2025 Business Deductions & Tax Credits Checklist

2025 Business Deductions & Tax Credits Checklist

1. Business Expense Deductions

• Home Office Deduction
  • Track the percentage of your home used for business purposes (deduct expenses like rent, utilities, and insurance accordingly).
• Vehicle Expenses
  • Keep a log of business miles traveled for tax purposes (mileage rate or actual expenses such as gas, insurance, and repairs).
• Business Travel
  • Airfare, train, or car rental expenses for business trips.
  • Lodging, meals, and incidental expenses incurred during travel.
• Supplies and Equipment
  • Office supplies (pens, paper, etc.).
  • Office furniture, computers, phones, software, and other equipment.
• Advertising & Marketing
  • Costs of advertising, including online marketing, print ads, promotional materials, and website costs.
• Interest on Loans
  • Interest paid on business loans and credit cards used for business purposes.
• Insurance Premiums
  • Business insurance (general liability, property, and workers' compensation).

2. Employee-Related Expenses

• Employee Salaries & Wages
  • Track salaries, bonuses, and commissions for employees.
• Employee Benefits
  • Health insurance premiums for employees and their families.
  • Retirement plan contributions (e.g., 401(k), SIMPLE IRA, SEP IRA).
  • Employee education or training programs.
• Contractor Payments
  • Payments made to independent contractors (1099s).

3. Business Rent and Utilities

• Business Rent
  • Rent paid for office space, retail space, or any business property.
• Utilities
  • Utilities for your business (electricity, water, internet, phone service).

4. Depreciation and Cost Recovery

• Accelerated Depreciation
  • Take advantage of accelerated depreciation methods such as Section 179 or Bonus Depreciation to deduct the full cost of qualifying property in the year it was purchased (up to certain limits).
  • Section 179 allows you to deduct the cost of certain assets, such as equipment, vehicles, and software, in the year of purchase (up to the annual limit).
  • Bonus Depreciation allows you to deduct a larger portion of the asset cost in the year it's placed in service, especially useful for larger capital expenditures.
• Cost Segregation
  • A Cost Segregation Study breaks down the cost of your property into different categories (e.g., personal property vs. real property). This allows you to accelerate depreciation deductions and reduce taxable income, freeing up cash for your business.

5. Tax Credits

• Research and Development (R&D) Tax Credit
  • If your business engages in developing new or improved products or processes, you may qualify.
• Work Opportunity Tax Credit (WOTC)
  • Credit for hiring employees from certain target groups (veterans, long-term unemployed, etc.).
• Small Business Health Care Tax Credit
  • If you provide health insurance to your employees, you may qualify for this credit.
• Energy Efficient Commercial Buildings Tax Deduction (Section 179D)
  • If your business installs energy-efficient systems or upgrades to the building, you may be eligible for deductions or credits.
• Disabled Access Credit
  • Credit for businesses that incur expenses to make their physical facilities accessible to persons with disabilities.
• Employer-Provided Childcare Credit
  • Credit for providing childcare assistance to employees.

6. Retirement Tax Credits

• Retirement Plan Credit
  • Small businesses can receive a tax credit of up to $5,000, for three years, of the costs to set up retirement plans for employees (e.g., 401(k), SIMPLE IRA).
• Retirement Savings Contributions Credit
  • Businesses offering retirement plans can help employees benefit from plan contributions made to a defined contribution plan, SEP or SIMPLE IRA plan, which incentivizes employees to save for retirement. The credit is a percentage of contributions made to retirement plans, such as 401(k)s or IRAs.
  • Saver’s Credit (individuals): take a tax credit for making eligible contributions to your IRA or employer-sponsored retirement plan.  Retirement plan participants (including self-employed individuals) who make contributions to their plan may qualify for the retirement savings contribution credit. The maximum contribution eligible for the credit is $2,000.

7. Miscellaneous Business Deductions

• Professional Services
  • Fees paid to accountants, consultants, legal professionals, etc.
• Bank Fees
  • Monthly fees, transaction fees, and other charges related to business bank accounts.
• Meals (50% Deduction)
  • Deduct meals related to business, but only 50% of the cost is deductible.
• Licensing and Professional Fees
  • Any required licenses or certifications needed to operate your business.

8. Other Considerations

• Net Operating Loss Carryforward
  • If your business operates at a loss, you may be able to carry it forward to offset future taxable income.

Final Notes:

• Documentation: Ensure you keep detailed records of all expenses and receipts related to your business activities, as well as any contracts or agreements related to tax credits.
• Tax Law Updates: Stay informed about changes in tax laws that may affect your eligibility for deductions or credits.
• Work with a CPA: It’s always a good idea to consult a tax professional or CPA to make sure you’re taking full advantage of available deductions and credits.