Recent tax law changes offer significant opportunities for businesses to reduce taxes and improve cash flow. As the year ends, it’s a good time to review your entity structure, accounting methods, and spending plans to make the most of available benefits. Here are six strategies to consider before December 31.

1. Timed Fixed Asset Purchases

The OBBBA reinstated 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. It also allows immediate deductions for some production-related buildings and expands Section 179 expensing.

These updates mean businesses may cut their 2025 tax bill by purchasing and placing assets in service before year-end. A cost segregation analysis can further enhance deductions by identifying components that qualify for shorter depreciation lives.

2. Reassess Accounting Methods

Accounting methods determine when your business recognizes income and expenses. Rising interest rates and new rules make this an ideal time to reconsider your approach.

Example: An S corporation switched from accrual to cash accounting, deferring $500,000 of income and saving about $150,000 in taxes.

Common areas to review:

• Overall cash method: Often defers income recognition compared to accrual.
• Advance payments: Accrual taxpayers may defer part of the income from prepaid sales, such as gift cards, to the following year.
  • Prepaid expenses: Certain 12-month items like insurance or maintenance contracts can be deducted upfront.

3. Reevaluate Your Entity Structure

• Your business structure — C corporation, S corporation, partnership, or sole proprietorship — determines how income is taxed.
  The OBBBA introduced new incentives that could make a different structure more beneficial:

  • A permanent 20% pass-through deduction for qualified business income

  • Expanded Qualified Small Business Stock (QSBS) exclusions, allowing certain C corporation shareholders to exclude up to $15 million (or ten times stock basis) in gains

  Review your structure before 2026 to ensure you’re not missing potential tax savings.

4. Leverage Tax Credits and Incentives

• The OBBBA accelerates the phase-out of many renewable energy credits, so timing is critical. For example, solar and wind projects must start by July 4, 2026, or be completed by December 31, 2027, to qualify.
  The law also restores full expensing for domestic R&D costs, giving you flexibility to deduct unamortized expenses through amended returns or current-year deductions. Forecasting the options can help you choose the most tax-efficient approach.

5. Accelerate Expense Payments

The timing of expense payments can make a difference.

• Cash-method taxpayers can deduct expenses only when paid.

• Accrual-method taxpayers can deduct bonuses and similar expenses only if paid within 2.5 months after year-end.

The new tax law opens many avenues for businesses to reduce taxable income — but the window for some incentives is short. Reviewing your entity structure, accounting methods, and investment timing now can position your business for stronger financial performance in 2026 and beyond. Visit with one of our tax experts at (888) 388-1040 about your situation.

Mitchell Erickson, CPA and Manager comments, 

“Every tax law change brings opportunity. Businesses that act early and plan strategically will be best positioned to capture the full benefits of the new rules.”