2025 Last-Minute Year-End General Business Income Tax Deductions

The purpose of this article is to get the IRS to owe you money.

Of course, the IRS will not likely cut you a check for this money—although, in the right circumstances, that will happen. But in most cases, you’ll probably realize the cash when you pay less in taxes.

This article gives you six powerful business tax deduction strategies you can easily understand and implement before the end of 2025.

1. Prepay Expenses Using the IRS Safe Harbor

You have to thank the IRS for its tax-deduction safe harbors.

IRS regulations contain a safe-harbor rule that allows cash-basis taxpayers to prepay and deduct qualifying expenses up to 12 months in advance without challenge, adjustment, or change by the IRS.¹

Under this safe harbor, your 2025 prepayments cannot go into 2027. This makes sense because you can prepay only 12 months of qualifying expenses under the safe-harbor rule.

For a cash-basis taxpayer, qualifying expenses include lease payments on business vehicles, rent payments on offices and machinery, and business and malpractice insurance premiums.

Example. You pay $3,000 a month in rent and would like a $36,000 deduction this year. So on Wednesday, December 31, 2025, you mail a rent check for $36,000 to cover all your 2026 rent. Your landlord does not receive the payment in the mail until Friday, January 2, 2026.

Here are the results:

• You deduct $36,000 this year (2025—the year you paid the money).

• The landlord reports $36,000 as rental income in 2026 (the year he received the money).

You get what you want—the deduction this year. The landlord gets what he wants and likely more—next year’s entire rent in advance, eliminating any collection problems while keeping the rent taxable in the year he expects it to be taxable.

Get the timing right. If the landlord pays taxes using the cash basis and receives the $36,000 of 2026 rent paid in advance in 2025, he would have to pay taxes on the rent money in 2025.

Don’t surprise your landlord. Before sending a big rent check, make sure your landlord understands the strategy. Otherwise, he might not deposit the rent check (thinking your payment was a mistake) and instead return the check to you. This could put a crimp in the strategy because you operate on a cash basis.

Also, think proof. Remember, the burden of proof is on you. How do you prove that you mailed the check on December 31? (Think like an IRS examiner or, better yet, a prosecuting attorney.)

Here’s the answer: send the check using one of the U.S. Postal Service (USPS) tracking delivery methods, such as priority mail with tracking and possibly signature required. Or even better, use one of the old standards that the IRS has to abide by, such as certified or registered mail.

With these types of mailings, you have proof of the date you mailed the rent check. You also have evidence of the date the landlord received the check.

If you are using USPS online tracking, make sure to print the delivery and receipt tracking results for your tax records because that tracking information disappears from the postal service records long before you would need it for the IRS.

*One little-known rule. Under the tax rules, you don’t (and shouldn’t) include the December 31 rent payment on the Form 1099 you give the landlord. This comes as a surprise to many, but putting the December 31 payment on the 1099 to the landlord would be incorrect reporting.

*Second little-known rule. If you and your corporation are on the cash basis and your corporation pays rent to you, you can use this strategy to create a deduction for your corporation this year. In other words, the related party rules do not apply.

2. Stop Billing Customers, Clients, and Patients

Here is one rock-solid, time-tested, easy strategy to reduce your taxable income for this year: stop billing your customers, clients, and patients until after December 31, 2025. (We assume here that you or your corporation is on the cash basis and operates on the calendar year.)

Customers, clients, patients, and insurance companies generally don’t pay until billed. Not billing customers and patients is a time-tested tax-planning strategy that business owners have used successfully for years.

Example. Jake, a dentist, usually bills his patients and the insurance companies at the end of each week. This year, however, he sends no bills in December. Instead, he gathers up those bills and mails them the first week of January. Presto! He just postponed paying taxes on his December 2025 income by moving that income to 2026.

3. Buy Office Equipment

Qualifying Section 179 and bonus depreciation purchases include new and used personal property such as machinery, equipment, computers, desks, furniture, and chairs (and certain qualifying vehicles).

You can likely use either 100 percent bonus depreciation or Section 179 expensing to deduct 100 percent of the cost of machinery, equipment, computers, desks, furniture, and chairs.²

*Planning note. If you qualify for the Section 199A deduction, the increased expenses will reduce your Section 199A deduction.

4. Use Your Credit Cards Correctly

If you are a single-member LLC or sole proprietor filing Schedule C for your business, the day you charge a purchase to your business or personal credit card is the day you deduct the expense.³

If you operate your business as a corporation and the corporation has a credit card in the corporate name, the same rule applies: the date of charge is the date of deduction for the corporation.⁴

But if you operate your business as a corporation and you are the personal owner of the credit card, the corporation must reimburse you if you want the corporation to realize the tax deduction, and that happens on the date of reimbursement. Thus, submit your expense report and have your corporation make its reimbursements to you before midnight on December 31.

5. Don’t Assume You Are Taking Too Many Deductions

You should never stop documenting your deductions, and you should always claim all your rightful deductions.

If your business deductions exceed your business income, you have a tax loss for the year. With a few modifications, tax law calls this a “net operating loss,” or NOL.⁵

If you are just starting your business, or with all that’s happened to you this year, you could very possibly have an NOL. And the good news is that NOLs can turn into future cash infusions for your business because you carry 2025 NOLs forward to future years.

6. Deal with Your Qualified Improvement Property

Qualified improvement property (QIP) is any improvement made by you to the interior portion of a building you own that is non-residential real property if you place the improvement in service after the date the building was first placed in service.⁶

The big deal with QIP is that it’s not considered real property that you depreciate over 39 years. QIP is 15-year property, eligible for:

• Immediate deduction using Section 179 expensing

• 100 percent bonus depreciation

• MACRS depreciation

To get the QIP deduction in 2025, you need to place the QIP in service on or before December 31, 2025.

Takeaways - 2025 Last-Minute Year-End General Business Income Tax Deductions

When it comes to your taxes, business deductions are king. The more business deductions you can claim, the better. The more business deductions you claim, the less you pay in regular taxes. And if you are self-employed, you’ll pay less in self-employment taxes.

Yes, paying less in taxes is good.

Here’s a review of the six last-minute tax deduction strategies covered in this article:

1. Prepay your 2025 expenses now to reduce taxes this year.

2. Stop billing customers and clients until January.

3. Purchase equipment or furniture and write off 100%.

4. Use business or corporate credit cards before year-end.

5. Claim every legitimate deduction—even with a loss.

6. Place any QIP in service by December 31, 2025.

2025 Last-Minute Year-End General Business Income Tax Deductions

¹ Reg. Section 1.263(a)-4(f)

² IRC Sections 168(k); 179

³ Rev. Rul. 78-38

⁴ Ibid.

⁵ IRC Section 172(d)

⁶ IRC Section 168(e)(6)(A)