Business

5 Effective Strategies to Reduce Your Tax Liability in 2025

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Opinions expressed by Entrepreneur contributors are their own.

As an entrepreneur, I’ve gotten accustomed to getting up early fairly often and hustling every day to build my business, and I know plenty of others who do it, too. While all of your hard work can pay off and lead to more revenue, it can also increase your annual tax liability. The good news is that there are several legal ways to reduce that tax liability in 2025 and beyond and free up more capital to reinvest in your business.

These strategies are about more than choosing the right tax software, although that’s an certainly a smart step. Here’s a look at some effective and legal ways to decrease your tax liability this year.

Tax law changes you need to know about

The federal government has implemented several tax law changes designed to help you invest in green energy and employee retirement. Learn about these changes and how they could impact you in 2025:

Green energy credits

I have a friend who runs a medium-sized startup and he told me a few years back about how he’s been able to save on his taxes because he added additional electric vehicles (EVs) to his fleet. At least for now, the federal government is continuing to offer vehicle tax credits on eligible new and pre-owned EVs.

Traditionally, you would have to wait until the end of the year to apply these credits to your tax liability. However, you can now sell the credit to the dealer. It will apply the credit to the upfront cost of the EV, reducing your out-of-pocket expenses. The EV credit will reduce the cost of a new electric vehicle by up to $7,500. The credit for qualifying pre-owned EVs is $4,000.

Setting Every Community Up for Retirement Enhancement (SECURE) Act

Several updates to the SECURE Act take effect in 2025. You can now offer higher catch-up contributions to qualifying retirement plans. This means you can contribute more money to eligible retirement plans, which reduces your tax liability while also helping your employees prepare for life after work.

Make sure to take advantage of the new catch-up allowances under the SECURE Act to improve employee morale and retention. Combining increased contributions with fair raises can be an effective way to remain competitive in the current talent environment. These perks incentivize job seekers to come to your business and encourage existing employees to stick around.

5 ways to reduce your company’s tax liability in 2025

Ready to decrease your tax liability this year? Here are five strategies to explore:

1. Have a retirement plan for your employees and contribute to it

Over the years I’ve interviewed a lot of entrepreneurs about saving money on their taxes and many of them mention retirement plans as a solid place to start. Find a good plan for your employees and contribute to it. If you already offer a retirement plan, ensure you are contributing to it optimally. Depending on the type of plan and your contribution, you may qualify for multiple tax benefits, including the following:

Employer contributions to retirement plans are tax-deductible, lowering your taxable income
Retirement plan startup costs tax credits provide even more savings
Contributions to employee retirement accounts can help attract and retain talent

The SECURE Act 2.0 allows you to contribute even more to eligible retirement accounts. Crunch the numbers and determine the optimal amount to contribute to employee retirement accounts to reduce your tax liability.

2. Use an accountable plan for employee expense reimbursements

The IRS allows you to reimburse employees for a wide range of job-related expenses. Some of the expenses you may be able to reimburse employees for include the following:

Travel expenses, including flights, lodging and meals
Business use of personal vehicles
Internet and phone costs for remote or hybrid employees

However, you’ll need to accurately track these expenses throughout the year and document every reimbursement. You need an auditable paper trail that supports the deductions you list on your tax documents.

When you follow IRS guidelines for an accountable plan, these reimbursements do not count as taxable income for the employees. Make sure you don’t reimburse the expenses as part of employees’ paychecks. Instead, issue separate reimbursement payments so you and your team members reap the tax benefits from this program.

3. Offer health insurance and dependent care options

Providing health insurance and dependent care assistance can be a strategic way to reduce your taxable income while offering valuable benefits to employees. Depending on your business size, the following tax benefits may be available:

Premiums paid for employees under a group health plan are tax-deductible
If your business has fewer than 25 employees and pays at least half of their premiums, you may qualify for the Small Business Health Care Tax Credit
You can offer tax-free dependent care benefits to employees to reduce the tax burden on your business and your team members

These tax-friendly benefits not only help you save on taxes but also boost employee morale and retention. If you are already offering these types of perks, make sure you are taking advantage of tax credits your business qualifies for.

4. Buy new assets before year’s end

Does your business need new equipment or vehicles? Is it time for a tech upgrade? You can make these purchases at any time during the tax year and claim them as deductions to lower your taxable income for the year. Section 179 of the Internal Revenue Code allows you to claim these as immediate expense deductions. Before buying new assets, consider the following:

Alignment with business needs: Don’t buy unnecessary assets just for tax benefits
Cash flow: While deductions help lower taxable income, they still require an upfront investment that can impact your cash flow
IRS limits: Some deductions have maximum limits depending on the asset type and your company’s income

Focusing on necessary tax-deductible upgrades is a smart way to invest in your business while reducing its tax liability.

5. Defer income to the next year

Deferring income to next year can provide a quick win that alleviates your tax liability. You can record unearned revenue, such as advance payments for services or products, as a liability rather than income until you receive the goods or services that are rendered. Here are a few legal ways to defer income:

Delay sending invoices until early January 2026
Postpone receiving payments on completed contracts
Structure contracts to spread payments over multiple tax years

Creating favorable contracts can help you defer income to the next year, especially if those agreements have installment plans or are being executed close to the end of the year.

Choosing the right tax strategies for your business

Reducing tax liability requires proactive planning throughout the year, not just when tax season arrives. Take advantage of available tax credits and deductions to minimize your tax burden in 2025.

Once you unlock tax savings with these strategies, identify high-impact opportunities to reinvest in your business. You can allocate the funds toward dynamic marketing principles or hire a coach or mentor to help take your business to the next level.

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Business

Perplexity CEO: AI Coding Tools Transformed the Way We Work

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AI search engine startup Perplexity internally mandated the use of AI coding tools — and says that its engineers have been noticeably more productive.

Perplexity CEO Aravind Srinivas told Y Combinator that the startup “made it compulsory” for its engineers to use AI coding tools such as Cursor or GitHub Copilot. These tools can generate blocks of code and debug programs.

Srinivas said that Perplexity engineers have seen measurable outcomes so far: Using the tools cuts down on “experimentation time” for new tasks from “three, four days to literally one hour,” he said.

“That level of change is incredible,” Srinivas stated. “The speed at which we can fix bugs and ship to production is crazy.”

Perplexity’s AI search engine reported a 20% month-over-month growth in May with 780 million queries.

^{Perplexity CEO Aravind Srinivas. Photographer: David Paul Morris/Bloomberg via Getty Images}

At Bloomberg’s Tech Summit in May, Srinivas predicted that within a year, Perplexity would be handling “a billion queries a week.” He pointed out that when the AI search engine first got started in 2022, it processed 3,000 queries a day, advancing to 30 million queries a day by May.

“It’s been phenomenal growth,” Srinivas stated at the event.

Still, there “are issues,” Srinivas said about using AI coding assistants, noting that the tools can introduce new bugs that software engineers aren’t familiar with and don’t know how to fix.

Last week, Perplexity introduced Comet, an AI-powered web browser that takes on Google Search and Google Chrome. Comet uses Perplexity’s AI search engine as its default tool, putting the company’s core product front and center for users.

In May, Perplexity was reportedly in late-stage talks for a $500 million funding round that would value the company at $14 billion.

Join top CEOs, founders and operators at the Level Up conference to unlock strategies for scaling your business, boosting revenue and building sustainable success.

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Business

How This Teacher Turned Business Owner Got Started

Opinions expressed by Entrepreneur contributors are their own.

Angie Snow was a teacher and mom of three young children when her husband suggested buying an HVAC company together. Assuming she’d be playing a background role, she agreed.

“I thought, Oh good, I can get out of the classroom, be at home. This will be a piece of cake! I just have to answer the phone and send out invoices, right? No big deal,” she says.

But what started as a small step into the trades industry quickly turned into a much bigger leap. Over the past 18 years, Snow and her husband grew Western Heating and Air Conditioning more than they ever could have imagined. Now an industry advisor, Snow also teaches business owners how to succeed with ServiceTitan, a leading home services software company.

“I thought teaching was for me, but it’s been fun as I’ve built my business and been able to help other contractors along the way,” she says. “I’ve been able to slide back into that teaching seat, just in a different role.”

Snow’s transition into the trades wasn’t always easy. As a woman stepping into a leadership role in a male-dominated industry, she struggled with impostor syndrome and finding her footing. Everything changed when she found community through Women in HVACR, an organization that promotes education, mentorship and support for women in the industry.

“I was like, ‘I found my people,'” Snow says.

That moment sparked a deeper passion. Snow later served on the group’s advisory board for six years and got involved with groups like Women in Plumbing and Piping and National Women in Roofing. “It’s just so cool to see these organizations exist to support women, where a lot of times we just haven’t felt or seen that in the trades,” she says.

Building a place in the trades where everyone can feel seen and supported became Snow’s goal, and part of her leadership philosophy centers on creating a workplace with a strong internal culture.

“Number one, you have to work on your leadership and always evolve as a leader — connecting with your people, helping your people feel like they matter and having a vision for them to look at and to follow. The foundational work has to be in place,” she says. “They have to know that you care and you’re a company and a brand worth working for.”

One of the biggest hurdles today is attracting younger workers to the trades. Snow says it’s not just about better recruiting, but rather about changing outdated perceptions of the industry.

“Something we’re doing at ServiceTitan to change that stigma is to show how home service companies are really the heroes,” she says. “They’re the ones showing up. You will have steady work, and these people are the heroes.”

The Covid-19 pandemic helped prove that point. While other industries slowed down, essential home services stayed strong. “It brought a new light to how important the trades are and why we are so needed,” Snow says.

Still, employee retention and morale require more than job security. Snow recognized that many employees, especially Gen Z workers, care deeply about balance and flexibility, which are things that don’t always come naturally in a demanding industry like home services.

“That generation really values work-life balance. They value having time with their family and time off when they want it,” Snow says. “We’re a 24/7 industry, but to help them, I show that I care about them and honor that work-life balance. Because that’s what I want in my life too.”

True to her word, she reworked the team’s schedule into four-day workweeks, which resulted in more engaged workers who take pride in each job.

Technology has also been a huge part of helping Snow deliver a high-level experience. Since switching to ServiceTitan in 2018, Western Heating and Air Conditioning has seen improvements in efficiency. Snow says artificial intelligence is further transforming the game. “It is just crazy how AI can analyze and do so many things so much faster,” she says.

With AI tools, her team can automate dispatching, consolidate contacts, track sales calls and even help technicians perform better during service visits. It’s a win-win: Smarter systems empower her people to focus on serving customers.

Looking back, Snow never imagined where this journey would take her. But she hopes others, especially women and young people, realize the trades offer much more than people assume.

“There is a path for everyone in the trades, and there is so much opportunity [and] money to be made,” she says. “It’s a very nice industry that way, and it is a service that people need. I would definitely consider finding your own unique genius in where you shine and finding a path in the trades, because it won’t let you down. You’ll be surprised.”

After nearly two decades growing a successful HVAC company and helping shape the future of the trade industry, Snow’s advice to current and future business leaders is clear:

Lead with people in mind. Whether it’s your technicians or customers, building a business rooted in care, connection and trust sets the foundation for long-term success.
Create an employee experience worth staying for. From flexible schedules to a culture of belonging, investing in your team elevates every part of your business.
Embrace innovation early. Tools like AI and integrated software platforms don’t just boost efficiency — they also free your team to focus on what matters most: serving customers.
Redefine what leadership looks like. There’s space in the trades for every kind of strength and every kind of leader.
If there’s an open door, walk through it. The trades are full of hidden opportunities. Whether you start in the field, the office or by someone else’s side, you might be surprised where you end up.

Watch the episode above to hear directly from Angie Snow, and subscribe to Behind the Review for more from new business owners and reviewers every Tuesday.

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Business

Nvidia CEO: AI Will Change Everyone’s Jobs, Including My Own

1752515286 Jensen Huang GettyImages 2219673318

In a new interview, Nvidia CEO Jensen Huang says AI is “the greatest technology equalizer” the world has ever seen — and that “100% of everybody’s jobs will be changed” as a result.

Huang told CNN‘s Fareed Zakaria on Sunday that AI was an “equalizer,” meaning that it “lifts” people who aren’t well-versed in technology to be able to use it. Huang said ChatGPT, an AI chatbot with over 500 million global weekly users, was an example of how people can easily use AI with little to no formal training in interacting with it.

“Look at how many people are using ChatGPT for the very first time,” Huang told Zakaria. “And the first time you use it, you’re getting something out of it… AI empowers people; it lifts people.”

AI results in people being able to do more with the technology than they would have without it, Huang said. He elaborated that he was “certain” that the “work that we do in our jobs” would be dramatically transformed due to AI.

Huang, who has been leading Nvidia as CEO since co-founding it in 1993, said his own work has changed because of AI.

“The work will change,” Huang said in the interview. “My job has already changed. The work that I do has changed, but I’m still doing my job.”

Huang said that “some” jobs would be lost because of AI, but “many” jobs would be created thanks to the technology. He predicted that AI would result in productivity gains across industries, lifting society as a whole.

^{Nvidia CEO Jensen Huang. Photo by Chesnot/Getty Images}

Huang’s predictions are less dire than those of Dario Amodei, the CEO of $61.5 billion AI startup Anthropic. In May, Amodei told Axios that within the next five years, AI could wipe out half of all entry-level white-collar jobs and cause unemployment to rise to 10% to 20%. In March, he stated that AI would write “all of the code” for companies within a year.

Adam Dorr, research director at the think tank RethinkX, stated that by 2045, AI and robotics could make human jobs obsolete.

“We don’t have that long to get ready for this,” Dorr told The Guardian last week. “We know it’s going to be tumultuous.”

In a new interview, Nvidia CEO Jensen Huang says AI is “the greatest technology equalizer” the world has ever seen — and that “100% of everybody’s jobs will be changed” as a result.