Smart Strategies to Reduce Your Business Tax Liability

July 24, 2025 by Gordon Advisors

Tax liability comes for every company, but that doesn’t mean the amount your company will owe is already fixed. Informed planning and timely action can help businesses significantly reduce what they owe in taxes without cutting corners or risking non-compliance. Here are some practical ways to reduce your tax liability while strengthening your business in the process:

Maximize Business Credits and Deductions

Businesses consistently miss out on available tax-saving opportunities because they are unaware that they qualify. Note that the passing of the One Big Beautiful Bill Act (OBBBA) may have put qualifying deadlines and other stipulations on using these credits.

Business Credits:

• Work Opportunity Tax Credit (WOTC): For businesses that hire employees from certain target groups who face barriers to employment.

• Employer-Provided Childcare Credit: For businesses that offer on-site or subsidized childcare.

• Energy-Efficient New Homes Tax Credit for Home Builders: For eligible contractors who substantially reconstruct or build energy-efficient homes that meet specific criteria. Under the OBBBA, the home must be sold or leased by June 30, 2026, to qualify for the credit.

• Commercial Clean Vehicle Credit: For businesses that buy a qualified commercial clean vehicle. With the passing of the OBBBA, vehicles must be purchased prior to September 30, 2025, to qualify for the credit.

• Fuel Tax Credit: For businesses that use fuel for specific work-related activities.

Business Deductions:

• Energy Efficient Commercial Buildings Deduction: For building owners who reduce annual energy and power costs for certain systems by 25% or more. OBBBA requires that the project begin prior to June 30, 2026, to qualify for the credit.

• Business Interest Deduction: For businesses that pay interest on qualifying debt.

• Standard Mileage Rates Deduction: For business owners and employees who use a personal vehicle for qualified business travel.

• Home Office Deduction: For self-employed individuals and small business owners with qualifying home workspaces.

• Section 179 and Bonus Depreciation Deductions: For businesses that purchase eligible equipment, vehicles, or long-term assets.

Check the IRS website for more information on business credits and deductions.

Offer Strategic Employee Benefits

Providing retirement and health benefits can reduce your tax burden and improve employee retention.

• Retirement Plans: Employer contributions to SEP, SIMPLE IRA, and 401(k) plans are tax-deductible. Employers may also qualify for credits up to $5,000 for establishing new plans.

• Health Insurance: Premiums paid for employee health coverage are typically deductible. Businesses may also offer Dependent Care Assistance to reduce taxable income.

• Accountable Reimbursement Plans: Employees can receive tax-free reimbursements for business expenses with proper documentation.

Leverage Timing to Your Advantage

Calculated timing can influence your tax outcome. If your business is expected to be in the same or lower tax bracket next year, delaying year-end invoices and purchasing necessary equipment, software, or vehicles before the end of the year to maximize deductions may be beneficial. On the other hand, if your business is expected to be in a higher tax bracket next year, accelerating income and deferring deductible expenses before the end of the year may result in a lower overall tax burden. These strategies should always be coordinated with your Certified Public Accountant (CPA).

Work With a Trusted Tax Advisor

Gordon Advisors provides expertise in both tax compliance and planning. Our CPAs can help you identify ways to make the most out of your earnings while keeping you compliant throughout the process. Contact the tax consultants at Gordon Advisors, P. C. to get started.