As 2025 draws to a close, taxpayers and business owners have a unique window to take advantage of powerful tax planning opportunities under the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. While many of its provisions are permanent, several are time-sensitive or transition in 2026 — making strategic moves now especially valuable. Here’s a rundown of the top year-end planning ideas to consider, and how to align them with your financial goals.
Individual Tax Planning:
- Charitable Giving - Bunch or Pre-Donate
- Starting in 2026, new rules will impose a floor on charitable deductions: contributions will only be deductible to the extent they exceed 0.5% of adjusted gross income. Beginning in 2026, there will be a cap on how much tax benefit you can get from itemized deductions.
- Strategy: Make larger-than-normal charitable gifts in 2025 to take full advantage of the existing deduction rules (i.e., “bunching” charitable contributions into this year).
- State & Local Tax (SALT) Deduction - Plan to Optimize
- The State and Local Tax (SALT) deduction cap is temporarily raised from $10,000 to $40,000 for 2025. However, this increased deduction phases out for high-income earners.
- Strategy: If you’re in a high-tax state, take full advantage of this elevated SALT cap in 2025, especially if you can bunch or accelerate payments.
- Roth Conversions & Income Timing - Know your Tax Bracket
- The lower tax brackets (from post-2018) are now permanent under OBBBA, so the old motivation to bunch income in 2025 to avoid “rate creep” may be less urgent. Still, Roth conversions remain attractive for some — especially if you expect higher income or tax rates in the future or want to lock in conversions at current rates.
- Strategy: Reevaluate whether Roth conversions make sense now, knowing the favorable bracket structure is more stable.
- Senior Deduction - Plan Carefully to Maximize
- The OBBBA created a new tax deduction for seniors 65+ starting with the 2025 tax year, offering up to $6,000 for single filers and $12,000 for married couples. For single taxpayers with income over $75,000 and married filers with income over $150,000, it phases out at a 6% rate. That means, for every $1,000 in additional income over $75,000 for singles (or $150,000 for married seniors filing jointly), the deduction will decline by $60. It is fully phased out at $175,000 for single filers (or $250,000 for joint filers).
- Strategy: Effective from 2025 through 2028, the temporary deduction presents a strategic window for tax planning, allowing to potentially offset income-producing moves like Roth conversions. Review your income and plan carefully to make sure you are able to take full advantage of the new deduction. Understand the implications of additional income triggered by Roth conversions, capital gains, and/or any other sources of income that could trigger phaseout of this new deduction.
Business Tax Planning:
- 100% Bonus Depreciation Is Back - Consider Accelerating Purchase of Fixed Assets
- OBBBA restores 100% bonus depreciation for qualified property placed in service after January 19, 2025. This change applies to new and used qualifying assets for many businesses.
- Strategy: If you were contemplating equipment, machinery, software, or other capital purchases, now is a strong moment: buy and place in service in 2025 to get full expensing.
- Reconsider the Business Interest Deduction
- OBBBA changes how adjusted taxable income (ATI) is calculated for the interest expense limitation (Section 163(j)): add-backs for depreciation, amortization, and depletion are reinstated. This means that businesses, especially capital-intensive ones, can deduct more interest than under prior (more restrictive) rules.
- Strategy: For leveraged businesses, revisit your interest burden and projections: if you plan new debt or refinancing, understanding the restored limit might free up more interest deduction.
- OBBBA changes how adjusted taxable income (ATI) is calculated for the interest expense limitation (Section 163(j)): add-backs for depreciation, amortization, and depletion are reinstated. This means that businesses, especially capital-intensive ones, can deduct more interest than under prior (more restrictive) rules.
- Maximize the Qualified Business Income (QBI) Deduction
- The 20% QBI deduction (Section 199A) is permanent under OBBBA. OBBBA also expanded the phase-in ranges for specified service trades or businesses: individual filers’ phase-in goes from $50K to $75K; joint filers $100K to $150K. OBBBA introduces a $400 minimum QBI deduction (indexed for inflation) for taxpayers with at least $1,000 of QBI.
- Strategy: Evaluate business structuring (S-Corporation, Partnership, etc.) to maximize QBI for 2025. If you're near the income thresholds, make sure your compensation, distributions, and business setup are optimized.
- Revisit Research & Development Deduction & Tax Credit Opportunities
- Under OBBBA, domestic R&D expenses (including internal-use software) can now be fully deducted in the year incurred, reversing prior amortization requirements.
- Strategy: If your business spends on research, development, or software, accelerate or reclassify projects to take advantage of this immediate expensing. Reconsider opportunities for the R&D tax credit with more favorable treatment with immediate expensing opportunities rather than the previous amortization requirement.
- Optimize Pass-Through SALT Strategies
- For pass-through entities (S-corps, partnerships), there is an opportunity for meaningful SALT planning: business-level SALT deductions help bypass individual SALT cap constraints.
- Strategy: Consider shifting the SALT burden into the passthrough entity (versus individual) for 2025 (and going forward), especially if you’re a high-income earner and/or in a high-tax state.
If you have any questions about the opportunities listed above, or if you would like to schedule an appointment to understand the impact of these changes on your situation, please do not hesitate to contact our team. Appointments can be scheduled online by visiting our homepage at www.ongandcompany.com.