What’s New for 2025 Business Tax Returns

By Katie McClintock, CPA

McClintock & Associates CPA

Business owners heading into the 2025 tax year (filed in 2026) are facing a tax landscape that continues to evolve. Recent federal changes have created new opportunities for deductions and planning—but also added complexity that can easily lead to missed benefits or costly mistakes if not handled correctly.

Below is an overview of several important developments affecting 2025 business tax returns and why proactive planning matters more than ever.

1. Full Bonus Depreciation Returns

For businesses investing in equipment, machinery, or other qualifying property, there is welcome news. Certain assets placed in service during 2025 may again qualify for 100% bonus depreciation, allowing the full cost to be deducted in the first year rather than spread out over time.

This can significantly reduce taxable income for businesses making capital investments. However, timing, asset classification, and interaction with other deductions all matter—making professional guidance essential before large purchases are made.

2. Higher Section 179 Expensing Limits

Section 179 continues to be a powerful tool for small and mid-sized businesses. For 2025, the maximum amount that can be immediately expensed has increased, with a higher threshold before phase-outs begin.

This means businesses purchasing qualifying property may be able to deduct a substantial portion of those costs right away, improving cash flow. Strategic planning is key, as Section 179 elections must be made carefully to avoid unintended consequences in future tax years.

3. Immediate Deduction of Research and Development Costs

Businesses engaged in product development, software creation, or process improvement may benefit from changes to how research and experimental expenses are treated. Certain domestic R&D costs may now be deducted in the year incurred rather than amortized over several years.

This shift can provide meaningful tax relief for innovative companies—but documentation and proper classification remain critical to support the deduction.

4. More Favorable Business Interest Expense Calculations

For some businesses, interest expense deductions may be more generous in 2025 due to adjustments in how adjusted taxable income is calculated. By excluding certain depreciation and amortization amounts, eligible businesses may be able to deduct a larger share of their interest costs.

This is particularly relevant for growing businesses that rely on financing, but eligibility rules can be complex and vary by entity type.

5. Expanded Opportunities for Qualified Small Business Stock (QSBS)

Owners and investors in qualifying small businesses may see expanded tax benefits tied to how long stock is held. New holding-period thresholds may allow for partial or full exclusion of gains when stock is sold, depending on timing and structure.

QSBS rules are highly technical, and planning must occur well before a sale or exit to take advantage of these benefits.

6. Ongoing Considerations for Pass-Through Entities

While the state and local tax deduction cap primarily affects individuals, changes in the tax environment continue to influence how pass-through entities—such as S corporations and partnerships—are taxed at the owner level. Entity-level elections and planning strategies may help mitigate limitations when properly implemented.

This is another area where one-size-fits-all tax preparation often falls short.

7. Why Business Structure Still Matters

Your choice of business entity—LLC, S corporation, or C corporation—continues to play a major role in how income is taxed, how deductions apply, and how payroll and distributions are handled. The right structure can reduce overall tax liability, while the wrong one can increase it year after year.

Regular review of your entity structure is especially important as laws change and businesses grow.

How a CPA Adds Value Beyond Filing

With these changes, business owners benefit most from working with a CPA who provides year-round planning, not just tax return preparation. A qualified CPA can help you:

• Identify deductions and credits you might otherwise miss

• Plan the timing of purchases and expenses

• Maintain clean, audit-ready books

• Evaluate entity structure and compensation strategies

• Reduce tax liability while staying fully compliant

Tax law changes can create opportunity—but only when applied correctly and intentionally.

Ready to Prepare for 2025?

At McClintock & Associates CPA, we focus on personalized service and proactive guidance. If you’re looking for a CPA who takes the time to understand your business and help you keep more of what you earn, we’re here and accepting new clients.

Planning now can make all the difference when filing season arrives.