More Tax-Managing Opportunities

Businesses large and small have numerous other tax-managing opportunities available to them. See which ones fit your business.

Research and Development Tax Credits

The regular Research and Development (R&D) tax credit has existed since the early 1980s and benefits U.S. businesses in various sectors, including manufacturing and distribution, software and technology, healthcare, construction, and consumer products. The amount of the credit is based on a company’s qualified research expenses and consists of wages, supplies used in the R&D process, and 65% of third-party contract research. Research must be completed in the U.S. and meet the IRS four-part test. Your state may have its own R&D credit, so speak with your tax professional to determine eligibility for your business.

Empowerment Zone Tax Incentives

The Empowerment Zone Tax Incentive program, designed to incentivize business investment and job growth in certain economically disadvantaged areas, is available only through December 31, 2025. The program may entitle you to expanded Section 179 deduction allowances, potential deferral of capital gains, and the ability to finance projects using certain tax-exempt bonds.

Vehicle Depreciation

Depreciation limits, as of publication, for passenger vehicles placed in service in 2023 or later increased slightly from 2022. If your business doesn’t claim bonus depreciation, limits range from $20,200 in the first year to $6,960 for years four and beyond. The deduction is phasing out through 2026.

Interest Expensing

Through 2025, amended IRC Section 163(j) limits corporations’ business interest expensing to any business interest income plus 30% of the business’s adjusted taxable income. The limit does not affect small businesses that averaged less than $27 million in annual gross receipts for the three previous tax years in tax year 2022 and $29 million for 2023.

Business Meals

After a bump up in 2021 and 2022, the costs of business meals—taking a client to lunch, treating your employees to a meal, or taking a prospective client to dinner, for example—reverted to 50% deductible in 2023 and remain at 50% for 2024.