Business Tax Planning amid Major Policy Shifts

The tax landscape for high-net-worth business owners continues to evolve, creating both opportunities and challenges that require significant planning to navigate. In this environment of shifting regulations, proactive business tax planning has become more important than ever for preserving wealth and optimizing business operations.

Business tax planning amid major policy shifts requires a thorough understanding of both current opportunities and emerging constraints. This article explores key strategies available to business owners today, including: 

• Maximizing the permanent 20% qualified business income deduction
• Leveraging Section 179 expensing and bonus depreciation for equipment purchases
• Adapting to new rules governing research and development expense deductions
• Diversifying with alternative investments within retirement accounts

At Avidian Wealth Solutions, our team helps business owners identify tax planning opportunities with consideration for future policy changes. Schedule a conversation today to explore how these strategies can be applied to your unique wealth objectives.

How do policy shifts affect your business tax planning?

Policy shifts create both immediate compliance challenges and strategic planning opportunities that require business owners to remain agile in their tax approaches. Recent changes have forced businesses to reconsider the timing of investments and restructure cash flow projections. These shifts often occur with limited transition periods, making it essential for business owners to build contingency planning into their business tax strategies rather than relying on temporary provisions that may expire or be modified. 

Successful business owners monitor legislative developments and work with tax professionals to model different scenarios so that they can quickly pivot when new rules take effect. This proactive approach allows businesses to evaluate current opportunities, such as accelerating deductions before unfavorable changes occur, while positioning themselves to take advantage of new benefits that emerging policies may introduce.

Smart business tax strategies to maximize deductions

Understanding the QBI deduction: maximizing your 20% tax savings

The qualified business income (QBI) deduction is one of the most important tax planning considerations for pass-through entities, allowing eligible businesses to deduct up to 20% of their qualified business income. However, maximizing this benefit requires careful attention to the W-2 wage and depreciable property limitations that can restrict the deduction for high-income earners.

Strategic planning around the QBI deduction involves more than just meeting the mathematical requirements — it requires understanding how different business activities and entity structures can be used when looking at how to optimize the benefit. For instance, businesses can increase their QBI deduction capacity by investing in depreciable assets before year-end or restructuring operations to generate more W-2 wages.

Additionally, business owners should consider how the deduction interacts with other strategies unique to tax planning for business owners, such as retirement plan contributions and charitable giving strategies, to create a comprehensive approach to help maximize overall tax savings.

Section 179 vs. bonus depreciation: equipment purchase strategies

Section 179 expensing and bonus depreciation both allow businesses to accelerate equipment deductions, but understanding their distinct advantages can significantly impact your business tax strategies. Section 179 provides immediate expensing up to $1,220,000 (2024 limit) for qualifying property, but includes a taxable business income limitation that prevents creating or increasing losses. The provision also offers strategic flexibility since businesses can elect how much Section 179 to claim, allowing for income management.

Bonus depreciation, currently at 60% for 2025 and decreasing by 20% annually through 2027, offers broader property eligibility and no income limitation, making it valuable for businesses with varying profitability or those looking to defer taxes through strategic loss creation. 

Unlike Section 179, bonus depreciation can create or increase net operating losses, providing future tax benefits when business income recovers. Many business owners combine both provisions, using Section 179 for immediate tax relief and bonus depreciation for longer-term tax optimization strategies.

R&D tax changes: adapting your research and development strategy

The elimination of immediate R&D expense deductions beginning in 2022 has fundamentally altered how innovative businesses approach research and development investments. Under current law, R&D expenses must be capitalized and amortized over five years for domestic research (15 years for foreign research), significantly impacting cash flow for technology companies, manufacturers, and other research-intensive businesses. This change requires businesses to reconsider the timing of R&D projects and explore alternative structures that can provide more favorable tax treatment.

Many forward-thinking businesses are adapting by implementing strategies that account for these extended amortization periods. Companies are increasingly focusing on maximizing R&D tax credits, which remain available and can offset the impact of delayed deductions. Additionally, businesses may benefit from developing a tax contingency plan that considers potential legislative changes, as Congress continues to debate reinstating immediate R&D expensing.

Alternative investments in 401(k)s: beyond traditional assets

Self-directed retirement accounts, particularly 401(k) plans with self-directed brokerage options, offer business owners access to alternative investments that may help enhance diversification while maintaining a tax-advantaged account status. These alternatives include:

• Real estate investment trusts (REITs)
• Commodities
• Precious metals
• Some private equity investments, depending on the plan’s provisions

For qualified business owners seeking to reduce correlation with traditional stock and bond markets, incorporating select alternative investments may be a consideration. While these investments have different risk and reward characteristics they are often used to provide portfolio stability while seeking potentially higher returns.

The key to successful alternative investment integration lies in understanding the prohibited transaction rules and ensuring proper custodial arrangements. Business owners must avoid self-dealing and make sure all investments benefit the retirement account rather than providing current personal advantages. Successful implementation requires coordination between retirement plan administration, investment management, and tax planning so these strategies complement rather than complicate overall financial objectives.

The importance of coordinating personal and business tax strategies

Effective wealth management for business owners often requires aligning business and personal tax planning. Decisions in one area often ripple into the other, shaping overall tax efficiency.

Business owners may wish to evaluate how choices such as income distributions, salary versus dividends, and entity structure affect their personal taxes. 

These decisions may influence investment income, charitable deduction limits, and even exposure to the alternative minimum tax. A coordinated approach helps tax strategies work together, rather than creating unintended conflicts between business and personal goals.

Timing also plays a key role. This is especially true for owners nearing retirement or major life transitions. For example, the timing of business asset sales, Roth IRA conversions, and charitable contributions can directly affect adjusted gross income and eligibility for tax benefits. Owners may also benefit from reviewing how their business structure influences their ability to use personal tax strategies — such as maximizing state and local tax deductions or optimizing investment portfolio taxation outside the business entity.

Ready to turn tax complexity into a competitive advantage? Let’s talk.

The strategies outlined in this article represent just the beginning of what’s possible with sophisticated tax planning. However, the complexity of coordinating personal and business tax planning, maximizing current deductions, and preparing for future policy changes makes professional guidance especially valuable when seeking sustainable success.

At Avidian Wealth Solutions, we work with business owners throughout Houston, Austin, Sugar Land, and The Woodlands to develop comprehensive tax strategies that adapt to regulatory changes while seeking to optimize current opportunities. Our integrated approach is designed to help your business tax planning work with your broader wealth management objectives, creating a cohesive strategy that aims to evolve with both your business growth and the changing tax landscape. 

Schedule a conversation with our team today to discover how strategic tax planning can become your competitive advantage in an era of unprecedented policy shifts.

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• Why Business Owners Need Tax Contingency Plans
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• Using an Intra-Family Loan for Tax-Efficient Wealth Transfer

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