7 Tax Write-Offs to Use Before Year-End 2025

7 Tax Write-Offs You Must Use Before Year-End

If you’re like most business owners, December arrives fast, workloads pile up, and smart tax planning often gets pushed to the bottom of the to-do list. But here’s the good news: even if the year is almost over, you still have time to make smart financial moves that can dramatically reduce your taxable income for 2025.

The IRS allows several powerful deductions that only work if executed before December 31st. Missing these deadlines means leaving money on the table—sometimes tens of thousands of dollars. Acting now ensures you lock in every deduction available, strengthen your financial position, and start the new year with more cash in your business instead of sending it to the government.

Below is your complete year-end tax planning checklist for 2025, written to help you take fast, confident action.

1. Prepay 2026 Expenses Before 12/31

Cash-based businesses have one major advantage at the end of the year: you can prepay certain expenses and deduct them this year even though they relate to services you’ll use next year.

Expenses you can safely prepay include:

Office or commercial rent
Insurance premiums
Software subscriptions (QuickBooks, CRM systems, cloud storage, apps)
Memberships or professional dues
Business service contracts

Prepaying expenses is one of the simplest ways to reduce taxable income without overcomplicating your books. The IRS allows prepayment as long as it does not cover more than 12 months and does not extend beyond next year’s end.

Why this matters

If your income was higher in 2025 than expected, this strategy helps level out your tax burden. For many businesses, prepaying $20,000–$50,000 in expenses can immediately reduce tax liability by thousands.

2. Buy Equipment & Vehicles Before Year-End

Section 179 and bonus depreciation remain two of the most powerful tax-saving tools available to business owners. But there’s one rule many owners don’t realize: the asset must be placed in service by year-end—not just ordered.

This applies to:

Work vehicles (SUVs, trucks, vans—weight matters)
Machinery and tools
Computers, laptops, tablets
Office furniture
Manufacturing and construction equipment

Section 179 vs. Bonus Depreciation

Section 179 allows you to deduct the full purchase price up to IRS limits.
Bonus depreciation allows 60% immediate deduction for the year (phasing down each year unless Congress updates it).

Why this matters

Buying a qualifying vehicle or equipment on December 30th and placing it in service on December 31st can result in a massive deduction this year.

This strategy is especially powerful for businesses that had a high-profit year and need quick deductions without complicating future cash flow.

3. Make Charitable Contributions (or Fund a DAF)

Charitable giving is not only meaningful—it’s one of the cleanest, easiest tax deductions available. However, there’s an even more strategic way to maximize it: by using a Donor-Advised Fund (DAF).

How a DAF works

You donate money now and receive your full tax deduction in 2025.
You distribute the funds to charities later, even years later.
You maintain control over where the money eventually goes.

This is a powerful tool for business owners who want to reduce income today but want time to decide which organizations they want to support long-term.

Why this matters

You can donate cash, stocks, crypto, or appreciated assets. Donating appreciated assets gives you two tax benefits:

Full deduction for the fair market value
Avoidance of capital gains tax

If you’re looking for both tax savings and long-term giving flexibility, a DAF should be on your year-end checklist.

4. Submit Owner Reimbursements Before 12/31

Many owners forget about reimbursing themselves for personal expenses they paid out of pocket for the business. But doing this before year-end is essential if you want to maximize deductions through an Accountable Plan.

Eligible expenses include:

Mileage or vehicle use
Home office expenses
Travel
Meals with clients
Supplies purchased personally but used for business

Submitting these expenses too late may cause you to lose the deduction or force the reimbursement to be treated as taxable income—both avoidable with simple year-end action.

Why this matters

The IRS allows tax-free reimbursements to owners under an accountable plan, which means:

The business deducts the expense
The owner receives the reimbursement without income tax

It’s one of the cleanest dual-benefit tax strategies available.

5. Pay Bonuses or Adjust Payroll Before Year-End

If you want to reduce taxable income quickly and reward your team (or yourself as a working owner), year-end bonuses are an excellent option.

These must be paid—not just announced—before December 31st.

You can use bonuses to:

Reward staff performance
Reduce business taxable income
Contribute to owner retirement plans
Catch up on reasonable compensation requirements for S-Corp owners

Why this matters

Bonuses are fully deductible to the business but taxable to employees, so timing is everything. For owners, bonuses can also increase the amount eligible for retirement plan contributions.

6. Set Up Retirement Plans Before 12/31

High-income business owners often wait too long to take advantage of the most powerful deduction available: retirement contributions.

Plans that must be established (not funded) before year-end:

Solo 401(k)
Cash Balance Pension Plan
Certain Defined Benefit Plans

Funding can occur later—sometimes up to the tax filing deadline or beyond—but the plan must legally exist before the year ends.

Why this matters

These plans can create massive deductions:

Solo 401(k): up to $69,000 with catch-up
Cash Balance Plan: $100,000–$300,000+ depending on age and income

For high-earning business owners, especially those in service-based businesses, this is often the single largest year-end tax-saving move on the table.

7. Document Augusta Rule Meetings Before 12/31

The Augusta Rule allows you to rent your personal home to your business for up to 14 days per year tax-free. That means the business deducts the rent, and the homeowner receives the income tax-free.

But the IRS requires proper documentation, including:

Dates of meetings
Business purpose
Comparable rental rates
Invoices and payments

Examples of legitimate business uses:

Board meetings
Marketing or planning sessions
Team events
Year-end strategy meetings

Why this matters

If documented correctly, business owners can often deduct $5,000–$15,000 per year, tax-free.

Final Thoughts: Even One Move Can Save You Thousands

Year-end tax planning doesn’t need to be stressful or overwhelming. The biggest mistake most business owners make is waiting too long, assuming they have no options left. In reality, you still have time to make extremely valuable moves before the clock strikes midnight on December 31st.

Even implementing one of these strategies—prepaying expenses, buying equipment, funding a retirement plan, or using the Augusta Rule—could mean tens of thousands of dollars back in your pocket at tax time.

Smart tax planning isn’t just about saving money now—it’s about building a financially resilient business for the future.If you want personalized guidance, talk to a qualified tax strategist who understands small business structures. With the right plan, December can become your most profitable month of the year.

Get a Tax Plan Built Around Your Reality

Your business, income, expenses, and goals are different from anyone else’s—so your tax strategy should be too. The biggest savings come when you choose actions that match your situation, not generic advice found online.

Take a moment to evaluate what truly benefits you. The right decisions—made at the right time—can change your entire financial picture.

We’re here to guide you with reliable insights and real strategies that put money back in your pocket.

Click below to book a free consultation with our tax expert and get a personalized review of your year-end tax plan.

Phone: +1 (737) 420-1736