Tax Deductions For Business Expenses

Build it, Deduct it!   On July 4th, the U.S. passed OBBBA, a sweeping tax reform package that delivers a windfall for companies who invest in innovation and infrastructure. It’s simple: more R&D + more CapEx = more free cash flow. Here’s why:   OBBBA reinstates 100% immediate expensing for U.S.-based R&D. No more amortizing over 5 years. If you’re building the next breakthrough in AI or life sciences, your tax deduction is instant. That means lower taxes this year, not in 2029. On the CapEx side, OBBBA brings back full bonus depreciation for qualified property, including everything from machinery, data center infrastructure, chip fabs, and corporate jets.   Buy it. Build it. Deduct it.   This bill serves to accelerate free cash flow, which will be a powerful tailwind for growth-oriented companies that reinvest heavily in their businesses. Companies that rely on R&D for product development (technology, biotech), building critical infrastructure (semis, energy, manufacturing, commercial property), or deploy heavy equipment (railroads, ship builders, farm equipment) benefit from this full write-off in year 1. For many companies this will result in a spike in free cash flow which should help drive valuations.   OBBBA also includes retroactive "catch-up" deductions for previously capitalized R&D from 2022–2024, which is a gift as refund checks for companies that have been carrying deferred tax assets is off-set this tax year. This policy rewards domestic innovation and encourages onshoring for strategic industries.   Asset Based Lending will also benefit since hard assets valuations will experience a step-function higher and U.S. taxpayers will see this flow through on their K-1s. At Marathon Asset Management, we are witnessing firsthand the demand to finance many of these hard mission-critical assets. 

The new Tax Law didn't just tweak the code It rewired it for business owners who know how to play offense. Entrepreneurs, investors, and small business owners now have access to powerful deductions and permanent rules that create certainty. Here are the key takeaways: 1) QBI Deduction Made Permanent The 20% deduction for qualified business income (QBI) from partnerships, S corps, sole proprietorships, REIT dividends, and MLP income is here to stay. This stability fosters long-term planning for flow-through owners. 2) Expanded Eligibility Phase-in thresholds are now $75K (individual) and $150K (joint). More taxpayers qualify, widening access to meaningful tax savings. 3)Minimum $1,000 QBI Rule Even modest business income of $1,000 guarantees access to the deduction. Startups and small ventures win here. 4)100% Bonus Depreciation, Permanent Full expensing of qualified property like machinery and equipment is now locked in, improving cash flow and fueling growth investments. 5)Boosted Section 179 Expensing The limit rises to $2.5 million, giving more SMEs the ability to expense critical capital expenditures upfront. These changes create predictability, and flexibility in structuring business operations. Timing purchases and coordinating with your CPA will be critical to maximizing benefits. The OBBBA did more than tweak the rules. It gave business owners permanent tools to keep more cash, plan with confidence, and accelerate growth.

All tax planning moves are not created equal Some deductions lead to $100s in savings Others lead to $10,000+ in savings This one specifically has led some of my clients to $10,000-$50,000 in tax savings Here's how to optimize the Qualified Business Income Deduction (QBID In 2017, Tax Cut and Jobs Act created the QBID It is a tax benefit designed for self-employed individuals and small business owners It allows eligible business owners to reduce their taxable income by letting them deduct either: - 20% of their qualified business income or - 50% of their wages paid out to themselves and employees Whichever is lesser This deduction serves as a valuable tool for reducing income tax payments If your business generates $200,000 in profit, you could potentially benefit from a $40,000 deduction Surprisingly, many business owners remain unaware of this deduction and how to maximize it Particularly for business owners who might overlook this opportunity Also... it's important to know that 1. You can claim the QBI deduction even if you opt for the standard deduction 2. The QBI deduction affects your income tax but does not impact self-employment tax So Who Qualifies for QBI and At What Income Levels? In 2024, the qualification for the QBI deduction is based on your taxable income. And for those married filing jointly, the threshold is $383,900 for full eligibility If your taxable income exceeds these thresholds, the QBI deduction begins to phase out However, there's also a higher QBI threshold to consider If you're married filing jointly and your taxable income exceeds $483,900, or if you're a single filer with taxable income exceeding $241,950 And your business falls into the category of a specified service trade or business (SSTB), then you won't receive any deduction For those that have incomes that exceed the threshold, here's the equation - You can deduct 50% of the W-2 wages paid by your business Or - You can deduct 20% of business profits Whichever is lower Unless you are a "specified service trade or business" (SSTB) then you get no deduction This chart below helps you understand how it works and if you qualify Consider the following example to see how this would work out in a basic case et’s say you’re a single filer and have taxable income of $250,000 You paid out $100,000 in W2 wages from the business Which leaves $150,000 in profit If you were under the taxable income threshold of $191,950, you’d simply take a $30,000 QBI deduction from 20% of that $150,000 profit But because you are over the income limit, you weigh the 2 options: Option 1: $100,000 x .5 = $50,000 from the wages Option 2: .2 x $150,000 = $30,000 You have to go with the lesser which is option 2 (not a choice) You have $20,000 less in deductions because you did not optimize So who qualifies for QBI? The QBI deduction is for owners of passthrough entities/self-employed Like: - Sole props - LLCs - Partnerships - S Corps Maximize this!

Understanding Depreciation: Crucial for Your Financial Strategy! Depreciation isn't just an accounting term—it's a strategic tool. Here are four common methods and their unique impacts on your financial statements: 1. **Straight-Line**: Simplest and most widely used. Assets depreciate evenly over their useful life. Predictable impact on income because the depreciation expense is even over the useful life. 2. **Declining Balance**: Accelerated depreciation. Greater depreciation expense upfront means lower taxable income early on. 3. **Sum-of-the-Years-Digits**: Front-loaded depreciation. Balances expense recognition and asset value over time. 4. **Units of Production**: Depreciates assets based on usage. Highly accurate recognition of depreciation expense for machinery or equipment. The more the asset is used, the more depreciation expense is recognized. Each method tells a different story about your assets and your net income. Choose wisely to reflect your business needs because once you decide on a depreciation method, you shouldn't change that method. #accounting #accountingandaccountants #strategy #financialacumen

How Sarah Saved a Fortune with Bonus Depreciation 🚀💰 Meet Sarah, a brilliant small business owner who needed a major equipment upgrade. Last year, Sarah bought a huge, shiny new piece of manufacturing equipment for $1,000,000 on March 28th. She told her friend, a fellow entrepreneur, "Great! I'll just deduct 20% this year and spread the rest over the next four years." (This is normal straight-line depreciation). Her friend gasped, "Wait! Did your tax advisor tell you about Bonus Depreciation?" Sarah was planning to take only a small ordinary depreciation deduction for the first year (maybe $200,000). She'd still have to pay tax on a large chunk of her business income. 📉 Bonus Depreciation is a special rule that allows businesses to immediately deduct a very large percentage of the cost of new (or used) qualified property in the year it's placed in service. For a qualifying property, that percentage is currently 60% but changes need to be considered from the TCJA and OBBA. Since Sarah placed it in service (started using it) by December 31st, she qualified! Sarah was able to deduct $600,000 (60% of $1,000,000) of the equipment's cost immediately! This massive deduction drastically lowered her business's taxable income, saving her hundreds of thousands in taxes for that year. This amazing tax break lives primarily in Internal Revenue Code Section §168(k). It’s the reason why so many businesses rush to purchase and place in service big assets before year-end—because getting to write off 60% (or more, depending on the year) in one shot is a game-changer for cash flow and tax planning. Depreciation isn't just a slow, boring write-off. It can be a turbo-charged, immediate tax shield! Don't be a Sarah who almost misses out! What's your biggest year-end tax planning scramble? Let me know in the comments! 👇 #USTax #BonusDepreciation #IRC168k #TaxPlanning #SmallBusinessTax #TaxStrategy #casahilmehta #linkedinforcreators

Most business owners overpay taxes—not because they have to, but because they don’t know better. Every year, I see entrepreneurs losing lakhs simply because they aren’t aware of tax strategies designed to help them save. The best part? These strategies are 100% legal and used by the smartest business owners to optimize their tax outflows. If you’re a business owner, read this carefully—it could save you serious money. 1. Choose the Right Business Structure Your legal entity matters more than you think. Sole proprietorship, partnership, LLP, or a private limited company—each has its own tax benefits and drawbacks. The right structure can reduce your tax liability significantly. A sole proprietor might pay taxes at individual slab rates, while an LLP or Pvt Ltd company may offer better tax efficiency depending on revenue, compliance costs, and future growth plans. The key? Get expert advice and choose wisely. 2. Claim Every Business Expense Possible One of the biggest mistakes small business owners make is not claiming all eligible deductions. If it’s a business-related expense, it’s tax-deductible. Office rent, utilities, internet, software, employee salaries, marketing expenses, travel costs for work, depreciation on equipment—the list is long. Keep proper records and claim everything you legally can. You’ll be surprised how much this one habit can save you in taxes. 3. Don’t Ignore GST Input Credit If you’re paying GST, you must claim input tax credit on business-related expenses. This reduces your net GST payable and can save lakhs every year. Many businesses either don’t know about this or don’t track their eligible credits properly. If you're paying GST on rent, advertising, professional fees, or software—get that credit back. 4. Use Presumptive Taxation for Simplicity & Savings For businesses with revenue up to ₹3 crore and professionals earning up to ₹75 lakh, the government allows presumptive taxation—a fixed profit percentage of revenue is taxed instead of maintaining detailed accounts. Businesses: Tax is calculated on just 6% of total revenue (if digital payments) or 8% (if cash-based). Professionals: You can declare 50% of revenue as profit and pay tax only on that amount. No detailed books, no audits—just tax savings and peace of mind. The truth is, tax planning is not just for big corporations—it’s for every business owner who wants to keep more of what they earn. In life, only two things are constant—death and taxes. We can’t avoid the first one, but we can definitely optimize the second. If this helped you, share it with a fellow entrepreneur who needs to stop overpaying taxes. Let’s build wealth the smart way. #taxsavings #businessgrowth #entrepreneurship #smallbusinessowner #taxplanning #financialfreedom #gst #incometax #wealthbuilding #taxstrategies #moneytips #businessowner #startupindia #ca #taxconsultant #savemoney #investmenttips #financialliteracy #finance101 #legaltaxhacks

Washington just dropped a legislative bombshell on the real estate world — and it’s packed with opportunity for those who know how to act fast. The One Big Beautiful Bill Act, signed into law on July 4, 2025, isn’t just a tweak to the tax code — it’s a complete reshaping of how investors structure deals, time acquisitions, and unlock tax advantages. Here’s what stands out: ✅ 100% Bonus Depreciation is Back — Qualifying property placed in service after Jan. 19, 2025 can be written off in year one. With the right cost segregation, that could mean millions in deductions on a single deal. ✅ Section 179 Expensing Expanded — Up to $2.5M of certain property improvements can be deducted immediately. Perfect for projects under $5M that need big upgrades without slow depreciation schedules. ✅ Green Incentives on a Countdown — Energy-efficient building deductions (179D) and residential credits (45L) phase out after June 30, 2026. If sustainability is part of your plan, the clock is ticking. ✅ 1031 Exchanges Stay Alive — Pairing exchanges with bonus depreciation just became a tax-efficiency powerhouse. ✅ New Opportunity Zones Coming in 2027 — Fresh designations mean new chances to align with growth markets early. This law is live now — and some of its best incentives are already on the clock. The investors who adjust fastest will capture the biggest benefits. At CPI Capital, we’re already mapping how these changes influence underwriting, project feasibility, and long-term returns. If you’re planning acquisitions, developments, or value-add projects in the next 24 months, now is the time to align your tax strategy with the new rules. #cpicapital #realestateinvesting #taxstrategy #wealthbuilding #obbba2025

Let's discuss a 𝐫𝐞𝐚𝐥 𝐥𝐢𝐟𝐞 𝐭𝐚𝐱 𝐩𝐥𝐚𝐧𝐧𝐢𝐧𝐠 when a client who 𝐛𝐨𝐮𝐠𝐡𝐭 an old 𝐡𝐨𝐮𝐬𝐞, demolished it, and built a new one to generate 𝐫𝐞𝐧𝐭𝐚𝐥 𝐢𝐧𝐜𝐨𝐦𝐞. Let's discuss how smart planning helped a client save thousands in taxes. Mr. A bought an old house with the plan to 𝐝𝐞𝐦𝐨𝐥𝐢𝐬𝐡 it and 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐜𝐭 𝐚 𝐧𝐞𝐰 𝐫𝐞𝐧𝐭𝐚𝐥 𝐩𝐫𝐨𝐩𝐞𝐫𝐭𝐲. But here’s where the 𝐭𝐚𝐱 𝐢𝐬𝐬𝐮𝐞 comes in. Suppose the 𝐩𝐮𝐫𝐜𝐡𝐚𝐬𝐞 𝐩𝐫𝐢𝐜𝐞 of the property was $𝟑𝟎𝟎,𝟎𝟎𝟎. According to the county records, $𝟔𝟎,𝟎𝟎𝟎 was allocated to 𝐥𝐚𝐧𝐝 and $𝟐𝟒𝟎,𝟎𝟎𝟎 to the 𝐛𝐮𝐢𝐥𝐝𝐢𝐧𝐠. Later, Mr. A spent $𝟓,𝟎𝟎𝟎 on 𝐝𝐞𝐦𝐨𝐥𝐢𝐭𝐢𝐨𝐧 and $𝟏𝟓𝟎,𝟎𝟎𝟎 on 𝐧𝐞𝐰 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐜𝐭𝐢𝐨𝐧. Now, under IRS rules, when a building is demolished, the 𝐞𝐧𝐭𝐢𝐫𝐞 𝐛𝐚𝐬𝐢𝐬 of the 𝐨𝐥𝐝 𝐛𝐮𝐢𝐥𝐝𝐢𝐧𝐠 ($𝟐𝟒𝟎,𝟎𝟎𝟎) plus the demolition cost ($5,000) gets added to the 𝐥𝐚𝐧𝐝 𝐛𝐚𝐬𝐢𝐬. That means the 𝐥𝐚𝐧𝐝 𝐛𝐚𝐬𝐢𝐬 becomes $𝟑𝟎𝟓,𝟎𝟎𝟎, which is non-depreciable. The new 𝐛𝐮𝐢𝐥𝐝𝐢𝐧𝐠 𝐛𝐚𝐬𝐢𝐬 would only be $𝟏𝟓𝟎,𝟎𝟎𝟎. This creates a problem. The $240,000 of the old building is lost for 𝐝𝐞𝐩𝐫𝐞𝐜𝐢𝐚𝐭𝐢𝐨𝐧 purposes. Ideally, that amount should have been depreciated to 𝐫𝐞𝐝𝐮𝐜𝐞 𝐭𝐚𝐱𝐚𝐛𝐥𝐞 𝐢𝐧𝐜𝐨𝐦𝐞. Instead, it 𝐠𝐞𝐭𝐬 𝐥𝐨𝐜𝐤𝐞𝐝 into the land value, which provides no tax benefit. But there is a smarter way to plan. Instead of demolishing immediately, Mr. A could 𝐟𝐢𝐫𝐬𝐭 𝐮𝐬𝐞 the old building as a 𝐬𝐡𝐨𝐫𝐭-𝐭𝐞𝐫𝐦 𝐫𝐞𝐧𝐭𝐚𝐥 (𝐒𝐓𝐑) for 𝐨𝐧𝐞 𝐲𝐞𝐚𝐫 with cost segregation. This would allow him to claim 𝟏𝟎𝟎% 𝐛𝐨𝐧𝐮𝐬 𝐝𝐞𝐩𝐫𝐞𝐜𝐢𝐚𝐭𝐢𝐨𝐧 on approx $𝟏𝟐𝟎,𝟎𝟎𝟎 𝐛𝐮𝐢𝐥𝐝𝐢𝐧𝐠 value in the first year itself after doing cost seg study. At a 37% tax rate, that creates tax savings of about $𝟒𝟒,𝟒𝟎𝟎. With this approach, the 𝐥𝐚𝐧𝐝 𝐛𝐚𝐬𝐢𝐬 ends up at $𝟏𝟖𝟓,𝟎𝟎𝟎 ($60,000 original land + $5,000 demolition + $120,000 old building that could not be fully depreciated), while the 𝐛𝐮𝐢𝐥𝐝𝐢𝐧𝐠 𝐛𝐚𝐬𝐢𝐬 is $𝟏𝟓𝟎,𝟎𝟎𝟎 for the new construction. Plus, he already claimed the $𝟏𝟐𝟎,𝟎𝟎𝟎 𝐛𝐨𝐧𝐮𝐬 𝐝𝐞𝐩𝐫𝐞𝐜𝐢𝐚𝐭𝐢𝐨𝐧 in the first year. This simple timing strategy allowed Mr. A to 𝐜𝐚𝐩𝐭𝐮𝐫𝐞 𝐝𝐞𝐝𝐮𝐜𝐭𝐢𝐨𝐧𝐬 that otherwise would have been 𝐥𝐨𝐬𝐭, turning a potential tax trap into a big tax-saving opportunity. 𝐍𝐨𝐭𝐞: Always check with your tax advisor to see if this strategy works for your situation. #ustax #ustaxation #uscpa #cpa #learning #taxseason #cpafirm #cpafirms

Most people wait for their CPA to tell them what they could’ve done. We built a guide of 297 proactive ways to play offense. The tax code is the ultimate playbook for investors. Here are 5 of my favorite plays: 1.  Restructure Holdco to an S-Corp or LLC for Pass-Through Savings Why it works: The 23% pass-through deduction favors well-structured entities. Example: A $2M income stream flowing through a passthrough could mean $400K+ in shielded income. 2. Refinance Debt to Take Advantage of Deductible Interest Why it works: Full interest deductibility is back to make your capital structure more tax efficient. Example: Swap mezzanine equity for debt, lower your WACC, and expense the interest. 3.  Use Cost Seg on Short-Term Rentals Why it works: STRs qualify as non-residential under certain rules meaning you can accelerate depreciation fast. Example: A $1.2M luxury STR can generate $200K+ in bonus depreciation in year one. 4. Run a Cost Seg Study on Heavy Equipment Businesses Why it works: With 100% bonus depreciation back, asset-heavy businesses (think paving, HVAC, waste, car washes) can now be turned into tax shields. Example: Acquire a $3M EBITDA paving company with $1.2M in equipment. Write off 100% in year one to offset income across the portfolio 5. Reclassify GP Comp from W2 to K1 (Passthrough at 23%) Why it works: The passthrough deduction increased to 23%. Reallocating active comp lets you shield more income and keep more profit. Example: A fund manager earning $600K as W2 can move to K1 and save ~$30K+ annually with the same gross payout. Want the full list of 297? Comment "forwardfirm" below and we will send it your way.

The new tax bill that just passed into law is the single most significant piece of legislation we have had in 8+ years Here is everything you should know as a high-income professional or business owner: (Bookmark this post as I'll be updating it as this develops) Background: I have run a startup for the last 3 years that helps business owners and high-income professionals be smart about taxes So this is an area I know a thing or two about This is also not a political post, and none of this is an endorsement for any specific policy 1 - America's biggest tax break for startup founders & investors gets even more generous QSBS allows C-Corp shareholders to pay no taxes on exit This bill raises the limit to $15M, has partial benefits kick in after 3 years & allows a company to qualify up to $75M in assets 2 - 100% bonus depreciation is back When you purchase property with a useful timeline of <20 years, you can depreciate the entire amount upfront This is very significant for real estate investors, who can recoup a huge percentage of their purchase price as a usable tax loss 3 - Relief for software companies in America There was a wild piece of legislation that forced you to amortize software developer salaries over 5 years This resulted in software companies that could lose money and still face a tax bill since their developer salaries had to be deducted over 5 years This is now fixed for local talent 4 - Qualified business income deduction permanent for LLC and S-Corp owners in America Pass-through business owners were gifted a free deduction of up to 20% called QBI since 2017 This was supposed to end this year.. but with this bill, it's now been made permanent 5 - Estate and gift tax exclusion made permanent at $15M per taxpayer, or $30M per couple These exclusions were supposed to fall by more than half at the end of this year But the new bill increases the exemption to $30M for a couple, which is big estate planning news 6 - State & local tax deduction now capped at $40K Before 2017, you could fully deduct state & local taxes from your federal return if you itemized But in 2017, the deduction was capped at $10K The new bill raises it to $40K... this will lead to more people itemizing taxes! 7 - Opportunity zone program made permanent You can defer capital gains for 5 years on a rolling basis by investing in an opportunity zone Hold the property for 10 years and you receive a free step-up in basis Will be a new stricter threshold on what areas count as an OZ 8 - The lowered 21% corporate tax rate is made permanent This coupled with QSBS expansion makes C-Corps a very attractive choice despite the double taxation At the highest tax brackets, C-Corps get very close to S-Corp tax rates with QSBS being a massive benefit on sale If you want to read the rest, I'll be covering these changes in a detailed breakdown post on my personal finance newsletter Silly Money Join 40k+ others: sillymoney.com/subscribe