Projecting your business income for both the current and upcoming year can help you strategically time income and deductible expenses. In general, deferring income and accelerating deductions is beneficial—unless you anticipate being in a higher tax bracket next year.
While cash-basis taxpayers often find it easier to shift income and expenses, accrual-basis taxpayers have unique opportunities to optimize deductions.
💼 Review Incurred Expenses
One of the most effective strategies for accrual-basis taxpayers is to ensure that expenses incurred in 2025—but not paid until 2026—are properly recorded. This allows you to deduct them on your 2025 federal tax return.
Common deductible expenses include:
- Commissions, salaries, and wages
- Payroll taxes
- Advertising costs
- Interest payments
- Utility bills
- Insurance premiums
- Property taxes
💳 You can also accelerate deductions by charging expenses to a credit card in 2025, even if payment is made in 2026. This tactic works for cash-basis taxpayers as well.
📦 Evaluate Prepaid Expenses
Take time to review all prepaid expense accounts. Write off any items that have been fully used before year-end.
If you’ve prepaid insurance for a term that begins in 2025 and ends in 2026, you may be able to deduct the full amount in 2025—provided you’ve made the appropriate method election.
📌 Additional Year-End Tips
- Review outstanding receivables and write off any that are clearly uncollectible.
- Ensure interest payments on shareholder loans are made before year-end.
For personalized advice and to explore more ways to reduce your 2025 tax liability, reach out to your tax advisor.
© 2025