steps
- Estimate your 2025 profits and tax bracket
- Determine maximum contribution amounts for your plan type
- Adjust payroll withholdings or make year-end contributions accordingly
- For defined benefit plans, confirm funding deadlines with plan administrator
Why It Matters
Retirement contributions are deductible to the business (or on personal returns for self-employed), while building tax-deferred wealth for your future. This is wealth building and tax reduction working together.
Watch Out For
- Contributions must be made by tax filing deadline (including extensions), but some must be paid before year-end
- Employee contributions (401(k) deferrals) must be withheld from payroll by December 31
- Over-contributing can trigger penalties and excise taxes
4. Entity Structure Review (Why Structure Matters Under OBBBA)
With many provisions now permanent, the choice of entity—LLC, S-Corporation, C-Corporation—remains critical for:
- Tax treatment of income
- QBI deduction eligibility
- Ownership transferability
- Exit planning and succession
Action Steps
Schedule a consultation with Gatewood Tax & Accounting to review whether your current structure still aligns with:
- Your ownership and growth plans
- Exit timeline (selling in 1 year vs. 10 years)
- Income levels and tax bracket
- Estate planning and succession goals
Why It Matters
The right entity impacts everything:
- How you’re taxed (self-employment tax, payroll tax, corporate tax)
- Your ability to bring in partners or investors
- Your exit options and valuation
- Your personal liability protection
Watch Out For
- Conversions late in the year may trigger unintended tax consequences
- C-corporation conversions have different considerations (double taxation vs. qualified small business stock benefits) and built in gain issues.
- State-level entity taxation varies significantly
5. Research & Experimentation (R&E) Expense Deduction (What Changed Under OBBBA)
For tax years beginning after December 31, 2024, domestic R&E costs can be expensed immediately rather than amortized over 5-15 years.
This is a significant change that benefits businesses investing in:
- Software development
- Product design and testing
- Manufacturing process improvements
- Engineering and scientific research
Action Steps
- Identify qualifying R&E activities in your business (broader than you might think)
- Document expenditures clearly
- Consider accelerating planned R&E spending into 2025 if beneficial
Why It Matters
Example: A software company with $150,000 in development costs can now deduct the full amount in 2025 rather than spreading it over 5 years. At a 35% effective tax rate, that’s a $52,500 tax savings this year instead of $10,500 annually for five years.
Watch Out For
- Proper classification is essential—not all development costs qualify
- Documentation requirements are stringent for audit defense
- Foreign R&E has different (15-year amortization) treatment
Gatewood Insight: We help identify qualifying R&E activities that business owners often overlook, maximizing this valuable deduction.
6. Inventory & Cost-Recovery Planning (The Strategy)
Review your cost of goods sold (COGS), inventory valuation methods, and whether accelerated write-downs make sense before year-end.
Action Steps
- Write off obsolete inventory before December 31 (reduces taxable income)
- Review inventory method (LIFO vs. FIFO) to determine if a change benefits you
- Identify damaged or unsaleable goods and document write-offs
- Consider year-end purchasing to increase COGS deduction (if cash flow allows)
Why It Matters
Optimizing your cost basis and inventory valuation reduces taxable income in high-profit years. For businesses with significant inventory, this can represent tens of thousands in tax savings.
Watch Out For
- Changes to accounting method require IRS Form 3115 (Application for Change in Accounting Method)
- Inventory method changes have longer-term implications—evaluate over multiple years
- Must maintain proper documentation for write-offs
7. State and Local Tax (S.A.L.T.) Strategy (What Changed Under OBBBA)
The S.A.L.T. deduction cap for individuals has been temporarily raised to $40,000 (from $10,000) for taxpayers with income under $500,000.
While this is primarily a personal deduction, business owners with pass-through income are significantly impacted because S-corporation, partnership, and LLC income flows to personal returns.
Action Steps
Coordinate with your Gatewood Tax & Accounting advisor to:
- Align business income timing with personal SALT exposure
- Consider distribution timing from your business
- Evaluate state residency planning (see our companion article on residency changes)
- Review electing P.T.E.T. (Pass-Through Entity Tax) at the entity level in states where available
Why It Matters
For business owners in high-tax states (California, New York, Illinois), the increased SALT cap can save $10,500-$14,000 in federal taxes (depending on bracket) if properly planned.
Watch Out For
- The increased S.A.L.T. cap is temporary and subject to phase-out rules
- P.T.E.T. elections have state-specific deadlines (often before year-end)
- Interaction between federal and state tax planning requires coordination
8. Estimated Tax Payments & Income Timing (The Strategy)
With OBBBA changes and continued economic uncertainty, business owners should assess estimated tax payments and income recognition timing.
Action Steps
- Review 2025 estimated payments (quarterly deadlines: April 15, June 15, September 15, January 15)
- Calculate your safe harbor (100% of prior year or 90% of current year—110% if AGI over $150K)
- Consider accelerating or deferring income where possible
- Make fourth-quarter adjustment payment if needed to avoid penalties
Why It Matters
Underpayment penalties can add 3-8% to your tax bill. Conversely, overpaying ties up cash that could be working in your business.
Watch Out For
- Income deferral may increase taxable income in future years—evaluate in light of expected future rates
- One-time income spikes (business sale, large contract) may require different safe harbor calculations
- Multi-state businesses have additional estimated payment requirements
9. Succession & Exit Planning Funding (Why This Matters Now)
OBBBA’s permanence around key provisions creates a stable environment for long-term planning. Business owners planning transitions in the next 3-10 years should ensure proper funding mechanisms are in place.
Action Steps
- Review your buy-sell agreement—is it properly funded?
- Update life insurance to reflect current business valuation
- Consider installment sale structures for internal transitions
- Evaluate year-end bonuses or dividends that might facilitate buyer financing
- Document succession timeline and begin transfer of institutional knowledge
Why It Matters
Proper succession planning ensures:
- Business continuity if something happens to you
- Fair valuation and transfer of ownership
- Tax-efficient wealth transfer to next generation or buyers
- Liquidity for your estate or heirs
Real example: A manufacturing client had a 15-year-old buy-sell agreement funded with life insurance based on a $2 million valuation. Current valuation: $8 million. The $6 million shortfall would have devastated the remaining partners trying to buy out a deceased owner’s family.
Watch Out For
- Valuation updates should occur every 3-5 years minimum
- Buy-sell funding via life insurance requires annual premium payments
- Bonus or dividend distributions should align with corporate earnings and plan documents
Gatewood Approach: Our Firm-to-Family™ model ensures business succession planning aligns with personal estate planning and family legacy goals.
10. Charitable Strategy & Qualified Giving (The Strategy)
With tax law stability under OBBBA, business owners can integrate charitable giving into comprehensive tax planning with confidence in the rules.
Action Steps
Consider these charitable strategies before year-end:
Corporate-level giving:
- Direct charitable contributions from your business (C-corps limited to 10% of taxable income)
- Sponsorships of community events (may be marketing expense rather than charitable contribution)
- In-kind donations of inventory or services
Personal-level giving (pass-through owners):
- Donor-advised funds (contribute in high-income year, distribute over time)
- Qualified charitable distributions from IRA (if 70½+)
- Charitable remainder trusts funded with appreciated business assets
Why It Matters
Charitable giving creates philanthropic impact while reducing taxable income and aligning with owner legacy goals.
Watch Out For
- Corporate contributions have different limits than personal (C-corp vs. pass-through)
- Timing is essential—contributions must be made by December 31 for 2025 deduction
- Substantiation requirements increase with contribution size (>$250 requires acknowledgment)
Your Year-End Action Plan
Week of December 2-6:
- Schedule tax strategy meeting with Gatewood Tax & Accounting
- Gather preliminary P&L and estimated year-end income
- Review the 10 strategies above and identify 2-3 that apply to your business
Week of December 9-13:
- Model scenarios with your advisor to quantify tax impact
- Make decisions on equipment purchases, inventory write-offs, contributions
- Identify actionable items and assign responsibility/deadlines
Week of December 16-20:
- Execute equipment purchases that must be placed in service by year-end
- Make charitable contributions
- Adjust estimated tax payments if needed
- Review and update succession/buy-sell documents
Week of December 23-31:
- Finalize payroll and contribution adjustments
- Confirm all year-end transactions are properly documented
- Create your audit-ready file for accelerated deductions or structural changes
Why Gatewood Tax & Accounting?
At Gatewood Wealth Solutions, we believe tax planning for business owners isn’t just about saving taxes—it’s about strategically aligning your business decisions with growth, value creation, and generational continuity.
Our Integrated Approach:
- Coordinated Client Care Team
- Your Wealth Advisor, CFP® Wealth Planner, Wealth Coordinator, and Tax & Accounting team work together—ensuring business tax planning aligns with personal wealth management, estate planning, and family legacy goals.
- Firm-to-Family™ Alignment
- We don’t just optimize this year’s tax return. We ensure your business planning serves your long-term family objectives—succession, wealth transfer, charitable legacy, and values transmission.
- Proactive Planning, Not Reactive Compliance
- We meet with business owner clients throughout the year—not just at tax time—to identify opportunities, model scenarios, and implement strategies before deadlines pass.
- Business Owner Expertise
- Our team specializes in the unique challenges business owners face: entity structure, succession planning, exit strategies, multi-state operations, and coordinating business and personal tax planning.
Don’t Let This Year-End Pass Without Strategic Planning
If you haven’t scheduled your year-end tax review, now is the time.
The strategies outlined above represent hundreds of thousands in potential tax savings—but only for business owners who act proactively before December 31.
The changes under OBBBA create opportunity. Let’s ensure those opportunities become advantages for your business—not missed savings you regret in April.
Schedule Your Business Tax Strategy Session
Contact Gatewood Tax & Accounting today.
We’ll help you:
- Review which of these 10 strategies apply to your specific business
- Model the tax impact of different scenarios
- Create an actionable implementation plan before year-end
- Coordinate business tax planning with personal wealth management
- Build audit-ready documentation for any aggressive strategies
This isn’t just tax planning—it’s business strategy that aligns with your life’s purpose.
Important Disclosures
This article is for educational and informational purposes only and should not be construed as tax, legal, or financial advice. Tax laws are complex and change frequently. The strategies discussed may not be suitable for all businesses or situations.
The information provided regarding the One Big Beautiful Bill Act (OBBBA) is current as of December 2025 but may be subject to change, clarification, or amendment. Always consult with qualified tax professionals before implementing tax strategies.
Gatewood Tax & Accounting provides comprehensive tax planning, preparation, and advisory services for business owners in coordination with Gatewood Wealth Solutions to deliver integrated financial and tax planning.
