Beat the Heat: Top 5 Summer Tax Moves for Business Owners to Lower Next Year’s Bill

While summer usually means vacations and patio lunches, it is also the absolute best time for business owners to cut their federal tax bill.

Waiting until December to think about taxes leaves you scrambling when choices are limited and supply chains are tight. Acting during the quiet summer months gives you the runway to make strategic moves that will significantly lower what you owe the IRS next spring.

Here are the top five things you can do right now to keep more money in your business.

1. Lock In 100% Bonus Depreciation on Capital Purchases

If your business needs new machinery, equipment, technology upgrades, office furniture, or vehicles, don't wait until the winter rush to buy them.

Thanks to the One, Big, Beautiful Bill Act (OBBBA), 100% bonus depreciation has been restored for qualifying assets purchased and placed in service. This means you can deduct the entire cost of eligible new or used business property in the very first year, rather than writing it off slowly over a decade.

Why Summer Matters: To claim this deduction on next year’s return, the equipment must be installed and in service by December 31. Buying in July or August helps avoid shipping or installation delays that could push the project into the next calendar year and eliminate the current-year tax benefit.

2. Recalibrate Your Quarterly Estimated Taxes

Many business owners rely blindly on "safe harbor" rules—paying 100% or 110% of their prior year's tax liability to avoid underpayment penalties. While this prevents the IRS from penalizing you, it can create a catastrophic surprise cash crunch when you file your actual return.

If your revenue has spiked, or if your operating expenses have shifted over the first six months of the year, your current quarterly estimates are likely detached from reality. Use the mid-year mark to look closely at your year-to-date profit and loss statement. Adjusting your remaining September and January estimated payments now protects your cash flow from a massive, unexpected tax bill in April.

3. Maximize and Optimize Retirement Plan Contributions

Setting up or increasing contributions to a tax-advantaged retirement plan remains one of the fastest, most effective ways to slash your business’s taxable ordinary income.

If you operate a pass-through entity (like an LLC, S Corporation, or Sole Proprietorship), employer contributions are fully tax-deductible for the business, while employee deferrals directly reduce your personal adjusted gross income (AGI).

If you already have a plan like a 401(k) or SIMPLE IRA, review your year-to-date contributions. If you have excess cash flow this summer, you can step up your automated payroll deductions for the back half of the year. If you don't have a plan yet, establishing one now gives you plenty of time to handle the administrative setup before year-end deadlines.

4. Review Owner Compensation and the 20% QBI Deduction

For S Corporation owners, summer is the perfect time to review your "Reasonable Compensation." Paying yourself too low of a salary risks an IRS audit, but paying yourself too high of a salary unnecessarily inflates your payroll tax burden.

Furthermore, your salary directly impacts your Qualified Business Income (QBI) deduction, which allows eligible pass-through business owners to deduct up to 20% of their business income. Because the full QBI deduction begins to phase out once your taxable income crosses specific IRS thresholds, a mid-year review allows you to balance your salary versus distributions. Adjusting this mix before autumn ensures you stay under the threshold and preserve this invaluable 20% write-off.

5. Clean House and Audit Your Inventory

If your business carries physical inventory, do not wait until New Year’s Eve to count it. Use the slower summer months to conduct a thorough inventory audit.

Identify items that are damaged, obsolete, or entirely unsellable. Under IRS rules, you can write down the value of subnormal or obsolete inventory to its actual sellable value or dispose of it entirely to claim an immediate tax deduction. Cleaning up your warehouse or backroom this summer shrinks your taxable year-end inventory balance while giving you a realistic picture of your true asset value.

The Bottom Line

Tax planning is not a year-end event; it is a year-round strategy. Taking a few hours this summer to review your equipment needs, adjust your estimates, and clean up your books will buy you peace of mind—and the extra cash—you deserve when tax season rolls around.