Knowing how to take the deductions you are entitled to may help your bottom line if you are a business owner. You may use various deductions this tax season 2025 to manage your taxable income and hopefully keep more of your hard-earned dollars. Here’s a rundown of the main tax deductions your business may take for 2025.
1. Business Operating Expenses
You have operating expenses, which are just your regular expenses for the day-to-day functions of your business. Many of these are tax-deductible, including:
- Rent or lease expenses for office space or equipment
- Power, electricity, Internet connectivity, paper, postage, and more.
- Fees for professional services like legal, accountant, consulting, etc.
- Costs for insurance, including general liability, workers' compensation, professional liability, etc.[i]
To qualify as tax-deductible, these expenses must be routine for your profession/industry and necessary for running your business.
2. Salaries, Wages, and Employee Benefits
If you have employees, you may generally deduct their salaries, wages, and bonuses. The employer’s part of payroll taxes, such as Social Security and Medicare, are deductible, too.
You also get to deduct the expenses of:
- Health insurance
- 401(k) employer’s contributions
- Education reimbursement
- Paid sick or vacation time off
3. Vehicle and Transportation Expenses
You deduct the actual cost (gas, repairs, insurance), or you may use the base mileage rate (in 2025, it’s 70 cents per mile, 21 cents per mile for Medical purposes (also for qualified active-duty military moving expenses) and 14 cents per mile for charitable purposes) if you maintain detailed mileage records and receipts supporting your claims.[ii]
4. Travel Expenses
If you travel overnight for business, you may deduct travel expenses, including:
- Airfare, train, or bus expense
- Local transportation at your destination (like car rental or ride-sharing)
- Hotel or lodging costs
- Meals and tips (50% of the expenses are deductible)[iii]
Keep all travel-related receipts and document the business purpose of the trip.
5. Depreciation of Assets
Whether it’s equipment, machinery, or real estate that you use for your business, you deduct the expense of those investments from your taxable income as depreciation. If 2025 is your first year for an asset, you may qualify for Bonus Depreciation.3
You may deduct a portion of the cost of eligible assets for the tax year that the assets go into service. The bonus depreciation rate was 80% for 2023 and is 60% for 2024, declining 20% each year after that until it is zero.[iv]
Section 179 Deduction
Investing in qualifying assets under Section 179 allows you to immediately deduct the total purchase price of eligible business equipment up to $2.5 million, with a total equipment purchase spending cap of $4 million in 2025.[v]
Calculating your depreciation deduction is complicated, so get a tax professional’s help if you’ve made some large purchases.
6. Retirement Plan Contributions
Contributing to a retirement plan5 provides for your future and may give you tax advantages now. Popular options include:
- SEP IRA: Deductible contributions up to 25% of compensation or $70,000, with different calculations for self-employed individuals (closer to 20% of net earnings). Max $350,000 of compensation is considered for the percentage calculation. [vi]
- SIMPLE IRA: Employee contributions of up to $16,500 are deductible, plus a $3,500 catch-up for those over 50.[vii]
- 401(k) Plans: You may add up to $23,500 ($31,000 if you are 50 and over) as a deductible for 2025.[viii]
These plans lower taxable earnings and may help attract and retain valuable employees.
Final Thoughts
When you have complicated tax arrangements or are taking large deductions, having your taxes handled by an experienced tax professional should help you stay on top of the latest tax laws. Effective tax planning now may save your company a significant amount in 2025 and beyond.
In the meantime, take charge of your tax planning with our comprehensive checklist. Use the checklist as a guide to help you get a clear roadmap for navigating tax season this year. Access the tax planning checklist here.
Important Disclosures
Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
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LPL Tracking #830201 2025 Tax Prep Checklist: Everything You Need to Know
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Discover key tax deductions for businesses in 2025—from operating costs to retirement plans—and learn how to save more this tax season.
[i]23 Small-Business Tax Deductions to Know in 2025 - NerdWallet
[ii]Standard mileage rates | Internal Revenue Service
[iii]Topic no. 511, Business travel expenses | Internal Revenue Service
[iv]Depreciation of Business Assets - TurboTax Tax Tips & Videos
[v]2025 Instructions for Form 4562
[vi]SEP IRA contribution limits for 2025 and 2026 | Fidelity
