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As we closed out 2025, one theme consistently emerged from year-end tax planning conversations at CPA on Fire: business owners who stayed proactive were best positioned to turn uncertainty into opportunity.

Between economic volatility, shifting markets, and major tax law changes passed mid-year, 2025 demanded more than a traditional, once-a-year tax review. It required intentional planning, ongoing communication, and a willingness to adjust strategy in real time.

In a recent CPA on Fire podcast, Ron Parisi and our Tax Director, Andrew Hawkins, CPA, sat down to reflect on what defined 2025 from a tax planning perspective—and why research and development (R&D) credits ultimately took center stage.

With tariffs and market uncertainty leading to dramatic movements in equities, commodities, and crypto, 2025 kept business owners on their toes. While the headlines were noisy, most of our clients ended the year in a strong position.

The differentiator wasn’t luck—it was planning.

Clients who maintained consistent communication throughout the year were able to make small, strategic pivots as conditions changed. Those small unnoticeable adjustments often made the difference between simply reacting at tax time and executing meaningful tax savings before year-end.

The Mid-Year Tax Law Shift That Changed Everything

Heading into 2025, many business owners were preparing for higher taxes. Several favorable provisions were scheduled to sunset, and early planning assumed the need for more aggressive strategies just to offset the increase.

That outlook changed in July with the passage of the “One Big Beautiful Bill.” While the legislation preserved and expanded several key benefits, it also introduced new rules and compliance considerations. Much of the second half of the year involved navigating the gap between what the law said and how the IRS would ultimately interpret it.

For many clients, this meant deeper conversations, additional year-end meetings, and a more deliberate approach to execution.

R&D Credits: From Hesitation to Opportunity

One of the most meaningful changes for business owners involved Section 174 Research and Development expenses.

Over the past few years, businesses claiming R&D credits were required to amortize those expenses over five to fifteen years. While the credit itself remained valuable, the forced deferral of deductions often resulted in higher near-term tax bills. As a result, many business owners viewed R&D credits as a tradeoff rather than a clear win.

The 2025 tax law reversed that treatment for domestically based R&D activities.

Businesses can now fully deduct qualifying R&D expenses in the year they are incurred and claim the associated credit. This restores the pre-2022 treatment and eliminates much of the timing mismatch that previously discouraged participation.

Why This Matters for Business Owners

The ability to expense R&D costs immediately improves cash flow, reduces taxable income, and makes the credit far more impactful in the year the investment is made, especially for companies investing in software development, internal systems, proprietary processes, or product innovation. In practical terms, this turns what was once a cautious “yellow light” strategy into a clear green light for eligible businesses.

As a result, we’re seeing renewed interest in R&D studies and more in-depth conversations with specialists to ensure expenses are properly identified, documented, and maximized.

Strategic Planning Still Matters

While the updated rules make R&D credits more attractive, they don’t eliminate the need for careful planning. Qualification, documentation, and alignment with your broader tax strategy remain essential.

If you’re investing in innovation, internal processes, or technology and aren’t sure how recent changes apply to your business, now is a smart time to review your position and ensure you’re not leaving value on the table.