As the year comes to a close, business owners still have time to take meaningful steps to reduce their 2025 tax liability. With the right moves before December 31, you can accelerate deductions, defer income, and position your business for stronger cash flow in 2026.
Below are six IRS-approved strategies that apply to sole proprietors, LLCs, corporations, and service-based businesses.
1. Prepay Up to 12 Months of Business Expenses
Cash-basis taxpayers can prepay certain expenses up to 12 months in advance and deduct the full amount in the year the payment is made.
Eligible prepaid expenses include:
- Office rent
- Equipment or vehicle leases
- Insurance premiums
- Business subscriptions
- Storage units or coworking spaces
Example:
If your rent is $3,000/month, paying $36,000 on December 31, 2025 creates a full 2025 deduction, even if the landlord receives it in January 2026.
Compliance Tips:
- Use USPS certified mail or other trackable delivery to prove payment date.
- Notify your landlord so the payment isn’t returned.
- Save mailing receipts, bank confirmations, and proof of delivery.
Learn more about business tax planning:
➡️ https://www.reckenen.com/tax-planning
Relevant IRS guidance:
➡️ Safe Harbor Explanation (IRS Regs): https://www.irs.gov/instructions/i4562
2. Delay Billing Until January to Defer Income
Cash-basis businesses recognize income when it’s received, not when earned.
Delaying December invoices until January shifts taxable income into 2026.
Best for:
- Accounting firms
- Consultants
- Medical and dental professionals
- Attorneys
- Contractors
- Any business where clients pay after invoicing
This strategy does not eliminate income — it simply gives you control over timing.
Explore year-end planning services:
➡️ https://www.reckenen.com/business-advisory
3. Buy Equipment and Deduct Up to 100%
Before year-end, consider purchasing equipment and technology that qualifies for Section 179 expensing or bonus depreciation, allowing you to deduct up to 100% of the cost.
Eligible assets include:
- Laptops and computers
- Servers and networking equipment
- Office desks and furniture
- Machinery and tools
- Certain heavy vehicles
- Software and technology equipment
Requirement:
The asset must be purchased and placed in service by December 31, 2025.
Internal Resource:
➡️ https://www.reckenen.com/blog (for related posts)
IRS Resources:
- Section 179: https://www.irs.gov/publications/p946
- Bonus Depreciation: https://www.irs.gov/forms-pubs/about-publication-946
4. Use Credit Cards Strategically for Year-End Deductions
For Schedule C filers (sole proprietors and single-member LLCs), you deduct expenses on the date the credit card is charged, not when you pay the bill.
For corporations:
- If the corporate card is used → deduction occurs on the charge date.
- If a personal card is used → the corporation must reimburse you by December 31 for the deduction to count in 2025.
Submit expense reports early to lock in deductions.
Need help organizing deductions?
➡️ https://www.reckenen.com/services
5. Claim All Legitimate Deductions — Even If They Create a Loss
Never skip a valid deduction because you think you’re “taking too much.”
If your deductions exceed your income, you may generate a Net Operating Loss (NOL), which can reduce taxable income in future years.
Key points:
- Valid deductions will withstand audit.
- There is no such thing as “too many” lawful deductions.
- NOLs can produce significant tax savings later.
IRS NOL Guidance:
➡️ https://www.irs.gov/forms-pubs/about-publication-536
Learn more about working with us:
➡️ https://www.reckenen.com/contact-us
6. Deduct Qualified Improvement Property (QIP)
Interior improvements to non-residential business property may qualify for accelerated deductions.
Examples:
- Lighting updates
- Flooring changes
- New ceilings
- Non-structural interior remodeling
QIP may qualify for:
- Section 179
- Bonus depreciation
- 15-year MACRS depreciation
Improvements must be placed in service by December 31 for 2025 deductibility.
⭐ Final Takeaway
Smart timing of expenses and income can significantly reduce your 2025 tax bill.
Summary of the strategies:
- Prepay up to 12 months of expenses
- Delay billing to January
- Purchase equipment before year-end
- Utilize credit cards strategically
- Claim all legitimate deductions (even if they create an NOL)
- Place Qualified Improvement Property into service
For personalized guidance, year-end projections, and tax planning strategies:
➡️ https://www.reckenen.com/contact-us
📄 LEGAL & TAX DISCLAIMER
This blog post is for general informational purposes only and does not constitute legal, tax, or financial advice. Tax laws change frequently, and the strategies described may not apply to your specific situation. You should consult a qualified tax professional before taking any action based on this content. No client relationship is created by reading this article or contacting our firm through this page.