As a small business or startup owner, making the most of your profits is key—whether to support your family or reinvest in your business. Taking advantage of small business tax deductions in 2025 can reduce your taxable income and help you hold on to more of what you’ve earned.
Understanding which deductions apply to your business now can set you up for success by year-end. A wealth manager at Anderson Financial Strategies can guide you through the process and identify the deductions you qualify for. In the meantime, here’s a look at some of the most valuable small business tax deductions for 2025.
The Best Tax Deductions for Small Businesses in 2025
Many expenses that keep your business running can generate tax deductions or credits that reduce the taxes you pay on your profits. A key to taking advantage of those tax breaks is to create a plan and maintain good records to track them.
Consider these tax deductions for small businesses in 2025.
The Cost to Start Your Business
If you’re starting a new business in the new year, you can deduct the costs you incur to launch your company. You can deduct up to $5,000 in startup costs for the year you begin operations. Costs above that—up to $50,000—must be spread out (amortized) over the next 15 years.
Business Income
The Qualified Business Income (QBI) deduction allows eligible small business owners to deduct up to 20% of their qualified business income from their taxable income. This deduction applies to pass-through entities like sole proprietorships, partnerships, and S corporations. Specific eligibility rules and income limits apply, so consulting a tax professional can help you maximize this benefit.
Professional Services
As a small business owner, you know that professional services from wealth managers, attorneys, and accountants can help you build a successful company. The cost of professional services and fees for financial planning and consulting for business strategy can be deducted from your taxes. You must keep good records of the fees and services.
Employer-Sponsored Retirement Savings Plan
Current IRS rules allow eligible employers to claim a tax credit (that would offset business income tax liability) of up to $5,000 per year for three years for the ordinary and necessary costs of starting an company retirement savings plan, including SEP IRAs, SIMPLE IRAs, and qualified plans such as 401(k) programs.
In addition, employers could also claim an additional $500 credit for implementing an auto-enrollment function within their new plan. An additional tax credit of up to $1,000 could be available over five years for employers with less than 100 employees who make contributions to employee accounts within the plan.
Work-Related Vehicle Use
If you use your vehicle exclusively for work, you can write off what you spend to maintain and operate it. If you also use it for personal errands, only the expenses related to your business can be deducted. You can claim your business mileage or use the standard mileage rate from the Internal Revenue Service, which is $0.70 per mile in 2025.
Office Supplies and Equipment
Office supplies and equipment are some tax deductions for small businesses you shouldn’t overlook. Computers and work-related software, printers, paper, and pens used during the year they were purchased can be deducted. You also can write off postage and shipping expenses. File away your receipts to have them available at tax time.
Employee-Related Expenses
You can deduct certain employee-related expenses deemed reasonable and necessary, including:
- Salaries
- Vacation pay and sick time
- Health and retirement benefits
- Life insurance
- Education
- Meals and lodging
To claim these tax deductions for small businesses, you must comply with all employment laws and regulations.
Business Meals and Entertainment
You can deduct some types of entertainment, like company parties, along with up to 50% of the costs of food and drinks you purchase for business purposes. The expenses must be directly related to your company, and you must document the date/time of the event, who attended, and the total cost.
Keep a receipt and write detailed notes about the outing on the back of the receipt. Consider consulting a tax professional about IRS limits on deducting entertainment expenses.
These are just a few of the tax deductions for small businesses available. You also can claim tax credits and deduct expenses related to marketing and advertising, home office space, utilities, business loan interest and bank fees, business insurance, and more.
Partner With a Wealth Manager
Strategic tax planning allows you to make the most of the credits and deductions your business is eligible for. At Anderson Financial Strategies, we understand the challenges small business owners face and are here to provide relationship-based, premium financial guidance rooted in honesty, transparency, and science-backed strategies. Our goal is to give you the confidence and clarity you need to feel excited about your financial future.
If you would like to explore our services for your family or business, please call us at 855-237-4545 to schedule an executive briefing to discuss your goals.
About Shon
Shon Anderson is president and chief wealth strategist at Anderson Financial Strategies, LLC with over 20 years of experience. As a fiduciary, Shon’s mission is to provide his clients with quality financial expertise along with rapidly responsive service through an honest relationship. He specializes in providing family office-style services to help his clients organize and focus their financial life. Shon graduated from Wright State University with a bachelor’s degree in financial services and an MBA in finance. He is a CERTIFIED FINANCIAL PLANNER® practitioner and holds the Chartered Financial Analyst® (CFA®) certification. His insights have been quoted in leading financial news publications such as CNBC, Yahoo Finance, Fox Business, Consumer Reports, Forbes, Bankrate.com, Investment News, and Kiplinger. Shon serves as an adjunct professor teaching personal finance courses at Wright State University, leads CFP® exam review courses for Keir Educational Resources, and is president of the CFA Society Dayton. Shon and his wife, Jessica, reside in Sugarcreek Township, Ohio, and are blessed with triplet daughters, Elizabeth, Bridgette, and Alexandra, along with their son, Jacob, and dog, Jack. Over the years, Shon has been involved in several volunteer organizations including the Wright State chapter of Delta Tau Delta as an alumni advisor and was a Big Brother in the Big Brothers/Big Sisters program. To learn more about Shon, connect with him on LinkedIn.