Top 5 Tax Breaks for Business Owners (2025 Bill)

#1 — Big write-off

100% Vehicle Deduction via Bonus Depreciation

Eligible business vehicles can be expensed using 100% bonus depreciation when business use and weight rules are met.

Qualify checklist

• Business purpose: income-producing use (client/vendor visits, between business locations, supply/equipment runs).
• Timing: 100% bonus renewed for eligible purchases after Jan 19, 2025.
• Weight: > 6,000 lbs GVWR generally avoids passenger-auto caps.
• Business use > 50%: required; deduction scales with business-use %.

Documentation

• Mileage / trip logs (business location to location).
• Purchase contract, GVWR evidence, in-service date.
• Allocate personal vs. business use accurately.

#2 — 20% deduction

Enhanced QBI — Made Permanent

The 20% deduction on qualified business income continues permanently, with higher phase-out ranges for certain specialized service businesses beginning in 2026.

Key points

• Who qualifies: owners & independent contractors with qualifying business income.
• Phase-outs (2026): thresholds increase by $75k (single) / $150k (married) for SSTBs.
• Structuring: separate specialized vs. non-specialized lines to preserve the 20% where allowed.

Practical moves

• Revisit entity type and compensation mix.
• Model income within new ranges.
• Track wages/property where those limits apply.

#3 — Lower brackets

Income Shifting: Family Payroll & 21% Corporate Rate

Leverage higher standard deductions and the maintained 21% C-corp rate to route income to lower-tax destinations—when the facts fit.

Family payroll basics

• Standard deduction ~$16,000 (single), $31,500 (MFJ) can absorb wages (if no other income).
• Owner deducts wages; work must be bona fide and reasonable.
• Keep time sheets, duties, and pay records.

21% C-corp planning

• Consider a C-corp or management C-corp when profits stay to fund growth.
• Avoid double tax: plan salaries vs. dividends; keep comp reasonable.
• Most useful if you’re otherwise in the 35–37% personal bracket.

#4 — Double benefit

100% R&D Expensing + R&D Credit

Deduct 100% of qualified R&D costs in the year paid and still claim the R&D credit—coordinated correctly—for bigger net savings.

What counts

• Developing or improving a product, process, technique, formula, or software.
• Costs: employee wages, contractors/agencies, supplies, and related research expenses.

How to capture

• Project lists, experiments/iterations, and engineering notes.
• Time tracking for staff/contractors; segregate qualified vs. general ops.
• Coordinate expensing with your chosen credit calculation method.

#5 — Capital gains play

Opportunity Zones to Defer & Eliminate Gains

Roll eligible gains into a Qualified Opportunity Zone Fund to defer the original gain and, after 10+ years, permanently exclude the OZ investment’s growth.

Timeline callouts

• New rules start in 2027.
• Earlier OZ investments: initial capital gain recognized in 2026 under old rules; 10-year growth exclusion may still apply.
• Invest via a QOF you create or a passive fund—watch compliance tests.

Evaluate

• Deadlines from gain event to funding.
• Asset tests, substantial improvement, reporting.
• Project merits first; tax benefits second.

Disclosure: Educational summary only, not tax advice. Eligibility, thresholds, and dates matter—confirm details for your situation before filing.