4 types of interest expense you may be able to deduct
Personal interest expense generally can’t be deducted for federal tax purposes. But there are exceptions. You probably know that home mortgage interest may be deductible if you itemize deductions rather than claiming the standard deduction. New for 2025 through 2028, you may be eligible to deduct up to $10,000 of car loan interest if the vehicle’s “final assembly” was in the U.S. and other requirements are met. But the deduction phases out starting at $100,000 of modified adjusted gross income ($200,000 for married couples filing jointly). Other potential interest expense deductions are student loan interest and investment interest. Contact us with any questions.
What’s your potential business vehicle deduction?
If you used one or more vehicles in your business during 2025, you may be eligible for valuable tax deductions on your 2025 income tax return. But the rules are complicated, and your deductions may be affected by factors such as the vehicle’s weight and business vs. personal use. The year you place a car, SUV, van, pickup or panel truck in service, you can choose to deduct the actual expenses (such as gas, insurance, repairs and registration fees) and depreciation attributable to your business use of the vehicle or claim the cents-per-mile deduction (with a depreciation allowance built into it). Heavier vehicles may be eligible for larger deductions. Contact us if you have questions.
ABCs of customer profitability
Not every customer relationship adds value to your business. One way to assess where to focus your time and resources is to look at customer level profitability. Identify the most and least profitable customers based on their purchase history and needs. Then assign them grades: “A” for the best customers you want to retain and grow, “B” for those with positive contributions and growth potential, and “C” for customers that aren’t profitable yet require substantial resources. Try shifting attention away from C and towards A and B customers. If many of your customers fall into the C group, it might be time for broader strategic changes. Contact us for help.
Parents: Claim all the tax credits you’re entitled to
Raising a family comes with plenty of expenses, but it may also make you eligible for various tax breaks. Some of the most valuable are tax credits, because they reduce your tax liability dollar for dollar (unlike deductions, which only reduce the amount of income subject to tax). Which credits might you be eligible for on your 2025 return? The child credit, credit for other dependents, child and dependent care credit, adoption credit, American Opportunity credit and Lifetime Learning credit are some of the possibilities. But various rules and income-based limits apply. We can help ensure you maximize your tax savings from these and other tax breaks you’re eligible for.
Deferring taxes on advance payments
If your business uses the accrual method of accounting and received advance payments in 2025, you may be able to defer reporting some or all of that income until 2026 for federal tax purposes. An advance payment is one received by a business before it provides whatever is being paid for. Examples of advance payments that may be eligible for this favorable tax treatment include payments for services, the sale of goods, gift cards, the use of intellectual property, the sale or use of computer software, warranty contracts and subscriptions. But complicated rules apply. Contact us for help determining if your business is eligible to defer 2025 advance payments.
To maximize — or not to maximize — depreciation deductions on your 2025 tax return
Claiming the maximum depreciation deductions you can on your 2025 income tax return will generally provide the greatest 2025 tax savings. But sometimes it may be better to depreciate business assets over a period of years, such as if you expect to become subject to higher tax rates. If you claim 100% bonus depreciation or Sec. 179 expensing today, you’re eliminating future depreciation deductions for those assets. And deductions save more tax when tax rates are higher. We can identify which depreciation breaks you’re eligible for, review your overall tax situation and help determine whether you should maximize depreciation-related breaks on your 2025 return. Contact us to get started.
Quadrupled SALT deduction limit means more taxpayers will benefit from itemizing on their 2025 returns
One big decision to make when filing your individual income tax return is whether to claim the standard deduction or itemize. Itemizing saves tax if total itemized deductions are larger than the standard deduction. If you paid more than $10,000 in state and local taxes (SALT) last year, you might save tax by itemizing on your 2025 return even if claiming the standard deduction has saved you more tax in recent years. This is because of a tax law change that increased the SALT deduction limit to $40,000 for 2025 ($20,000 for married couples filing separately). But an income-based limit could reduce your SALT deduction. We can assess the impact of the SALT limit change on your tax situation.
Where should you hold your company retreat?
When you plan a company retreat, one of the first things you need to do is select the location. Holding it in your office can be a cost-conscious choice. After all, you won’t have to pay for meeting rooms, and you can better control food and beverage expenses. But off-site retreats may enable employees to focus and enjoy themselves more. If you decide to go off-site, be sure to negotiate and ask for discounts. Obtain multiple quotes and compare prices for space, meals, and any guest rooms you’ll need for speakers or out-of-town employees. Contact us for more ideas, including guidance on tax considerations.
If you’re married, should you file jointly or separately?
Married couples have a choice when filing their 2025 federal income tax returns. They can file jointly or separately. What you choose will affect your standard deduction, eligibility for certain tax breaks, tax bracket and, ultimately, your tax liability. Typically, filing jointly saves tax compared to filing separately. This is especially true when the spouses have different income levels. Combining two incomes can bring some of the higher-earning spouse’s income into a lower tax bracket. Also, some tax breaks aren’t available to separate filers. But filing separately may save tax when one spouse has significant medical expenses. Contact us to discuss your particular situation.
Some small businesses can still benefit from the health care coverage credit
Tax credits reduce tax liability dollar-for-dollar. So, they can be more valuable than deductions, which reduce only the amount of income subject to tax. One tax credit that hasn’t been getting much attention lately but that can still be valuable for certain small businesses is the credit for providing health insurance to employees. Although it’s been available for more than a decade and generally can be claimed for only two years, some small businesses may still be eligible. These may include newer businesses as well as older ones that only recently have begun offering health insurance. The credit can equal as much as 50% of health coverage premiums paid. Contact us to learn more.