The clock is ticking. These proven strategies can save business owners and high-income earners thousands—but only if you act before year-end.
If you're planning major purchases for early next year, consider moving them to December instead. Equipment, software, supplies, and other deductible business expenses can reduce your taxable income for the current year.
Retirement plan contributions are one of the most powerful tax-saving tools available. For 2025, contribution limits are substantial—but you must make contributions by December 31st for them to count toward this year's taxes.
If you're on the cash basis (most small businesses), you have control over when you recognize income. Consider delaying December invoicing until January 1st, so that income hits your 2026 tax return instead of 2025.
Important: This strategy is most beneficial if you expect to be in a lower tax bracket next year. If your income will jump significantly in 2026, you may want the opposite approach.
Tax-loss harvesting allows you to sell investments at a loss to offset capital gains. You can deduct up to $3,000 in net capital losses against ordinary income, and carry forward additional losses indefinitely.
Pro tip: You can immediately buy a similar (but not identical) investment to maintain your market position while capturing the tax loss. Just be aware of the wash-sale rule (30-day waiting period for identical securities).
Year-end is prime time for charitable giving—but there are smarter ways to donate than writing a check. Consider these advanced strategies:
Avoid capital gains tax while getting a deduction for the full fair market value
Get an immediate deduction while distributing funds to charities over time
If you're operating as a sole proprietor or single-member LLC, you might be paying significantly more in self-employment taxes than necessary. Converting to an S-Corp can save thousands annually, but it must be done strategically.
Section 179 allows you to immediately deduct the full cost of qualifying equipment purchases (up to $1.22 million for 2025) instead of depreciating them over several years. Bonus depreciation adds even more opportunity.
If you're a C-Corp owner, consider paying yourself a performance bonus before year-end. This shifts income from the corporation (taxed at 21%) to you personally, where it can potentially be taxed at a lower effective rate after deductions.
For S-Corps and partnerships, consider year-end distributions to take advantage of current tax rates before potential increases.
If you had a great year and your estimated payments are too low, you'll owe underpayment penalties. Make a final estimated payment before December 31st to minimize these penalties.
Penalty Trigger: If you owe more than $1,000 at tax time and haven't paid at least 90% of your current year tax liability (or 100% of last year's), you'll face penalties.
This isn't glamorous, but it's crucial. Before year-end, organize your receipts, invoices, mileage logs, and business expense documentation. An IRS audit can disallow deductions you can't substantiate—even if they were legitimate business expenses.
These strategies are powerful—but only if you implement them before December 31st. Once the calendar flips to January 1st, most of these opportunities are gone for good.
The difference between reactive tax preparation and proactive tax strategy is often tens of thousands of dollars. Business owners who plan ahead keep more of what they earn.
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