2025 Tax Law Changes Every Small Business Owner Should Know

By Robert Whited Referral Partners Taxes February 19, 2025
2025 Tax Law Changes Every Small Business Owner Should Know

Navigating tax season is challenging enough without the constant shifts in regulations. For 2025, U.S. small business owners are facing a host of new tax laws and requirements that could significantly impact their operations. From updated tax brackets to changes in credits and deductions, staying informed is essential for maintaining compliance and optimizing financial health.

This guide will break down the 2025 Tax Law Changes every small business owner should know. Lending Experts will learn how to help their clients minimize tax liability, avoid penalties, and leverage new opportunities—helping you stay ahead of the curve this tax season. 

New 2025 Tax Brackets

The 2025 tax year introduces revised tax brackets intended to reflect changing economic conditions. Here’s a breakdown of the updated brackets:

  • 10% Bracket – For taxable income up to $10,000. A modest threshold increase provides additional relief for lower-earning businesses.
  • 12% Bracket – Covers $10,001 to $40,000. This expanded range offers strategic advantages for most small businesses.
  • 22% Bracket – Affects $40,001 to $85,000. Adjustments here may require financial recalibration.
  • 24% Bracket – Applies to income from $85,001 to $160,000. With a widened threshold, mid-tier businesses should reassess their tax planning strategies.
  • 32% Bracket – Spans $160,001 to $210,000. Businesses with earnings near the cap should forecast payments carefully.
  • 35% Bracket – Income between $210,001 and $510,000. No significant changes here require adjustment.
  • 37% Bracket – For income above $510,000. High-earning entities should monitor policy developments impacting this rate.

Actionable Tip:

Use these brackets to adjust payrolls, allocate resources, and update withholding estimates. Consult tax professionals to refine payment schedules and avoid surprises.

Beneficial Ownership Reporting Requirements

Under the Corporate Transparency Act (CTA), new reporting mandates aim to reduce fraud and increase financial transparency. If your client’s business is structured as a corporation, LLC, or other similar entity, they are likely required to file a Beneficial Ownership Information Report (BOIR) by January 1, 2025.

2/21/2025 Update: While deadlines for reporting were initially set for early 2025, recent updates have extended the filing deadline to March 21, 2025

3/4/2025 Update: The Corporate Transparency Act is back on hold except for foreign reporting companies.

Key Compliance Details:

  • What Must Be Reported?
    • Full legal name, date of birth, and current residential or business address of each owner.
    • A unique identifying number (e.g., driver’s license or passport).
  • Who Needs to File?
    • Most small businesses, unless exempt (e.g., publicly traded companies and nonprofits).
  • Filing Deadlines
    • New entities formed after January 1, 2025, must file within 30 days of formation.
    • Updates must be reported within 30 days of any ownership changes.
  • Potential Penalties:
    • Missing deadlines results in fines starting at $500 per day, with potential criminal charges for willful non-compliance.

Pro Tip:

Migrate to automated compliance tools like the CTA-compliant software available at Palm to ensure reporting is timely and accurate.

2/21/2025 Update: While deadlines for reporting were initially set for early 2025, recent updates have extended the filing deadline to March 21, 2025

3/4/2025 Update: The Corporate Transparency Act is back on hold except for foreign reporting companies.

Updates to Tax Credits and Deductions

Maximizing tax credits and deductions has always been a powerful way for small businesses to reduce liability. Here’s what’s new for 2025:

Research & Development (R&D) Credit

Expanded to cover additional industries, especially technology and manufacturing. If your client’s company innovates or creates prototypes, verify their eligibility.

Small Business Health Care Tax Credit

Now increased for small businesses with fewer than 25 employees that provide health insurance.

Work Opportunity Tax Credit (WOTC)

Extended through 2025, encouraging businesses to hire workers from underrepresented groups.

Energy-Efficient Building Deductions

Rewards businesses investing in energy-saving improvements like better HVAC, solar energy systems, or insulation.

Bonus Depreciation

The popular 100% bonus depreciation option continues, making this an excellent time to invest in machinery, equipment, or vehicles.

Section 179 Deduction

Increased deduction thresholds allow immediate write-offs for qualifying property purchases instead of depreciating over time.

Practical Advice:

Integrate these deductions into tax planning strategies early, and ensure meticulous documentation to claim them effectively.

Penalties for Non-Compliance

Failing to comply with these new tax laws can lead to hefty penalties and additional costs. Here’s what to watch for:

  • Late BOIR Filing
    • $500 daily fines, up to $10,000 total, plus the possibility of imprisonment for intentional violations.
  • Missed Tax Deadlines
    • Penalties for overdue tax filings or underpayment can range from 5% to 25% of your client’s unpaid taxes. Interest accrues daily.
  • Forfeited Credits or Deductions
    • Missing deadlines or failing to meet documentation requirements could make your client’s business ineligible for key deductions.

Preventative Measures:

  • Use accounting software to track deadlines.
  • Set reminders for quarterly tax payments and annual compliance tasks.

Key Compliance Deadlines for 2025

There’s a long list of critical IRS and state-specific deadlines your clients should prioritize:

  • January 1: BOIR filing deadline for pre-2024 entities.
  • March 15: S corporations and partnerships file taxes or extension requests.
  • April 15: Individual business owners file taxes.
  • June 15: Q2 estimated tax payments due.
  • September 15: Final S-corp and partnership extension deadline.
  • October 15: Extension deadline for individual returns.

Pro Tip:

Map all deadlines in their calendar and use free reminders or apps to stay compliant.

Leveraging Professional Tools for Compliance & Support

Investing in professional tax services and automation tools can save you time and reduce errors. Here’s what’s available in 2025:

  • Compliance Management Tools

Platforms like Palm support document organization and deadline tracking for BOIR filings. Besides monitoring potential risks, they also offer tax-saving insights.

  • Expert Consultations

Tax professionals help refine their strategy, working to maximize deductions while ensuring 100% compliance.

  • Cloud Accounting Software

Use integrated solutions like QuickBooks or Xero for streamlined financial tracking.

Final Thoughts to Optimize Your Client’s 2025 Tax Strategy

From understanding new tax brackets to filing BOIR reports and taking advantage of credits and deductions, staying proactive is the key to succeeding under the 2025 Tax Changes.

Takeaways:

  • Review and adjust your client’s financial plans in accordance with new tax brackets.
  • File your client’s BOIR report early to avoid non-compliance penalties.
  • Maximize credits like R&D and Work Opportunity while planning capital investments strategically.
  • Partner with trusted compliance and tax professionals to help you prepare.

Are your clients ready for 2025’s tax season? Get them started by exploring all available compliance tools for small businesses!

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