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Discover the most effective tax planning strategies for mid-sized businesses in the current fiscal year, including recent changes to the tax code.
As we move through 2025, mid-sized companies face both challenges and opportunities in the tax landscape. Recent legislative changes have introduced new considerations for tax planning, making it essential for businesses to review and potentially adjust their strategies.
1. Maximize R&D Tax Credits
The Research and Development (R&D) tax credit remains one of the most valuable tax incentives for mid-sized companies, particularly those in technology, manufacturing, and healthcare sectors. Recent enhancements to this credit have made it more accessible and beneficial.
Key considerations:
- Expanded definition of qualifying activities
- Option to offset payroll taxes for startups
- Improved documentation requirements
2. Leverage Enhanced Depreciation Provisions
Current depreciation rules offer significant opportunities for companies making capital investments. Understanding and applying these provisions correctly can substantially reduce your tax burden.
Focus areas:
- Section 179 expensing
- Bonus depreciation considerations
- Cost segregation studies
3. Optimize Entity Structure
The choice of business entity structure continues to have significant tax implications. Recent tax law changes have altered the comparative advantages of different structures.
Consider reviewing:
- C-Corporation vs. S-Corporation status
- Partnership considerations
- State tax implications of your structure
4. Implement Strategic Timing of Income and Expenses
Thoughtful timing of revenue recognition and expense payments can optimize your tax position, especially with potential rate changes on the horizon.
Strategies to consider:
- Deferring income when appropriate
- Accelerating deductible expenses
- Managing year-end bonuses and accruals
5. Explore State and Local Tax Planning Opportunities
State and local taxes represent a significant portion of many businesses' tax burdens. With remote work changing nexus considerations, this area deserves special attention.
Key focus areas:
- Nexus review and planning
- State-specific credits and incentives
- Sales tax compliance and optimization
Conclusion
Effective tax planning requires a proactive, strategic approach that considers your specific business circumstances and goals. By implementing these strategies with the guidance of experienced tax advisors, mid-sized companies can significantly reduce their tax burdens while maintaining full compliance with all applicable regulations.