Every January, I have the same conversation with business owners. They sit down across from me, look at last year’s tax bill, and say some version of,
“There has to be something we can still do… right?”
Sometimes the answer is yes. Other times, the honest answer is no — at least not as much as they hoped.
That’s not because tax planning is broken. It’s because tax planning has a clock. And once certain doors close, they close for good.
The good news is this. Even as we move deeper into 2026, there are still legitimate, IRS-approved ways to impact your 2025 taxable income. The bad news is that the window is narrower than most people realize, and the margin for error is thinner than social media would have you believe.
What separates the business owners who still save meaningful money from the ones who don’t isn’t intelligence or income. It’s preparation. The people who win understand which levers are still available, how much they can pull them, and how to do it without hurting cash flow or triggering problems down the road.
That’s exactly what I want to walk you through.
Why Your Ability to Change 2025 Taxes Is Limited — But Not Gone
Taxes don’t work like a thermostat you can adjust after the fact. Most of the heavy lifting happens during the year decisions are made, not when returns are filed.
Income structure, entity elections, payroll strategy, asset purchases, and timing decisions all shape your tax outcome long before April rolls around. By the time we’re filing, many of the biggest opportunities are already locked in.
Still, the tax code does leave a few doors open after year-end. Congress designed certain provisions to allow taxpayers flexibility, especially business owners whose income fluctuates or whose cash flow doesn’t align neatly with the calendar year.
These provisions exist for a reason. The IRS expects taxpayers to use them. The problem is most people either don’t know they exist or misuse them and end up worse off than where they started.
The goal at this stage isn’t perfection. It’s optimization. Smart planning now focuses on strategies that are still legal, still defensible, and still practical without introducing new risk.
The Strategies That Still Matter After the Year Ends
When clients ask me what can still move the needle for 2025, I focus on a short list of tools that remain available well into the filing season.
Retirement contributions sit at the top of that list. Certain employer-sponsored plans allow contributions to be made after December 31 while still counting toward the prior tax year. This includes Solo 401(k)s, SEP IRAs, and pension plans tied to business income.
Health-based strategies also remain in play. Health Savings Accounts, when paired with qualifying health plans, allow contributions up until the filing deadline and reduce taxable income dollar for dollar. For the right taxpayer, this becomes one of the most efficient tax tools available.
Entity-level decisions can also matter, especially for S-Corp owners. Employer contributions, reasonable compensation adjustments, and retirement plan funding often remain flexible longer than people expect. These aren’t last-minute hacks. They require clean books, accurate payroll, and intentional execution.
Finally, charitable strategies and certain elections tied to depreciation and accounting methods may still apply depending on facts and timing. These tend to be more nuanced and require professional guidance, but they can still play a role in a well-structured plan.
Each of these strategies has limits. Each has rules. And each works best when it fits into a broader picture rather than being bolted on at the last minute.
How to Apply These Strategies Without Hurting Your Business
Saving taxes is pointless if it starves your business of oxygen.
One of the biggest mistakes I see is business owners chasing deductions without understanding how those decisions affect cash flow. Just because something lowers taxable income doesn’t mean it’s good for the business today.
The right approach starts with cash awareness. Before making any contribution or election, I walk clients through how much cash they actually have available, how predictable future revenue looks, and what obligations sit on the horizon.
From there, we prioritize flexibility. Retirement plans that allow adjustable contributions work better than rigid structures when cash flow fluctuates. Health-based strategies provide tax savings without permanently locking money away. Entity-level decisions should align with payroll reality, not theoretical savings.
I often remind clients that taxes are just one line item. Liquidity, growth, and optionality matter just as much. The best tax plan is one you can sustain year after year, not one that leaves you scrambling to make payroll in June.
Contribution Limits and Reality Checks for 2025
This is where planning gets real.
For 2025, contribution limits still cap how much income you can shelter using these strategies. Retirement accounts have annual maximums based on age, plan type, and earned income. HSAs have defined limits tied to coverage type. Employer contributions must align with profits and payroll structure.
These limits aren’t suggestions. The IRS enforces them strictly.
Trying to force money into a strategy beyond what’s allowed doesn’t create savings. It creates penalties, amended returns, and uncomfortable conversations later.
That’s why I focus on optimization rather than exhaustion. Using the right mix of strategies, sized correctly, almost always produces better results than trying to max out everything blindly.
Why Filing an Extension Can Be a Strategic Advantage
One of the most misunderstood tools in tax planning is the filing extension.
Extending your return doesn’t mean you’re behind. In many cases, it means you’re intentional.
An extension gives you more time to finalize numbers, make allowable contributions, and manage cash flow without rushing decisions. For business owners, that breathing room can be the difference between a smart plan and a reactive one.
I often recommend extensions when income is uneven, books need cleanup, or cash flow timing matters. The extra months allow profits to stabilize and decisions to be made with clarity instead of pressure.
Used correctly, an extension becomes part of the strategy rather than a sign of procrastination.
The Trap Most People Fall Into When Extending
Here’s the warning I give every client, without exception. An extension extends the time to file, not the time to pay. The IRS still expects an estimated payment by the original deadline. Miss that, and penalties and interest start accruing immediately.
This is where many taxpayers stumble. They extend, assume they bought time across the board, and then get hit with avoidable charges months later.
The fix is simple but requires discipline. You estimate conservatively, pay what you reasonably owe, and true up later if needed.
For example, imagine a Florida-based business owner with no state income tax. They extend their federal return because income spiked late in the year. Their strategist estimates the liability based on current numbers and submits a payment with the extension. When the final return is filed months later, adjustments are made, and any overpayment is applied forward or refunded.
There is one more lever many business owners don’t realize exists. In certain situations, the IRS will remove or reduce the failure-to-pay penalty if you can show reasonable cause and a history of compliance. This is not automatic, and it is not something you “hope for.” It requires understanding how the penalty is calculated, what qualifies as reasonable cause, and when it makes sense to request relief versus simply paying and moving on.
The IRS outlines these rules clearly, but applying them to a real-world business situation is where most people get stuck. You can read the IRS’s official guidance on failure-to-pay penalties and relief options here: IRS – Penalties for Failure to Pay Tax.
How to Calculate Your Estimated Payment
The goal is to estimate your tax liability as accurately as possible to avoid penalties and interest. The IRS offers a safe harbor rule to help you avoid underpayment penalties: you generally won’t owe a penalty if the amount you pay during the year (through withholding and estimated taxes) is the smaller of:
- 90% of the tax you expect to owe for the current year, or
- 100% of the tax shown on your prior year’s tax return (this increases to 110% if your prior year’s Adjusted Gross Income (AGI) was more than $150,000, or $75,000 if married filing separately).
By doing so, there are no penalties, there are no surprises, and zero added stress. If you ask me, that’s how extensions are meant to work.
If you’re unsure whether relief applies to you, this is exactly the type of situation I walk through with business owners. A short planning call can help determine how much exposure you actually have, whether penalty abatement is realistic, and how to structure payments without disrupting cash flow.
The Bigger Picture Most Business Owners Miss
The biggest mistake isn’t missing a deduction. It’s treating taxes as a once-a-year event.
The clients who save the most money don’t rely on April decisions. They make structural choices during the year that compound over time. Entity structure, compensation strategy, investment timing, and long-term planning all matter far more than last-minute moves.
Still, preparation at this stage can soften the landing. It can protect cash flow. And it can set the stage for smarter decisions going forward.
If you’re prepared, 2025 isn’t set in stone yet. But the window won’t stay open forever.
The earlier you act, the more control you keep.
Welcome to the New Age of Accounting. Let’s begin.
P.S. If you found this article helpful, you’ll love my new book S-Corp Mastery: How Smart Business Owners Maximize Tax Savings & Build a Lasting Legacy. It’s now live and available in a sleek, easy-to-read PDF version. Grab your copy here.
Chris is the Managing Partner at Weston Tax Associates, a best-selling author, and a renowned tax strategist. With over 20 years of expertise in tax and corporate finance, he simplifies complex tax concepts into actionable strategies that drive business growth. Originally from Sweden, he now lives in Florida with his wife and two sons.
