Year-End Tax Planning for Texas Small Businesses (2025)
What to Do Before December 31
Running a business is demanding, but closing the books on the year shouldn’t be. This 2025 year-end tax planning checklist is built for Texas small businesses and owners who want practical steps to reduce taxes, clean up records, and hit January with confidence.
As a Fort Worth CPA firm, we’re here to help you make smart moves before the end of the year with these tax planning tips and map out 2026 with clarity.
What’s new for 2025 (and why it matters before Dec 31)
100% bonus depreciation is back. Thanks to the One, Big, Beautiful Bill (OBBB), qualifying assets placed in service after Jan. 19, 2025 may again be expensed at 100%. This is a powerful lever for Q4 equipment, vehicle, and leasehold-improvement purchases. IRS+2KBKG+2
Section 179 got bigger. For tax years beginning after Dec. 31, 2024, Section 179 expensing allows up to $2.5M with a phase-out starting at $4M in eligible purchases—great for small and mid-sized businesses that invest consistently through the year. Ways and Means+1
Mileage rates changed. The 2025 standard mileage rate for business use is 70¢/mile. Update reimbursement policies and logs now. IRS
Payment-platform reporting (1099-K). For 2025, third-party processors (PayPal, Stripe, etc.) generally issue a 1099-K at $2,500 in payments for goods/services (lower than 2024). Keep clean sales records to avoid mix-ups with personal transfers. IRS
Payroll cap update. The Social Security wage base for 2025 is $176,100—useful for year-end payroll and bonus planning. Social Security
Texas franchise tax note. If your annualized total revenue is ≤ $2.47M, you generally don’t file a No-Tax-Due franchise tax report for 2025, but you still must file a Public or Ownership Information Report. Plan your year-end close accordingly. Texas Comptroller
Your 2025 Texas Small Business Year-End Tax Planning Checklist
Use this year-end planning checklist to capture deductions and tighten compliance before Dec 31.
1) Lock in end-of-year business tax deductions
Time asset purchases (machinery, computers, tools, furniture, qualified improvement property). With 100% bonus depreciation reinstated for qualifying property placed in service after Jan. 19, 2025, Q4 is a prime window. Compare with Section 179 if you want to target specific assets or avoid creating a loss. Model how each option could change your taxable income and potentially your tax bracket before you buy. KBKG+2CohnReznick+2
Prepay eligible expenses (under the 12-month rule) like insurance or software if cash-basis and beneficial to reduce current-year tax bill.
Clean up inventory (write-downs for damaged/obsolete stock) and document year-end counts.
Review repairs vs. improvements (capitalize when required; expense true repairs).
Vehicle strategy: if you use the mileage method, ensure complete logs at 70¢/mile for 2025; if you’ll switch to actual expense, gather receipts now. IRS
2) Tune your payroll and owner compensation
S-Corp reasonable compensation: confirm salary aligns with role and industry; bonus or distribution decisions can reduce exposure.
Coordinate salary and distributions with planned retirement plan contributions to hit your target retirement account funding level
Year-end bonuses: run projections with the $176,100 Social Security wage base in mind to estimate FICA. Social Security
Fringe benefits & accountable plans: reimburse employee/owner expenses before year-end under an accountable plan to keep them non-taxable.
3) Max retirement and health tax advantages
401(k)/SIMPLE IRA deferrals: finalize employee deferrals and employer matches; consider profit-sharing add-ons. Higher deferrals can lower income tax for 2025.
SEP IRA (if applicable): you can fund up to the filing deadline, but decide the strategy before Dec 31 for cash planning.
HSAs & FSAs: true-up contributions and remind staff of use-it-or-lose-it rules where applicable.
4) Sales tax and Texas-specific clean-up
Reconcile Texas sales tax filings for the year; fix any rate or sourcing issues.
Resale/exemption certificates: verify and retain for at least four years; refresh expired or incomplete certificates. Texas Comptroller+1
Franchise tax readiness: if 2025 revenue likely exceeds $2.47M, prep for the May 15 filing; if under, plan to file the required PIR/OIR only. Texas Comptroller
5) Information returns: 1099s, W-9s, and platforms
Collect W-9s from vendors now (contractors, attorneys, landlords).
Map payments to 1099-NEC/MISC rules and your accounting software.
Expect 1099-Ks at $2,500 for platform sales; reconcile platform reports to your GL to prevent double-counting. IRS
6) Bookkeeping closeout for a smoother tax season
Bank/credit card reconciliations through Dec 31.
A/R and A/P aging: write off bad debts, chase collections, and clear old vendor credits.
Fixed asset rollforward: ensure purchases, disposals, and bonus/§179 elections are documented.
Entity minutes & agreements: update ownership, loans to/from owners, and accountable plan policies.
End-of-Year Business Tax Deductions: High-impact 2025 moves to reduce your tax liability
Equipment & improvements: Q4 purchases placed in service can qualify for 100% bonus depreciation or §179 expensing, potentially creating or increasing a loss you can use strategically. Model AMT and state effects first. Compare scenarios to see which path lowers income tax and simplifies your tax return. KBKG+1
Software & subscriptions: often deductible when paid (cash basis).
Marketing & training: lock in deductible investments that set up next year’s growth.
Charitable contributions (C-corps) or via owners: confirm limits and substantiation.
Work with a Fort Worth CPA who plans ahead
From equipment expensing and cash-flow timing to payroll, 1099s, and Texas franchise tax, our tax professionals make the complex manageable—so you can focus on the business.
Schedule your free consultation with David Hecht to review your 2025 plan. We’ll walk you through your options, model the tax impact, and handle the filings—together.
This article provides general guidance. Always consult your tax advisor about your specific situation.