Not all “business” expenses are tax deductible
With 2025 in the rear view mirror and the tax filing deadline on the road ahead, it’s a good time for businesses to start gathering information about their deductible expenses for 2025. But what’s deductible (and what’s not) might not be as clear-cut as you think. Most business deductions aren’t specifically listed in the Internal Revenue Code (IRC). The general rule is what’s stated in the first sentence of IRC Section 162, that you can write off “all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.” In addition, you must be able to substantiate the expenses. We can help you determine what you can deduct on your 2025 tax return.
What business owners should know about debt restructuring
Debt commonly helps small and midsize businesses fund startup costs, growth, equipment purchases and cash flow. Problems typically arise not because debt exists, but because its terms no longer align with operational realities. If your business encounters such trouble, consider debt restructuring. It involves discussing reasonable solutions with lenders, such as extending repayment periods, modifying payment schedules or consolidating multiple loans. Although often associated with financial distress, restructuring can also be used strategically by healthy businesses to facilitate long-term sustainability. Contact us for help assessing its implications and exploring alternatives.
Consider these issues before providing (or reimbursing) mobile phones
Employees often appreciate receiving mobile phones or reimbursements for business-related personal phone costs. But what seems like a simple fringe benefit can introduce security threats, productivity challenges and tax implications. For example, to help ensure the IRS treats work-issued phones as a nontaxable fringe benefit, you must provide them “primarily for noncompensatory business purposes.” Make sure phones are fully protected against cyberthreats and employees understand when and how they’re allowed to use their phones, particularly when accessing company data. Contact us to discuss potential equipment cost, tax and security issues.
If you suffered a disaster, you may be eligible for a casualty loss tax deduction
Every year, many taxpayers experience damage to their homes or personal property from storms, floods, wildfires or other disasters. For 2025 income tax returns due April 15, 2026, personal casualty loss deductions are generally limited to those due to federally declared disasters. But, effective for losses occurring on or after Jan. 1, 2026, eligible disasters also include certain state-declared disasters. Even when the cause of a loss qualifies you for the deduction, additional limits apply. For example, your deduction is reduced by insurance proceeds received, a 10% of adjusted gross income floor applies, and you must itemize deductions. Contact us for help determining if you’re eligible.
Unite your company’s sales team around a USP
A unique selling proposition (USP) is a clear, concise statement that explains the distinct value of your products or services and why customers should choose your business over the competition. Developing a strong USP requires thoughtful internal discussion and a keen understanding of competitors. A certain amount of “competitive intelligence gathering” may be necessary. Once defined, your USP should guide not only sales conversations but also marketing, customer service and operational decisions. You can measure its impact through metrics, such as conversion rates and sales cycle length. Contact us for help evaluating the financial impact of your USP and measuring its effectiveness.
Changes to charitable donation deductions are on the horizon
Changes to charitable donation deductions are on the horizon. Beginning in 2026, if you itemize deductions, your otherwise allowable charitable deductions will be limited to the amount that exceeds 0.5% of your 2026 adjusted gross income. In addition, if you’ll be in the 37% income tax bracket, your tax benefit generally will be as if you were in the 35% bracket. If you’ll be affected, you may want to accelerate donations into 2025 and then bunch donations into alternating years. But if you claim the standard deduction, in 2026 you can potentially benefit from a new charitable deduction for nonitemizers of up to $1,000 ($2,000 for married couples filing jointly). Contact us to learn more.
Significant changes to information reporting go into effect for the 2026 tax year
If your business has employees or independent contractors, you’re subject to various information reporting requirements. Some significant changes to these rules will go into effect for the 2026 tax year (forms that will be filed in early 2027 to report 2026 amounts). Specifically, new reporting will be required to help employees and others claim tax deductions for qualified tips income and qualified overtime income. But there also will be some reporting relief for businesses. Effective for payments made after 2025, the reporting threshold for filing Form 1099-MISC and Form 1099-NEC will increase to $2,000 (from $600 for 2025), with inflation adjustments for payments made after 2026.
New law eases the limitation on business interest expense deductions for 2025 and beyond
Interest paid or accrued by a business can be deductible for federal tax purposes. But for larger businesses, the deduction is generally limited to 30% of adjusted taxable income (ATI). Now, for tax years beginning in 2025 and beyond, ATI will be computed before any deductions for depreciation, amortization or depletion. This change more closely aligns the ATI definition with the financial accounting concept of earnings before interest, taxes, depreciation and amortization (EBITDA) and increases ATI, thus increasing allowable deductions for business interest expense. The rules are complicated. If your business may be affected, contact us. We can help assess the impact.
Businesses should carefully contemplate their cybersecurity budgets
As your business grows, a strong cybersecurity budget is essential to mitigate risk. To determine how much to spend, first review your technological environment. Define how your systems are structured and managed, identify protections in place, and evaluate whether past issues indicate vulnerabilities. Most companies budget for recurring costs (such as software subscriptions and external support) as well as periodic enhancements to address new threats and evolving technology. Adding cybersecurity as a dedicated line item in your annual budget helps keep spending predictable and aligned with your strategic objectives. Contact us for help developing or reviewing your cybersecurity budget.
Checking off RMDs on the year-end to-do list
If you’re age 73 or older and have one or more tax-advantaged retirement accounts or you’re younger and have inherited such an account, you may need to take required minimum distributions (RMDs) by Dec. 31. If you don’t comply, you can owe a penalty equal to 25% of the amount you should have withdrawn but didn’t. (If the failure is corrected in a “timely” manner, the penalty drops to 10%.) The RMD rules can be confusing, especially if you’ve inherited a retirement account. If you’re subject to RMDs, it’s also important to accurately calculate your 2025 RMD. We can help ensure you’re in compliance. Please contact us today.