A tax return only reports decisions you already made – a proactive tax strategy creates them. Business owners who plan ahead can deduct up to $1,250,000 in equipment purchases under Section 179, claim a 20% deduction on qualified business income, and contribute as much as $70,000 a year into a SEP IRA. Most of these opportunities disappear once December 31 passes, which is why planning has to happen before tax season, not during it.
Real Estate Strategies to Build Wealth
What changed: Nothing new – but many owners still don’t use depreciation, cost segregation, or 1031 exchanges to their full advantage.
Who it affects: Business owners and investors who own or are considering commercial or rental property.
What to do: Have a cost segregation study done before year-end to accelerate depreciation and free up cash now instead of over 27.5-39 years.
Ohio/Columbus Note: With commercial property values rising across Central Ohio, a cost segregation study can meaningfully offset gains from a recent purchase or renovation.
Tax-Advantaged Retirement Plans
What changed: Contribution limits are adjusted annually, and a SEP IRA now allows contributions up to $70,000 or 25% of compensation, whichever is less.
Who it affects: Self-employed individuals and business owners without an employer-sponsored plan.
What to do: Set up or fund a SEP IRA, Solo 401(k), or defined benefit plan before your filing deadline to lower this year’s taxable income while building retirement savings.
Investing in Your Business
What changed: Section 179 currently allows businesses to expense up to $1,250,000 in qualifying equipment and software purchases in the year they’re placed in service.
Who it affects: Any business making capital investments in equipment, technology, or vehicles.
What to do: Time major purchases before year-end so the deduction lands in the tax year that benefits you most.
Ohio/Columbus Note: Manufacturing and logistics businesses in the Columbus corridor are frequent beneficiaries of this deduction due to equipment-heavy operations.
Credits and Deductions You May Be Missing
What changed: The Qualified Business Income (QBI) deduction still allows eligible pass-through owners to deduct 20% of qualified business income.
Who it affects: Owners of S-corps, partnerships, and sole proprietorships under applicable income thresholds.
What to do: Review your entity structure and income annually – small adjustments can preserve or increase your eligibility for this deduction.
Strategic Charitable Giving
What changed: Cash donations to qualifying public charities can be deducted up to 60% of adjusted gross income.
Who it affects: Individuals and business owners who give regularly or are considering a larger gift.
What to do: Consider bunching donations or using a donor-advised fund to maximize the deduction in a high-income year.
Stop Reacting – Start Planning
A tax return tells you what already happened. A tax strategy session tells you what to do next while you can still act on it. At Harper & Co CPAs Plus, we help business owners and investors build proactive strategies around real estate, retirement planning, business investment, and charitable giving, tailored to their actual goals instead of a generic checklist.
Schedule your free Tax Strategy Call today and start making decisions before your tax bill is already written.
Frequently Asked Questions
What is the difference between tax preparation and tax planning?
Tax preparation reports what already happened during the year and files your return. Tax planning happens beforehand, using strategies like retirement contributions, equipment purchases, or charitable giving to reduce what you’ll owe.
How much can I deduct for business equipment purchases?
Under Section 179, businesses can currently expense up to $1,250,000 in qualifying equipment and software purchases in the year the assets are placed in service, subject to phase-out at higher purchase levels.
How much can I contribute to a SEP IRA?
A SEP IRA allows contributions of up to $70,000 or 25% of compensation, whichever is less, making it a powerful option for self-employed individuals and small business owners to reduce taxable income.
What is the Qualified Business Income deduction?
The QBI deduction allows eligible owners of pass-through entities, like S-corps and sole proprietorships, to deduct up to 20% of their qualified business income, subject to income and business-type limitations.
How much of my income can I deduct for charitable donations?
Cash donations to qualifying public charities can generally be deducted up to 60% of your adjusted gross income, with different limits applying to donations of appreciated assets or gifts to private foundations.
When should I start tax planning for the year?
Ideally before the fourth quarter of the tax year, since many strategies (like equipment purchases, retirement contributions, and entity structuring) require action before December 31 to count for that tax year.
Can a cost segregation study reduce my taxes now?
Yes. A cost segregation study reclassifies parts of a property to shorter depreciation schedules, letting owners accelerate deductions into earlier years instead of spreading them over 27.5 to 39 years.
Recent Comments