Year-End Tax Moves That Can Still Lower Your Tax Bill
The end of the year comes fast. While most business owners are focused on holiday sales or taking time off, the IRS clock keeps ticking. The good news is this: there are still smart tax moves you can make before December 31 that can lower this year’s tax bill and keep more cash in your business.
This guide breaks down simple, legal, last-minute strategies to reduce taxes and start the new year with confidence.
1. Buy Equipment or Tools and Deduct Them Immediately
If your business needs equipment soon, buying before year-end can create a big deduction.
Section 179 allows you to deduct the full purchase price of equipment and software in the same year you buy it.
Examples
Laptops and office computers
Furniture or desks
Machinery and tools
Accounting and software subscriptions
This helps lower taxable income while investing in growth.
2. Prepay Certain 2025 Business Expenses
Cash-basis taxpayers can lower taxes by paying some expenses early.
Common expenses you can prepay
Rent
Insurance premiums
Advertising or software subscriptions
Retainers for professional services
If you already know you will spend the money soon, paying it in December can create a deduction this year.
3. Max Out Retirement Contributions
Retirement plans are one of the best tax savings tools available.
Contributions reduce taxable income while building long-term wealth.
Options include
SEP IRA
Solo 401(k)
Traditional IRA
The earlier you set up the account, the more options you have. Solo 401(k)s especially allow large contributions if you have strong profits.
4. Track and Deduct Business Mileage
Mileage is one of the top write-offs business owners miss.
If you have not tracked your driving throughout the year, now is the time to catch up before the year closes.
For 2025, the IRS standard rate is 67 cents per mile.
Even a few business trips can add up to thousands of dollars in deductions.
5. Write Off Unpaid Customer Invoices
Provided the income was originally recorded, uncollectible invoices can often be deducted as bad debt.
Examples that may qualify
Customer disappeared or went out of business
A project was completed but never paid for
If you have been chasing overdue invoices all year, this could reduce your taxable income significantly.
6. Issue 1099 Contractor Forms Now
The IRS requires 1099-NEC forms to be sent by January 31.
If you wait until the last minute, you risk penalties and missing deductions.
Make sure contractor payments are categorized correctly
Name and address
Taxpayer identification number
Total paid in the year
Clean records now prevent headaches later.
7. Clean Up and Categorize All Bookkeeping
If your books are a mess, your tax bill is usually higher.
Why? Missed deductions, incorrect reporting, and expensive CPA time trying to fix mistakes.
A good year-end cleanup means
Matching every bank and credit card transaction
Categorizing expenses properly
Reconciling all accounts
Saving receipts in one place
Accurate books equal accurate tax savings.
8. Consider the S Corp Election for Next Year
If your business profits are growing, planning ahead can lower your taxes next year.
Electing S Corp status can reduce self-employment taxes by allowing part of your profit to be taken as distributions rather than wages.
This is especially helpful if your business earns at least seventy to one hundred thousand dollars in profit annually.
Final Thoughts
December 31 is a deadline you cannot push back.
Every tax move you make now can help you keep more of what you earned this year.
If you are unsure what applies to your business or your bookkeeping is not caught up, you do not have to handle it alone.
Red Leaf Bookkeeping helps business owners clean up books, capture missed deductions, and finish the year prepared and confident.
👉 Schedule a Free Money Clarity Call and let’s lower your tax bill while there’s still time.