Navigating the 2025 Tax Code: What Small Businesses Need to Know
As 2025 unfolds, small business owners face a rapidly shifting tax landscape. With a new presidential administration and evolving federal and state regulations, staying informed isn’t just smart—it’s essential for protecting your bottom line. Understanding these changes now can help you stay compliant, minimize tax exposure, and maximize profitability.
Higher Standard Deductions and Adjusted Tax Brackets
The IRS has raised the standard deduction to $14,600 for single filers and $29,200 for married couples filing jointly, reflecting inflation adjustments. This could influence whether business owners continue to itemize or take the now-larger standard deduction, especially for those with pass-through income structures.
At the same time, federal income tax brackets have shifted upward, slightly reducing tax liability for many earners. This makes 2025 an ideal time to revisit your payroll strategies, estimated payments, and year-end bonuses.
Bonus Depreciation Is Being Phased Out
One major change small businesses can't afford to overlook: bonus depreciation. Previously at 100%, bonus depreciation drops to 60% in 2025, with further annual reductions planned. If you’re considering purchasing major assets like equipment, vehicles, or technology, strategic timing could mean significant upfront tax savings. Don’t miss the window.
QBI Deduction—Use It Before You Lose It
The Qualified Business Income (QBI) deduction—allowing up to a 20% deduction on eligible business income—remains available for sole proprietors, S-corporations, and partnerships. However, it's scheduled to sunset after 2025 unless extended by Congress. Business owners should take this opportunity to review their income strategies, retirement plan contributions, and entity structures while this powerful deduction is still in play.
New Opportunities with State-Level PTE Elections
At the state level, many jurisdictions have implemented new tax reforms, including lower income tax rates in some areas. Even more importantly, pass-through entities (like S-corporations and partnerships) can take advantage of Pass-Through Entity (PTE) tax elections.
By opting into a PTE election, businesses can pay state taxes at the entity level—circumventing the $10,000 federal cap on state and local tax (SALT) deductions. For businesses in high-tax states, this move could result in major savings. A smart 2025 strategy should include evaluating whether a PTE election makes sense for your situation.
Why Proactive Bookkeeping and Tax Planning Matter More Than Ever
Keeping up with tax law changes while running a business is a serious challenge. That's why clean, strategic bookkeeping isn’t just about recordkeeping—it’s a competitive advantage. Accurate financials help you spot opportunities, respond to new tax laws, and work seamlessly with your CPA come filing time.
At Jackson Square Partners, we specialize in helping small businesses turn financial data into strategic action. From optimizing deductions to navigating bonus depreciation and PTE elections, we’re here to help you stay compliant, confident, and positioned for success.
Ready to take control of your 2025 financial strategy?
Contact us today to schedule a consultation—and learn how smarter bookkeeping can power smarter business decisions.