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2025 IRS Changes Are Here, Here’s What Small Businesses Need to Do Now

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The IRS and Congress rolled out several key changes in 2025 that directly affect small business owners, from bonus depreciation to reporting rules and inflation adjustments. Below is a roundup of the most important developments from the start of 2025 to now (November 2025), with direct links to IRS and Treasury sources so you can dig deeper.


  1. Inflation Adjustments and Tax Bracket Changes


Every year, the IRS adjusts tax brackets and deductions for inflation, but 2025’s updates are particularly impactful for small business owners who report pass-through income on personal returns.

For example, the standard deduction rose to $31,500 for married couples filing jointly and $15,750 for single filers. These shifts may slightly reduce taxable income and affect estimated tax payments.


  1. Expanded Expensing and Depreciation Rules


Big news for small businesses investing in equipment or technology: The 2025 tax legislation made 100% bonus depreciation permanent for qualifying property placed in service after January 19, 2025.

Section 179 expensing limits were also increased, now allowing many small businesses to deduct the full cost of assets such as machinery, computers, and certain improvements in the year they’re placed in service.

Why it matters: these provisions let small businesses recover costs faster, improving cash flow and making reinvestment easier.


  1. Research & Experimentation (R&D) Deduction Restored


Starting with tax years beginning after January 1, 2025, eligible small businesses can immediately deduct U.S.-based research and experimental expenditures instead of amortizing them over multiple years.

Takeaway: if you’re developing new products, prototypes, or software, this rule change can substantially reduce your taxable income in 2025.


  1. Reporting and Compliance Updates (Forms 1099-K & 1099-NEC)


The IRS continues to refine how third-party payment platforms (like PayPal, Square, and Etsy) report transactions. For 2025, the Form 1099-K reporting threshold reverted to the pre-2022 level: $20,000 and 200 transactions.

If your small business sells online or receives payments through these platforms, keep precise records. You may receive a 1099-K even if you fall below the threshold depending on state rules or platform policies.


  1. Employer Credits and Benefits Expansion


The 2025 tax law expanded certain small-business credits, including:

  • A higher credit for employer-provided childcare,

  • Enhanced expensing limits for qualifying property, and

  • Extended benefits for businesses supporting workforce development.

  • 📄 Source: Duane Morris – The 2025 Tax Bill

If you provide childcare or training benefits, check whether your company meets the definition of an “eligible small business” under the new rules.


  1. IRS Enforcement and Scam Prevention Focus


The IRS has emphasized enforcement against false credit claims and emerging scams targeting small businesses, especially fraudulent filings related to pandemic-era credits and the Fuel Tax Credit.

Stay alert for emails, calls, or social-media messages pretending to offer “instant refunds” or “credit programs.” Always verify IRS communications through your secure IRS online account or your trusted accounting professional.


  1. Phase-Out of Paper Refund Checks


Starting September 30, 2025, the IRS will end paper refund checks for most individual and small business filers, shifting to electronic methods like direct deposit or prepaid cards.

If your business or personal refund still arrives by mail, set up direct deposit before filing next season.


What Small Businesses Should Do Now


Review your capital investment plans. Take advantage of expanded § 179 and bonus depreciation limits.

Revisit your R&D spending. Immediate deductions could free up significant cash.

Track third-party transactions. Maintain clean records to reconcile with 1099-K and 1099-NEC forms.

Update your refund and payment methods. Move to electronic deposits ahead of the 2025 deadline.

Monitor credits and inflation thresholds. Adjust quarterly estimates and 2025/2026 tax planning accordingly.


Final Thought


The 2025 tax landscape brought meaningful opportunities for small businesses to enhance cash flow, simplify compliance, and take advantage of generous expensing rules. As always, it’s smart to consult your CPA or accounting advisor before year-end to ensure your strategy aligns with the new IRS guidance.  Contact us today at 603-541-7485 or schedule a free consultation.

 
 
 

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