GJC Advisor 2025 Year-End Tax Planning BUSINESSES

GJC Advisor

2025 Year-End Tax Planning BUSINESSES

Dear Friends,

We are pleased to present the 2025 Year-End Tax Planning Guide for Businesses.

The Business of Disruption

Public companies are under immense pressure to innovate, improve, and disrupt. As the saying goes, if you’re not growing, you’re dying. But disruption is a double-edged sword.

External factors, such as changing economic conditions and major policy shifts, can upend strategic plans. This type of disruption creates both challenges and opportunities. Competitors are facing the same issues, and boards and investors expect public companies to understand and respond to changing conditions. The most agile companies will often be the most successful.

The past year brought no shortage of disruption. Tariff developments often seemed to change by the hour and remain unsettled. Fortunately, mitigation tools and planning responses can help companies thrive despite the challenges.

On the tax side, the One Big Beautiful Bill Act (OBBBA) will have major implications for nearly all public companies. Businesses will enjoy new opportunities to accelerate deductions for research and equipment, and they may be able to deduct more interest expense. New minimum tax rules and an expanded deduction for exports will be important for multinationals. And a bevy of less heralded changes can also affect tax planning in significant ways.

Many of the most important OBBBA provisions offer different options for implementation. Modeling can help identify beneficial strategies. State taxes will also be an important factor in these planning decisions, and numerous state tax law changes over the past year pose their own issues.

Public companies have the added responsibility of reporting the impact of all these changes on public financial statements. New income tax disclosure rules in effect for 2025 will only increase the burden.

To properly identify tax risk and planning opportunities, the tax function needs to operate efficiently. Automation and other tools can help companies deploy the necessary resources to properly integrate tax considerations into business decisions.

This guide is a resource for understanding the most pressing tax issues facing public companies as 2025 closes and a new year begins. It covers important tax developments over the past year and offers practical insights and actionable planning strategies. But remember, no guide can cover every possible consideration, and there may be additional developments after the publication date. There is no substitute for a discussion with a tax professional.

Unless otherwise noted, the information contained in this guide is based on enacted tax laws and policies as of the publication date and is subject to change based on future legislative or tax policy changes.

Have a safe and healthy Holiday Season!

GJC

Corporate Income Taxes

Legislative, regulatory, and economic changes over the past year should prompt a reevaluation of corporate income tax planning at year-end. While the corporate rate remains unchanged at 21%, the rules for calculating and recognizing income have changed significantly. The OBBBA makes major changes to research expensing, bonus depreciation, and the limit on the interest deduction. Accounting methods planning can help leverage the implementation options. Strategically adopting or changing tax accounting methods to defer (or, in certain cases, accelerate) taxable income recognition can also enhance overall cash tax savings for 2025. For companies in scope of the corporate alternative minimum tax (CAMT), guidance changes could offer significant relief.

Bonus Depreciation

The OBBBA permanently restores 100% bonus depreciation for most investments in business property acquired and placed in service after January 19, 2025. Property is considered acquired no later than the date the taxpayer enters into a binding written contract for its acquisition. Eligible property includes tangible property with a class life of 20 years or less under the modified accelerated cost recovery system (MACRS), computer software, qualified improvement property, and other property listed in Section 168(k).

Property acquired on or before January 19, 2025, and placed in service after that date remains subject to the bonus depreciation phasedown rules under the Tax Cuts and Jobs Act (TCJA) — 40% for property placed in service in calendar year 2025 (60% for longer production period property and certain aircraft). Used property remains eligible for 100% bonus depreciation if it meets certain additional requirements.

The OBBBA continues to allow taxpayers to elect out of bonus depreciation by property class. However, the OBBBA also gives taxpayers the ability to elect 40% bonus depreciation instead of 100% bonus depreciation for the first tax year ending after January 19, 2025 (60% for longer production period property and certain aircraft).

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