Podcasts

Empowering Healthy Business Podcast Episode 51 : New Developments Impacting 2025 Year-End Tax Planning with Greg Reed

Business owner meeting with CPA to review 2025 year-end tax planning options
November 11, 2025 by Calvin Wilder in Articles

If you’re a business owner heading into Q4, 2025 year-end tax planning should be on your calendar. In this episode of the Empowering Healthy Business podcast, host Calvin Wilder sits down with Greg Reed, Head of Tax at SmartBooks and a Certified Tax Coach, to unpack several changes and planning angles that could affect your 2025 return—and what to line up before December 31. Below is a practical recap, translated from CPA-speak into plain English so you can take action with your advisor.

What’s most actionable for 2025 year-end tax planning

100% bonus depreciation is back (with timing caveats)

For owners purchasing equipment, machinery, computers, or qualifying vehicles, 100% bonus depreciation makes a big comeback in Greg’s playbook. Unlike Section 179 (which can’t create a taxable loss), bonus depreciation can push your business into a loss—useful if you need the deduction this year.
Key nuances Greg highlights:

  • You still need to watch basis limits for S-corps/LLCs; a paper loss won’t pass through without basis.

  • You can decide at filing time whether to use bonus, 179, or regular depreciation—handy if your year-end numbers change.

  • Retroactive rules may include specific effective dates tied to when property was acquired and placed in service; delivery dates and contract timing matter. Bring invoices, contracts, and delivery docs to your CPA so they can apply the right percentage.

Action: If you expect strong profits—or want to create a loss—review pending asset purchases now. Confirm whether bonus or 179 delivers the better outcome after basis, passive limits, and state rules.

SALT, PTET, and the shifting personal deduction picture

SALT cap relief (temporarily higher)

The state and local tax (SALT) deduction cap that sat at $10,000 for years is moving higher in the coming years in Greg’s framework—up to $40,000 for a limited window. That’s meaningful for owners in high-tax states with significant income and property taxes. It may nudge some filers back into itemizing instead of taking the standard deduction.

Pass-Through Entity Tax (PTET) still matters

Many states now allow pass-throughs (S-corps/partnerships) to pay certain owner taxes at the entity level, generating a federal deduction and an offsetting owner credit on the personal return. Greg’s rule of thumb: for many successful owners, PTET still pencils out, even with a higher SALT cap—run both scenarios.

Action: If you’re in a high-tax state, model PTET vs. personal SALT under the new cap and lock in estimated payments appropriately.

Looking ahead to 2026: QBI change and 1099 relief

QBI deduction slated to increase to 23% (starting 2026)

Pass-through owners have lived with the Qualified Business Income (QBI) deduction at 20%. Greg notes a scheduled increase to 23% in 2026—positioning pass-throughs more favorably versus C-corps. While not a 2025 change, it’s worth including in multi-year planning.

1099 threshold rising (but not for 2025 filings)

That frustrating $600 Form 1099-NEC/MISC threshold finally gets relief, moving to $2,000—but after the 2025 filing season. For forms you issue in January 2026 for 2025 payments, the $600 rule still applies.

Action: Keep issuing 2025 1099s at the $600 threshold; plan for the higher threshold in 2026 and beyond.

A big fix for innovators: R&D expense treatment

Back in 2021, businesses were forced to amortize R&D costs over multiple years rather than deduct them upfront. Greg flags a welcome correction: businesses may be able to retroactively expense those R&D costs (via amended returns) or elect to expense them in 2025 and/or 2026.

Why this matters:

  • Product-focused companies that showed book losses but taxable income due to R&D add-backs could reclaim cash with amended returns.

  • You’ll need clean support: project records, payroll allocations, vendor invoices, and clear definitions of qualifying R&D.

Action: Pull 2021–2024 R&D detail. Ask your CPA to model (1) amending prior years vs. (2) expensing in 2025/2026 to find the best cash outcome.

A niche but massive. write-off window for builders and makers

If you construct a manufacturing, production, or refining facility—not an office or rental—the discussion highlights a 100% write-off of the building’s cost for projects that break ground between 2026–2031 and are placed in service by 2031. Greg emphasized there are lots of “gotchas,” definitions, and documentation requirements here. But when it fits, it’s a game-changer versus the normal 39-year building life.

This can cover more than heavy industry; think coffee bean roasting or other refining steps that transform an input into a new product.

Action: If you’ve been considering your own plant or production space, start feasibility work now. The calendar matters, and design choices will need to align with “manufacturing/production/refining” definitions.

Put it together: your 2025 tax planning checklist

  • Schedule a planning meeting now. Don’t wait until February. Ask for a projection (what you’ll owe) and a plan (how to reduce it).

  • Decide on asset strategy. Price and order qualifying equipment if bonus depreciation or 179 will help. Keep delivery and in-service timing tight.

  • Evaluate PTET vs. SALT itemizing. Run both paths to maximize your combined federal/state outcome.

  • Aggregate R&D documentation. Have your CPA model amended returns vs. 2025/2026 expensing.

  • Review entity structure. With QBI changes on the horizon and differing cash goals, revisit S-corp vs. partnership vs. C-corp for the next 5–10 years—not just 2025.

  • Tighten 1099 processes. For 2025 payments, the $600 threshold still applies; update vendor W-9s now.

Conclusion: Meet early, model options, lock moves before 12/31

Effective 2025 year-end tax planning is about sequencing and documentation—what you buy, when it’s delivered, how your state handles PTET, and how multi-year choices (like R&D expensing) ripple through cash and tax. Greg Reed’s advice is simple: book a planning session before year-end, get a projection on paper, and choose the levers that actually move your number down.

If you want help modeling these scenarios, you can reach Greg via the SmartBooks website and get on his calendar. Even if 2025 is a lower-income or loss year, planning now sets you up for stronger, more predictable results in 2026.

Want to go deeper? Listen to the full conversation on the Empowering Healthy Business Podcast