9 Tax Planning Strategies To Know for 2025

Every year brings changes to the tax code, and 2025 is no exception. Each year, the IRS adjusts more than 60 tax provisions for inflation, including tax brackets, contribution limits for retirement accounts, and standard deductions. Understanding these updates—and how they impact your business structure, income level, and tax obligations—is key to protecting your bottom line.

Here are nine practical strategies to consider this year, especially if you’re a small business owner juggling multiple tax obligations.

What To Consider During Strategic Tax Planning

Before we dive into the details, let’s talk about what strategic tax planning really means. At its core, it’s about being proactive instead of reactive—making decisions during the year that reduce your overall tax burden, not scrambling after the fact.

This means looking at your entire financial picture: your business structure, income sources, retirement accounts, investment portfolio, and even your charitable giving plan.

In 2025, the IRS has made inflation adjustments that affect many of these areas. Tax brackets are shifting slightly higher, the standard deduction is increasing ($14,600 for single filers and $29,200 for married couples filing jointly), and contribution limits are rising for many retirement and tax-advantaged accounts. All of that creates new opportunities for tax savings—if you know where to look.

So, here’s what you need to focus on when it comes to tax planning in 2025.

1. Understand Your Tax Bracket

Knowing your tax bracket helps you figure out what percentage of your income goes to the IRS. It also highlights key tipping points—spots where even a small boost in income could push you into a higher bracket and raise the tax rate on your ordinary income.

For 2025, the seven federal tax rates remain unchanged (10% to 37%), but the income thresholds have moved. For example, single filers move from the 24% to 32% bracket at $197,300. Married couples hit that same jump at $394,600. If your business has a strong year and your adjusted gross income (AGI) puts you close to one of those lines, tax strategies like timing expenses or shifting income can make a meaningful difference.

2. Maximize Your Retirement Contributions

Retirement accounts offer some of the best tax advantages available. For business owners, there are even more ways to build retirement wealth while trimming down taxable income.

Here are the 2025 contribution limits:

• 401(k), 403(b), and most 457 plans: $23,500 (+$7,500 catch-up if you’re 50+)
• SIMPLE IRA: $16,500 (+$3,500 catch-up)
• SEP IRA: Up to $70,000 or 25% of compensation (whichever is less)
• Traditional IRA and Roth IRAs: $7,000 (+$1,000 catch-up if you’re 50+)

Traditional retirement accounts use pre-tax contributions, which reduce your taxable income now. Roth IRAs are funded with after-tax contributions, but your withdrawals in retirement are tax-free. Both have strategic uses depending on your current bracket and your expected future income.

If you’re self-employed or run a small team, setting up a SEP or SIMPLE IRA can also provide tax benefits for the business and help you attract quality employees.

3. Leverage Business Deductions

Every deductible dollar is a dollar that doesn’t count toward your taxable income. That’s why it’s so important to stay on top of what qualifies as a legitimate business expense—and what doesn’t.

Common tax deductions for small business owners include:

• Office rent and utilities
• Equipment and software
• Business meals and travel
• Marketing and advertising costs
• Health insurance premiums
• Qualified retirement plan contributions
• Payroll and contractor payments

If you’re using your personal vehicle or home for business purposes, you may be eligible for mileage or home office deductions as well.

The key is documentation. Keep clean records, separate business and personal finances, and revisit your write-offs regularly. Missing even a few deductions can increase your tax bill significantly.

4. Use Tax-Advantaged Accounts

Beyond retirement savings, there are other tax-advantaged accounts that can ease your tax burden while helping you plan for future expenses.

Two worth exploring:

• Health Savings Accounts (HSAs): Available if you have a high-deductible health plan. Contributions are pre-tax, grow tax-free, and can be withdrawn tax-free for qualified medical expenses. That’s a triple tax benefit.
• Flexible Spending Accounts (FSAs): Let you set aside pre-tax dollars for health or dependent care expenses. Unlike HSAs, FSAs are usually “use it or lose it,” so planning is critical.

These accounts can reduce your adjusted gross income, which may also help you qualify for other tax benefits or avoid phaseouts.

5. Take Advantage of Tax Credits

Tax deductions reduce your taxable income. Tax credits reduce your actual tax bill, dollar-for-dollar, which makes them especially powerful.

Some credits to keep in mind:

• Child Tax Credit: Up to $2,000 per child (with $1,700 refundable in 2025)
• Earned Income Tax Credit: Based on income and number of dependents
• Education Credits: Like the American Opportunity Credit and Lifetime Learning Credit
• Energy Efficiency Credits: For home upgrades, solar panels, and electric vehicles
• Small Business Credits: For providing healthcare, hiring employees from target groups, or investing in clean energy

The rules around credits can be complicated, especially when it comes to phaseouts or income limits. A tax advisor can help you claim the ones you’re eligible for—and avoid mistakes that could trigger an audit.

6. Review Your Investment and Wealth Management Strategy

Capital gains taxes can sneak up on you if you’re not paying attention. Selling stocks, property, or even crypto can trigger gains taxed at either short-term (ordinary income) or long-term rates.

Here’s how to plan smarter:

• Hold investments for at least a year to qualify for long-term capital gains tax rates (0%, 15%, or 20%, depending on income)
• Harvest losses to offset capital gains—selling underperforming investments strategically
• Watch the timing of large transactions, especially if they could push you into a higher bracket or impact your eligibility for tax credits

If you’re nearing retirement, selling a business, or managing multiple assets, now’s the time to get a second opinion on your overall wealth strategy. Tax laws change, and what worked five years ago may not work anymore.

7. Plan for Major Life Changes

Big life events often come with big tax consequences. Don’t wait until tax season to figure out how they’ll affect your return.

Here are some common changes to plan around:

• Getting married or divorced
• Having a child or adopting
• Buying or selling a home
• Starting or selling a business
• Retiring or moving to a new state

All of these impact your filing status, income taxes, tax deductions, and credit eligibility. Planning ahead lets you shift timing, maximize tax benefits, and avoid unpleasant surprises.

8. Plan Your Charitable Contributions

Giving back feels good—and it can also come with meaningful tax benefits when done strategically.

If you itemize your deductions, charitable gifts to qualified nonprofits are generally deductible based on the fair market value of the donation. This applies to both cash and non-cash contributions (like equipment, inventory, or property). Be sure to get receipts and, for larger donations, the required documentation.

Other ways to give smart:

• Donor-Advised Funds: Let you bundle charitable donations for a larger deduction now, while distributing funds over time
• Qualified Charitable Distributions (QCDs): For those over age 70½ with IRAs, a direct transfer to a charity can satisfy required minimum distributions and avoid adding to taxable income

Even if your business isn’t a large donor, small, consistent giving can still add up to savings if structured correctly.

9. Work with a Tax Advisor

Tax software is great for filing. But it won’t tell you what you’re missing—or how to legally, morally, and ethically reduce your tax liability in the first place.

Working with a tax strategist gives you:

• A custom plan for your financial goals
• Guidance on how to navigate complex tax laws
• Year-round support for major decisions
• Peace of mind when the IRS comes calling

And at OTB Tax, that’s exactly what we offer. Our approach goes beyond preparing returns. We look for ways to free up money, take advantage of every available tax break, and protect your personal assets along the way.

Reduce Your Tax Burden With Proactive Tax Planning Strategies

No one wants to overpay the IRS—but many business owners do, simply because they didn’t plan ahead. The tax code offers plenty of legal tools to reduce your tax bill, increase after-tax dollars, and protect your cash flow. The key is knowing how to use them.

Don’t leave money on the table. A few smart moves now can make a big difference next spring—and for years to come.

Need help building a plan that works for your specific situation? Get in touch today to schedule a consultation with a tax professional who understands your business.