3 tax measures that entrepreneurs must make before 2025 ends

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The clock is ticking for entrepreneurs to take full advantage of the new changes in tax legislation. With the introduction of the One Big Beautiful Bill Act important updatesthere’s never been a better time to rethink your tax strategy.

Here are three actions I recommend every entrepreneur take in the fourth quarter.

Related: I work with high-earning entrepreneurs – this end-of-year practice prevents money problems

1. Check your entity structure

Choosing the wrong entity structure is the biggest mistake I see investors and entrepreneurs make. Fortunately, these mistakes are not irreversible. In fact, I’ve seen entrepreneurs save $100,000 or more just by making a strategic change. With recent changes in tax law, it’s more important than ever to take a closer look at this fundamental part of your business.

The government taxes your company in one of the following three categories:

• As a corporation (a C corporation or an S corporation)
• As a partnership (general or limited)
• As a sole proprietorship

The right choice depends on how you run your business, how you pay yourself and whether you reinvest profits or withdraw money regularly.

AC Corporation is a great option for entrepreneurs who want to keep their company’s money in the business. The corporate tax rate amounts to only 21%significantly lower than most personal income tax rates, and is expected to remain that way permanently.

If, like many small business owners, you need to generate income from your business, a C corporation is probably not your best choice. First, the company pays tax at the rate of 21%. Then you essentially pay double tax by paying your income tax rate on any benefits you receive.

For entrepreneurs who regularly take money out of their businesses, pass-through entities, including sole proprietorships, partnerships and S corporations, are often the better choice. These entities “pass through” their income to the owner’s personal tax return, avoiding the double taxation of a C corporation.

The new tax law marked a major win for pass-through entities by creating the 20% qualified business income deduction permanently. However, there are some important limitations to the QBI deduction. It is linked to wages paid by the company and is gradually phased out for high-income earners. So you should work closely with your CPA or tax advisor to ensure that your business is structured and operated in a way that maximizes your benefit.

Before the end of the year, review the structure of all your taxable entities with your CPA. There is time to make adjustments as needed, and even add new entities if that makes sense for your goals.

2. Use bonus depreciation strategically to maximize tax savings

Bonus depreciation is a powerful tool that governments use to encourage companies to invest in certain assets. This allows business owners to deduct a greater portion of the purchase price of qualifying assets in the year they are acquired, rather than spreading the deduction over the useful life of the asset.

Before President Trump signed the One Big Beautiful Bill Act on July 4, the bonus was set to be written off only 40% in 2025 and sunset in 2027. The best news for business owners in the legislation is that the 100% bonus depreciation is back for eligible properties acquired and put into service after January 19.

If you have invested in real estate, bonus amortization becomes even more valuable when combined with cost segregation.

With a good cost segregation analysis, you can take 100% bonus depreciation on the parts of your property that have a shorter lifespan. This can give you a huge tax deduction the year you purchase a property, creating significant tax savings that you can use for other investments.

I work with many real estate investors through my tax education company WealthAbility®, and I am constantly surprised by the number of people who avoid cost segregation because they think it will cause problems with the IRS. That’s just not the case. If you do this correctly, cost segregation will allow you to properly depreciate your investment properties.

Make sure you work closely with both your tax advisor and a cost segregation expert. You want to be sure that the analysis is done correctly and that you reduce your taxable income as much as possible without creating an excessive net operating loss that you cannot use to offset future income. Getting started on this before the end of the year will give you more time to strategically plan your future purchases and deductions for 2025, 2026 and beyond.

Related: These Are the Smartest Tax Strategies in 2025, According to a CPA

3. Take a close look at your state and local income taxes

Since the passage of the Tax Cuts and Jobs Act of 2017, business owners living in high-tax states have felt the pain of a $10,000 cap on state and local tax deductions.

Thanks to the new tax legislation, entrepreneurs can… SALT deduction of up to $40,000 in 2025, depending on their adjusted adjusted gross income. The deduction will increase to $40,400 in 2026 and to 1% each year until 2030, when the deduction will drop to $10,000. It’s a welcome change, but it still requires careful analysis to ensure you pay the lowest tax necessary.

When the federal government reduced the SALT deduction, almost all states with an income tax created “workarounds” that allowed passing entities to pay state taxes at the entity level so that the state tax could be deducted as a business expense, just as corporations can.

Because these solutions are still in placeyou’ll want to rerun your numbers to ensure you’re making the optimal choices this year. Depending on your personal tax situation, the solution may still give you a better benefit than the SALT deduction.

Your action points for the fourth quarter

Make sure you fully review your tax strategy and make any necessary adjustments in a timely manner so that you can reap the full benefits of the recent changes in tax law. Schedule a meeting with your CPA or tax advisor to review these three points and your overall tax strategy. Ask them to run through all the numbers so you can make an informed decision. And of course, include your short- and long-term business and personal objectives in your analysis.

By prioritizing this work in the fourth quarter, you’ll set yourself up for greater financial success, both for this fiscal year and for years to come.