Waiting until the filing deadline to consider your tax strategy means leaving money on the table. Proactive planning is essential for maximizing profits, allowing you to make decisions throughout the year that minimize your tax liability.
Here’s what you should know to develop informed business tax planning strategies in 2025, including which key tax opportunities remain available and which notable regulations are subject to change.
Key Business Tax Opportunities in 2025
Inflation Reduction Act Tax Credits
The Inflation Reduction Act (IRA) introduced a variety of new tax provisions designed to incentivize investments in clean energy and sustainability, most of which took effect in 2023 and are still available in 2025.
These new regulations primarily offer tax credits to businesses and individuals. Some notable examples include:
- Investment Tax Credit (ITC): This lets qualified businesses claim a percentage of their renewable energy system purchases.
- 45X Advanced Manufacturing Credit: This provides a tax break to businesses for the production of renewable energy systems.
- New Clean Vehicle Tax Credit: This allows individuals and businesses to claim up to $7,500 per clean vehicle placed into service.
However, the IRA faces political and legal challenges under the Trump administration, which has called for rollbacks of many provisions. As a result, there’s significant uncertainty over the future of these incentives.
Businesses should consider moving quickly to capitalize on IRA opportunities while they’re still available. At the same time, it may be wise to prepare for potential shifts in federal policy that could affect their long-term viability.
R&D Payroll Tax Credits
Since 2016, qualified startups and small businesses have been able to claim payroll tax credits for research and development (R&D) expenses, allowing them to offset their Social Security taxes by up to $250K per year.
The IRA raised the annual cap to $500K, increasing the maximum savings amount to $2.5 million over five years. It also allowed businesses to apply leftover credits to their Medicare taxes after reducing their Social Security taxes to zero.
As a result, the R&D tax credit remains one of the most lucrative business tax opportunities in 2025. However, your business must generate no more than $5 million in annual revenue and have less than five years of revenue to be eligible.
Student Loan Repayment Programs
The Biden administration’s broad student loan forgiveness plan was eventually struck down, and widespread debt cancellation is unlikely under the Trump administration, which has opposed such measures.
The Department of Education was also forced to take down online applications facilitating income-driven repayment plans in February 2025, and President Trump has repeatedly expressed his intentions to abolish the agency altogether.
This represents a unique opportunity for businesses to support employees through the Employer Student Loan Repayment Program, which was extended through 2025 by the Consolidated Appropriations Act of 2021.
It allows employers to contribute up to $5,250 per year toward employees’ student loan payments tax-free, for both the employer and employee.
With fewer repayment and forgiveness options available, employer-sponsored repayment assistance may be more valuable than ever. If you’re looking to attract and retain talent, you may want to offer this benefit while it remains available.
Notable 2025 Tax Law Changes
Impending Expiration of Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act (TCJA) is one of the most significant tax reforms in decades, reshaping everything from corporate income tax rates to the availability of individual tax credits, like the Child Tax Credit.
However, many TCJA provisions were temporary and set to expire at the end of 2026, so taxpayers will experience major changes over the next few years as they wind down and eventually disappear.
One of the most notable shifts in 2025 is the continued phase-out of bonus depreciation, which lets businesses deduct a large portion of the cost of qualifying property in the year it was purchased. It dropped from 60% to 40% in 2025 and will fall to just 20% in 2026 before sunsetting at the end of the year.
Some other significant TCJA provisions include:
- A $10,000 cap on the state and local tax deduction
- Stricter limitations on business interest expense deductions
- Capitalization requirements for research and experimentation (R&E) expenses
Make sure to factor these changing TCJA provisions into your tax strategy. For example, real estate business owners may want to consider initiating cost segregation studies before bonus depreciation goes away.
That said, the Trump administration has expressed interest in extending various TCJA policies, creating uncertainty over their future. Consider working with an expert tax advisor to determine the best approach as the situation continues to evolve.
Expiration of the Employee Retention Credit
The Employee Retention Credit (ERC) provided substantial financial benefits to businesses, primarily allowing eligible employers to claim a refundable credit of up to $5,000 per employee in 2020 and up to $21,000 per employee in 2021.
Employers that began operations after February 15, 2020, and don’t meet other ERC eligibility criteria may qualify as recovery startup businesses, allowing them to claim ERC funds for Q3 and Q4 of 2021, up to a maximum of $50,000 per quarter.
The deadline to claim the ERC in 2020 has passed, but you can still amend your 2021 return until April 15, 2025. If you haven’t assessed your eligibility for the ERC in that year yet, now is the time to act before the opportunity expires.
Undermining of CHIPS and Science Act
The CHIPS and Science Act aimed to revitalize semiconductor manufacturing in the United States. It provided $39 billion in clean air incentives and a 25% tax credit for capital expenses related to manufacturing semiconductors and related equipment.
However, in February 2025, the Trump administration’s plans for mass layoffs at the National Institute of Standards and Technology (NIST)—the agency responsible for administering the CHIPS Act—could severely hamper the program’s ability to function.
Without the personnel to certify company compliance and manage disbursements, the CHIPS Act may be rendered ineffective. Businesses planning to rely on CHIPS Act incentives should consider holding off on factoring these benefits into their tax planning until the future of the program becomes clear.
Evergreen Business Tax Planning Strategies
No matter how tax laws change, some strategies are consistently beneficial for maximizing profitability. Consider taking the following steps every year:
- Reevaluate your business structure: Owners of pass-through entities—like sole proprietorships, partnerships and certain LLCs—should review their business structure annually to determine if it remains the most tax-efficient. A cost-benefit analysis can help you determine if it would be profitable to switch to an S corporation or a C corporation.
- Consider updating accounting methods: Strategic adjustments to your accounting methods—such as your basis of accounting or inventory valuation method—can significantly impact profitability. Consider updating them given changes in regulations and financial circumstances. For example, adopting the Last In, First Out (LIFO) method in inflationary environments can lead to immediate savings by deducting higher-cost inventory first.
- Make strategic retirement contributions: Contributing to retirement plans like 401(k)s or SEP IRAs can lower taxable income while supporting long-term financial stability for both business owners and employees. Reviewing contribution strategies throughout the year helps you maximize available tax benefits, take advantage of investment growth and remain compliant with contribution limits.
Tax laws and financial conditions are always changing, so staying informed and proactive is essential. Ultimately, tax planning is about consistently making informed strategic decisions to maximize long-term savings in an ever-evolving landscape.
Get Business Tax Planning Support
Managing taxes on top of your day-to-day responsibilities can be overwhelming, especially in years like 2025, when a change in political administration creates uncertainty over critical regulations.
Don’t navigate today’s complex tax landscape alone. Qualified, remote tax experts at Paro can quickly assess your company structure, operations and financials. They can expedite developing 2025 tax planning strategies unique to your organization. Get matched with a tax professional that can set the pace for year-round tax planning.
