As the year winds down and December moves at full speed, many business owners assume it is too late to reduce their tax bill for 2025. The truth is that the final weeks of the year offer powerful opportunities to lower your taxable income, improve your financial position, and prepare your business for a stronger start to 2026.

Even small, strategic moves can create meaningful savings. December is the time to review your numbers, identify final tax planning opportunities, and use the levers available before December 31. The key is taking action now, while there is still time to make an impact.

This guide walks you through the last minute tax moves that can still save you money this year and help you enter next year with clarity and confidence.

Leverage Year End Deductions to Reduce Taxable Income

Deductions lower your taxable income and reduce the amount you owe. Before the clock strikes midnight on December 31, take time to evaluate which deductions you can still take advantage of.

1. Review Business Expenses for the Year

Look through your books and evaluate whether there are business expenses you have not yet purchased or paid for. Common year end expenses that qualify include:

• Office supplies and equipment

• Software subscriptions

• Tools and technology

• Professional fees

• Marketing and advertising investments

• Continuing education or certifications

If these expenses support your business operations, purchasing them before year end can lower your taxable income while helping you enter 2026 more prepared.

2. Prepay Certain Business Expenses

If you operate under the cash basis of accounting, you may be able to prepay some expenses and deduct them in 2025. Examples include:

• Rent

• Insurance premiums

• Utilities

• Subscriptions

• Professional service retainers

Prepaying expenses can help smooth cash flow while also reducing your immediate tax liability.

3. Review Your Mileage and Travel Records

Many entrepreneurs miss travel related deductions simply because they did not track them clearly. Before year end, review:

• Mileage logs

• Travel receipts

• Client meeting documentation

• Transportation and lodging costs

Capturing every eligible expense helps ensure you do not lose out on deductions you earned throughout the year.

Maximize Retirement Contributions Before the Deadline

Retirement contributions are one of the most effective tax saving tools available to business owners. They reduce taxable income while helping you build long term financial security. December is the perfect time to evaluate your contribution options.

1. Contribute to a Traditional IRA or SEP IRA

Depending on your income and business structure, you may be able to contribute:

• Traditional IRA contributions

• SEP IRA contributions for self employed individuals

• Solo 401(k) contributions if you have a qualifying plan

Retirement contributions are one of the few remaining ways to significantly lower your taxable income before the year ends.

2. Evaluate Employer Contributions if You Have Employees

If your business offers a retirement plan, review:

• Profit sharing contributions

• Employer match options

• The potential tax benefits of contributing more before year end

These contributions can support both your team and your tax savings.

3. Consider Creating a Retirement Plan if You Do Not Have One

If you do not yet have a retirement plan in place, you may still qualify for:

• SEP IRA setup

• Solo 401(k) setup if done before year end in some cases

• Small employer retirement plan tax credits

Setting up the right plan now can create benefits for both 2025 and 2026.

Take Advantage of Equipment Purchases and Section 179

If your business needs equipment, December may be the best time to buy. Strategic timing can allow you to deduct a larger portion of the cost in 2025.

1. Use Section 179 to Deduct Qualifying Purchases

Section 179 allows businesses to deduct the full purchase price of qualifying equipment in the year it is placed in service. Examples include:

• Computers and laptops

• Office furniture

• Machinery and tools

• Software

• Vehicles that meet IRS requirements

The equipment must be purchased and placed in service by December 31 to qualify.

2. Bonus Depreciation Opportunities

Depending on current IRS rules for 2025, you may still qualify for bonus depreciation on certain assets. Bonus depreciation allows you to deduct a large portion of an asset’s cost in the first year.

Review your asset purchases for:

• Technology upgrades

• Machinery

• Large equipment

• Office improvements

These deductions can significantly reduce your taxable income for the year.

3. Evaluate Whether You Should Accelerate or Delay Purchases

If a purchase will help your business operate more efficiently in 2026 and qualifies for a deduction, it may be worth completing in 2025. If you expect higher income next year, delaying the purchase may provide a greater tax benefit later.

Your tax strategy should align with both your short term and long term goals.

Make Strategic Charitable Donations Before December 31

Charitable donations are a powerful way to support organizations you care about while also receiving potential tax benefits. December is the peak season for charitable giving, and many donations qualify for deductions if completed before year end.

1. Cash Donations to Qualified Organizations

Cash gifts to qualifying organizations can be deductible if:

• You receive documentation of the gift

• The organization is IRS approved

• You give before December 31

Even small contributions add up over time.

2. Donating Goods or Property

If you have unused equipment, inventory, or supplies, donating them can create a deduction equal to the fair market value. Be sure to document:

• What was donated

• The value of the items

• The organization that received the donation

Proper documentation is essential for audit purposes.

3. Consider Donor Advised Funds

A donor advised fund allows you to make a charitable contribution now and distribute the funds to organizations later. This can:

• Create an immediate deduction

• Allow you to plan your giving intentionally

• Support long term charitable strategy

DAFs can be especially helpful during high income years.

4. Support Causes That Align With Your Values

Charitable giving can be both strategic and meaningful. Choose organizations that reflect your personal or business mission.

Review the Timing of Income and Expenses

One of the most overlooked tax strategies is managing the timing of income and expenses. The goal is simple. Reduce taxes in high income years and prepare more strategically for lower income years.

1. Delay Income if It Benefits Your Tax Position

If your cash flow allows, you can potentially delay certain types of income until January. This might include:

• Sending invoices later in December

• Holding off on certain project completions

• Delaying year end billing cycles

Only consider this strategy if it aligns with your overall financial goals and cash flow needs.

2. Accelerate Expenses to Reduce Taxable Income

Accelerating expenses into the current year can reduce your tax bill. Examples include:

• Purchasing supplies

• Paying vendor invoices early

• Prepaying rent or insurance

• Purchasing needed equipment

• Renewing software subscriptions

Make sure these expenses are legitimate business needs and not forced spending.

3. Match Timing With Your Accounting Method

Cash basis taxpayers have flexibility with timing. Accrual basis taxpayers have more rigid rules. Always confirm which methods apply to your business structure before shifting income or expenses.

Prepare for 2026 Tax Planning Before the Year Ends

While December focuses heavily on closing out 2025, it also sets the stage for tax planning in 2026. The more aligned you are now, the more confident you will feel moving into the new year.

1. Review Your Estimated Taxes

Confirm that your estimated tax payments align with your income for the year. This helps you:

• Avoid penalties

• Stay on track

• Enter 2026 with a clean slate

2. Evaluate Your Entity Structure

If your business has grown or changed in 2025, your current entity type may no longer be the most tax efficient. Consider:

• S Corporation status

• Partnership structure

• Single member LLC considerations

Entity decisions can influence tax savings and retirement plan opportunities.

3. Analyze Your Financial Statements

A clear understanding of your income, expenses, and cash flow helps you build a proactive 2026 plan.

Review:

• Profit and loss statements

• Balance sheets

• Cash flow trends

• Outstanding liabilities

• Revenue patterns

The more clarity you have now, the more prepared you will be for January planning.

4. Set Preliminary Goals for 2026

Before the holidays arrive, start thinking about:

• Revenue targets

• Team expansion

• Operational upgrades

• Cash reserves

• Debt repayment goals

• Investment opportunities

These early ideas will help guide your full planning sessions in January.

Take Action Now to Reduce Your 2025 Tax Bill

There is still time to make a significant impact before the year ends. The December window is short, but it is powerful when used intentionally. By reviewing your deductions, evaluating year end purchases, maximizing retirement contributions, and planning your charitable giving, you can reduce your tax liability and strengthen your financial position.

If you want help identifying the best tax saving moves for your business, our team is here to support you.

Schedule a year end tax strategy session with Bernstein Tax Group and finish 2025 with clarity, confidence, and significant tax savings.