By Daniel Korleski, MBA
As a small business owner or startup founder, your goal is to make the most of your profits—whether that means supporting your family or reinvesting in your company. In 2025, small business tax deductions can help lower your income tax bill, allowing you to retain more of your earnings.
By understanding the available tax deductions now, you can set yourself up for significant savings by the end of the year. Here are some of the top tax deductions small businesses should consider in 2025.
The Best Tax Deductions for Small Businesses in 2025
Many expenses that keep your business running can generate tax deductions or credits that reduce the taxes you pay on your profits. A key to taking advantage of those tax breaks is to create a plan and maintain good records to track them.
Consider these tax deductions for small businesses in 2025.
The Cost to Start Your Business
If you’re starting a new business in the new year, you can deduct the costs you incur to launch your company. You can deduct up to $5,000 in startup costs for the year you begin operations. Costs above that—up to $50,000—must be spread out (amortized) over the next 15 years.
Business Meals and Entertainment
You can deduct some types of entertainment, like company parties, along with up to 50% of the costs of food and drinks you purchase for business purposes. The expenses must be directly related to your company, and you must document the following:
- Date and time of the event
- The business relationship of those in attendance
- The total cost
Keep a receipt and write detailed notes about the outing on the back of the receipt. Consider consulting a tax professional about IRS limits on deducting entertainment expenses.
Work-Related Vehicle Use
If you use your vehicle exclusively for work, you can write off what you spend to maintain and operate it. If you also use it for personal errands, only the expenses related to your business can be deducted. You can claim your business mileage or use the standard mileage rate from the Internal Revenue Service, which is $0.70 per mile in 2025.
Office Supplies and Equipment
Office supplies and equipment are some tax deductions for small businesses you shouldn’t overlook. Computers and work-related software, printers, paper, and pens used during the year they were purchased can be deducted. You also can write off postage and shipping expenses. File away your receipts to have them available at tax time.
Employee-Related Expenses
You can deduct certain employee-related expenses deemed reasonable and necessary, including:
- Salaries
- Vacation pay and sick time
- Health and retirement benefits
- Life insurance
- Education
- Meals and lodging
To claim these tax deductions for small businesses, you must comply with all employment laws and regulations.
Professional Services
As a small business owner, you know that professional services from financial advisors, attorneys, and accountants can help you build a successful company. The cost of professional services and fees for financial planning and consulting for business strategy can be deducted from your taxes. You must keep good records of the fees and services.
These are just a few of the tax deductions for small businesses available. You also can claim tax credits and deduct expenses related to marketing and advertising, home office space, utilities, business loan interest and bank fees, business insurance, and more.
Find a Financial Advisor for Small Business Tax Deductions
Smart tax planning can unlock valuable credits and deductions for your business. At Cobalt Private Wealth, we understand the challenges small business owners face, and we’re here to help guide you through it. Our team works with you to develop strategies that reduce your tax burden and position your business for long-term success.
Let us help you make the most of every opportunity available. Reach out to me at danielkorleski@cobaltprivatewealth.com or 719-332-3863 to schedule a meeting.
About Dan
Daniel Korleski is the President & CEO for Cobalt Private Wealth, where he helps his clients grow, manage, and protect their wealth so they can work toward a stronger financial future. With over 30 years of experience in the financial services industry, Dan has served as the managing director for Investment Trust Company, chief investment officer for the Wealth Management Group at American National Bank in Denver, and regional investment manager for the Greater Colorado Region of the Private Bank at Wells Fargo, where he oversaw the management of over $2 billion. In 2008, he was appointed by the mayor of Colorado Springs to the City’s Investment Advisory Committee. Dan holds an MBA in investment management from Midwestern State University in Wichita Falls, Texas, a Bachelor of Science in Finance from Florida State University, and is a member of both the CFA Society Colorado and The Financial Planning Association.
Dan loves to give of his time to his community and is currently serving as the Board Chair of Catholic Charities of Central Colorado and oversees the Homebound Ministry at St. Paul Catholic Church. He has also served as Chair of the Board of Trustees of Pikes Peak Hospice Foundation, President of the Broadmoor Rotary Club, and Vice President of the Board for the Pikes Peak Chapter of Trout Unlimited. Dan was born and raised in Spain and is fluent in Spanish. To learn more about Dan, connect with him on LinkedIn.
