The end of the year always seems to sneak up faster than you expect. You’re busy wrapping up projects, closing out the books, and trying to finish strong before the holidays hit. But if you’re self-employed or running a business, there’s something else you need to pay attention to before December 31: your taxes.
It might feel too late to make a difference, but you’d be surprised how many moves are still on the table. These last-minute strategies can reduce your taxable income, lower your tax bill, and set you up for a smoother start next year. The key is to act now while the window is still open.
Here are six tax deduction opportunities you can take advantage of before year-end.
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1. Accelerate Purchases You Already Planned to Make
If you know you’ll need certain equipment, software, or supplies in the coming months, buying them before December 31 can shift the deduction into this tax year. This isn’t about spending recklessly — it’s about moving up purchases you’d make anyway so you can lower your current year’s taxable income.
Think about items like:
- Computers, tablets, or office furniture
- Business software subscriptions
- Marketing materials or trade show expenses
- Tools and machinery for operations
The benefit is twofold. You’ll get the deduction now, and you’ll be better prepared for the year ahead. Just be sure the expense is ordinary and necessary for your business. That’s the IRS standard, and it’s what keeps your deduction legitimate.
2. Take Advantage of Bonus Depreciation and Section 179
Large purchases, like vehicles or machinery, often qualify for special depreciation rules. Bonus depreciation allows you to deduct a big chunk (sometimes the entire cost) of qualifying assets in the year you put them into service, rather than spreading it over several years.
Similarly, Section 179 lets you write off the full cost of certain business assets up to annual limits. If you’ve been considering upgrading your vehicle, investing in new equipment, or expanding your office setup, doing so before year-end can deliver a significant deduction.
One detail you can’t overlook: The asset must be in use by December 31, not just ordered or paid for. That means you’ll need to receive it and start using it to qualify.
3. Max Out Retirement Contributions
One of the smartest ways to reduce your taxable income is to put money toward your future self. Retirement plans like a SEP IRA, Solo 401(k), or SIMPLE IRA give you the ability to make tax-deductible contributions that grow tax-deferred.
For 2025, contribution limits are generous. With a Solo 401(k), you can contribute both as the employee and employer, allowing you to put away tens of thousands of dollars if your income allows. SEP IRAs also allow large contributions based on a percentage of your net earnings.
Even if you can’t max out the full amount, putting something extra in before the deadline gives you a deduction today and long-term savings tomorrow. If cash flow is tight, remember that some plans give you until your tax filing date to make contributions. However, the earlier you act, the more intentional you can be with year-end planning.
4. Make Charitable Contributions
Charitable donations are a classic year-end tax move, and for good reason. They not only lower your taxable income but also let you support causes you care about.
You can give in several ways:
- Cash donations to qualified charities
- Donating appreciated assets like stocks or cryptocurrency
- Contributing household items, clothing, or business inventory
If you donate appreciated assets you’ve held for more than a year, you can deduct the fair market value and avoid paying capital gains tax on the appreciation. That’s a win-win strategy if you’ve had investments grow significantly.
Keep in mind that you’ll need documentation. For cash donations, a receipt or acknowledgment letter is enough. For non-cash contributions over $500, the IRS requires additional forms.
5. Pay Outstanding Bills or Prepay Certain Expenses
If you operate on a cash-basis accounting system — and most small businesses do — you can deduct expenses in the year you actually pay them. That means prepaying certain costs before December 31 can give you a current-year deduction.
Examples include rent, insurance premiums, professional subscriptions, utility bills, vendor invoices, etc. This strategy works best when you know your income will be higher this year than next. Pulling expenses into the current year helps reduce your taxable income at the point when you need it most.
6. Review Your Records for Missed Deductions
Sometimes the best deductions aren’t about making new moves but catching what you’ve already spent. Before year-end, comb through your bank and credit card statements to make sure you didn’t overlook anything.
Commonly missed deductions include:
- Home office expenses (a portion of rent, utilities, and internet if you work from home)
- Business mileage or vehicle expenses
- Education and training related to your work
- Professional fees, including accountants, attorneys, or consultants
Don’t Underestimate the Power of Sound Advice
While these strategies are all legitimate ways to reduce your taxable income, not every tactic works for every business. What makes sense for one entrepreneur might not be the right move for another. This is where professional guidance matters.
A trained financial planner or tax advisor can help you figure out which strategies actually save you money without creating new problems down the line. They can also ensure your documentation is airtight, which matters if the IRS ever asks questions.
Wrapping Up the Year With Confidence
Taxes may not be the most exciting part of running your business, but year-end planning is one of the best ways to take control of your financial picture. The window closes on December 31, and once it does, your options narrow dramatically.
Don’t wait until the last week of December to scramble — take action now. Even small moves can add up to big savings when you file. And with the right plan in place, you’ll finish the year not just with stronger numbers, but with peace of mind knowing you’ve done everything you can to keep more of what you’ve earned.