New Tax Laws Affecting Small Businesses in 2025

As a small business owner, it’s vital to stay informed about the 2025 tax changes—some may unlock savings, while others require new compliance. Here’s a helpful breakdown in simple language, complete with examples:

1. Expanded Section 179 Expensing

What’s changing? The maximum amount you can deduct in one year for equipment purchases jumps from $1.25 million to $2.5 million. The phase-out threshold also rises from $3.13 million to $4 million.

Example: You buy a $200,000 machine. Under 2025 rules, you can take the full deduction this year, reducing your taxable profit immediately—improving cash flow.

2. Bonus on R&D Deductions

What’s happening? Congress is considering rolling back the current rule (that forces R&D salaries to be deducted over five years) back to full deduction in the year paid.

Benefit: If passed, startups and small tech firms can deduct their R&D expenditures now, enhancing their ability to reinvest quickly.

3. Increased Credits for Startup Retirement Plans

Update: For tax year 2025, businesses with up to 100 employees can claim 100% credit on retirement plan startup costs, up to $5,000.

Example: Starting a 401(k) costs $3,000. You get the full $3,000 credit—no cost to you in setting it up.

4. Reporting for Beneficial Ownership (BOI)

New rule: All existing businesses must report their beneficial owners by end of 2025; new companies have 30 days.

Why it matters: Non-compliance can lead to penalties. It adds paperwork but improves transparency.

5. Digital & Crypto Reporting Requirements

IRS is tightening tracking of digital payments and cryptocurrency activities.

Example: Accepting crypto payments? You’ll need to report them more thoroughly and keep precise records to avoid IRS penalties.

6. Pass-Through Deduction Boost

Proposed: The House GOP wants to increase the pass-through deduction from 20% to 23%, benefiting owners of S-corps, LLCs, and partnerships.

Impact: Eligible small business owners could enjoy a larger deduction on their personal returns.

IRS Inflation-Adjusted Changes (General)

• Standard deduction increased: $15,000 single / $30,000 married filing jointly.
• Tax brackets shifted slightly—check if your business income falls into a new bracket.
• Higher thresholds for alternative minimum tax and transportation/parking benefits.

What You Should Do:

Need Expert Support?

Accounting and tax rules are evolving quickly—don’t navigate this alone! At Velin & Associates, Inc., our experienced Accountants Los Angeles and CPAs in Los Angeles are here to guide you through these changes. We specialize in Accounting Services in Los Angeles for small businesses like yours. For more information about our services, please visit our website.

Contact us for help with:

• Maximizing Section 179 and retirement credits
• Setting up robust record‑keeping for digital and crypto transactions
• Preparing beneficial ownership filings and BOI paperwork
• Navigating evolving pass‑through deductions

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org

Let’s make 2025 your most tax‑smart year yet!