2025 Year-End Tax Planning Guide for Businesses

Position your business for 2026 tax success with proactive strategies built for today’s evolving tax landscape.

As 2025 draws to a close, tax planning takes on even more significance than usual. The recently passed One Big Beautiful Bill Act (OBBBA) ushers in sweeping tax reform, much of which becomes effective in 2026. That gives businesses a critical year-end window to take decisive, strategic action.

The moves you make before December 31 could significantly influence your tax liability and your readiness for what’s ahead.

What’s Changed: Why Year-End Tax Planning Matters More in 2025

While year-end tax planning is always valuable, 2025 is uniquely pivotal. Several factors make it especially important:

Several OBBBA provisions take effect in 2025, giving businesses a short runway to prepare.
IRS enforcement is rising, especially for high-income businesses and those in specialized sectors.
Key provisions from the Tax Cuts and Jobs Act (TCJA) were set to sunset but have been revamped under the OBBA, including:
- The 20% Qualified Business Income (QBI) deduction (Section 199A);
- Bonus depreciation, phasing down to 40% in 2025; and
- Tighter interest deduction limits under Section 163(j)

With some tax code changes applying retroactively and others set for the future, 2025 presents an opportunity to optimize under the current rules while planning for a very different 2026.

The One Big Beautiful Bill Act (OBBBA): What You Need to Know

Signed into law in mid-2025, the OBBBA represents the most comprehensive overhaul of the business tax code since the TCJA.

Here are a few highlights most likely to affect our clients:

Corporate and Pass-Through Changes

Qualified Business Income (QBI) deduction adjustments will phase in, particularly for high-income owners and service firms. See our full breakdown on the QBI deduction here.

Section 174 R&D Capitalization Relief

OBBBA partially rolls back the harsh Section 174 capitalization rules that took effect in 2022. Starting in 2025, businesses will have more flexibility in expensing domestic R&D costs. However, pre-2025 costs may still be governed by previous amortization rules, so careful planning is required. We explain how to use this relief window wisely in our post on Section 174 relief under the OBBBA.

International and Multinational Businesses

The Act also affects Global Intangible Low-Taxed Income (GILTI), foreign tax credits, and outbound payment rules—especially relevant for tech and life sciences firms with international contractors or entities. See our insights on OBBBA’s impact on international tax.

Real Estate and Depreciation

While bonus depreciation begins to phase out under TCJA rules, OBBBA introduces nuanced treatment of real estate-related deductions, state-level disparities, and new documentation requirements. Learn more here.

Must-Do Year-End Moves for 2025

With the policy landscape shifting, what can you do now to prepare?

Accelerate or Defer Income Strategically

Depending on your expected 2026 tax rate (especially with OBBBA changes), consider deferring expenses into 2026 if you’ll benefit from enhanced deductions or lower income that year. For cash basis taxpayers, this can be particularly effective.

Reevaluate Your Capital Investments

While capital expenditures receive more favorable treatment under OBBBA in 2025, businesses should consider:

With 100% bonus depreciation restored for property placed in service after January 19, 2025, consider completing significant fixed-asset purchases before year-end, particularly those delayed from 2024.
The maximum Section 179 expense is set at $2.5 million, reduced dollar-for-dollar by the amount by which the cost of qualifying property exceeds $4 million. These limits will be adjusted annually for inflation, and the new rules apply to property placed in service for tax years beginning after December 31, 2024.

Revisit Entity Structure and Compensation Strategy

2025 is the right time to determine if your current structure still fits your goals:

S-Corp owner? Review compensation strategy and ensure you’re not under- or overpaying yourself.
C-Corp? Consider whether dividends make sense now. Here’s a primer on 1099-DIV reporting and return of capital.
Partnership or LLC? Review eligibility and future impact of QBI changes—we break it down here.

Don’t Ignore International Payment Risks

If you’re paying contractors or subsidiaries abroad—especially in tech or biotech—ensure your team is ready for:

Withholding rules should be considered when paying a foreign person and services are performed in the United States, unless valid documentation or treaty relief applies.
Maintain proper documentation or payments to non-U.S. persons or entities, including obtaining the appropriate Form W-8BEN or W-8BEN-E.

Get ahead of exposure with our foreign contractor compliance guide.

Sector-Specific Planning Tips

Cannabis Operators

Watch for shifting state-level tax credits or cash-based accounting adjustments.
Clean, defensible payroll and 280E documentation remains vital.
Accumulated earnings tax if your Company becomes profitable, you will need to ensure that your unappropriated retained earnings is no more than $250k unless there are board of director discussions about why this meets an exception to be held.

Life Sciences Companies

R&D planning is your core tax strategy. Evaluate whether 2025 or 2026 is your optimal year for clinical trial expense recognition. See our quick recap on the R&D Tax Credit.
If you have an international entity, now would be an optimal time to reassess transfer pricing strategy.

Technology Companies

IP valuation and QSBS planning should be revisited under new rules. See how OBBBA changes QSBS for founders and investors.
Cloud costs: Capitalize or expense? Make sure you’re applying the right accounting treatment ahead of 2026.

Government Contracting

The OBBBA appropriates substantial funding to several high-priority focus areas, including offensive cyber operations, supply chain protection, modernizing critical infrastructure, energy systems, and other essential technologies. With the renewed emphasis on security infrastructure, cybersecurity is now a factor in determining the bid score.
OBBBA changes to bonus depreciation, 179 expensing, and domestic research activities will impact government contractors that incur these types of expenditures.

Look Ahead to 2026: Prepare Now, Save Later

Some of the OBBBA’s most impactful changes arrive in 2026. The best use of 2025? Lay the groundwork now:

Expected sunsetting of TCJA benefits have been significantly revamped by the OBBA so planning now is about updating tax models to incorporate the new OBBBA rules.
New compliance standards could require updated software, payroll systems, or accounting practices.
Strategic actions taken in 2025, like entity restructuring or investment timing, can help minimize headaches in the first year of OBBBA enforcement.

Let’s Plan Ahead, Together

Aura Advisors is here to help you turn uncertainty into advantage. The 2025 year-end window is your opportunity to maximize savings and build a defensible position before the rules change.

Ready to talk strategy?

Schedule a consultation with our team to get a customized 2025 tax plan built for your business, your industry, and your future.

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Aura Advisors is a boutique tax consulting and compliance firm working with start-ups, emerging growth companies, and affluent individuals. Making it safer for good people and good companies to continue to do good things.