The tax strategy library

41 legal tax strategies for business owners and their families, explained in plain English: how each works, the records that make it hold up, the risks, and the questions to ask your CPA. Many never come up in a once-a-year tax appointment.

Business structure

• NC pass-through entity tax electionNC lets an S corp or partnership pay the owners’ state income tax itself. The company deducts it on the federal return, which gets around the federal…Explore
• Set a reasonable S corp salaryAn S corp owner who works in the business pays themselves a salary, which carries payroll tax, and takes the rest as distributions, which don’t. A…Explore with diligence
• Elect S corp statusA company that reports on your own return pays self-employment tax on all its profit. As an S corp, it pays you a salary and the rest can come out as…Explore with diligence

Business deductions

• Claim the 20% business income deductionOwners of pass-through businesses (sole proprietorships, partnerships, S corps) can deduct up to 20% of their qualified business income. The 2025 tax…Explore
• Home office used for the businessA part of your home used regularly and only for your business can carry a share of rent or mortgage interest, utilities, insurance and repairs. An S…Explore
• Business travel and per diemTravel away from home overnight for business is deductible: airfare, lodging, and meals. Instead of saving every meal receipt, you can use the federal…Explore
• Prepay next year’s expenses before December 31A cash-basis business can usually deduct expenses paid in December for services that run up to 12 months ahead, such as rent, insurance or…Explore

Family and college

• Augusta rule: rent your home to the company for meetingsYou can rent your home to anyone for up to 14 days a year and not pay tax on the rent. When the renter is your company, the company deducts the rent…Explore
• Pay your children for real workWages you pay your child for real work are a deduction for the company. When the company belongs only to the child’s parents (a sole proprietorship, a…Explore
• Employ your spousePaying your spouse for real work in the business lets them put their own money into a 401(k). In a business that reports on your own return, it can…Explore
• Lower your income before college-aid yearsFederal college aid uses your tax return from two years before each school year. Lowering that year’s income (bigger retirement contributions, timing a…Explore
• Open a Trump account for each childA new tax-deferred investment account for children under 18, open since July 2026. Family can put in up to $5,000 per child a year, and an employer can…Explore

Retirement accounts

• Retirement contributionsMoney put into a 401(k), SEP or IRA before tax lowers this year’s taxable income. A 401(k) lets you defer up to $24,500 of your own pay in 2026, and…Explore
• Backdoor Roth IRAAbove certain incomes you can’t put money straight into a Roth IRA. You can put it in a traditional IRA without a deduction and convert it to a Roth,…Explore
• Mega backdoor Roth through a 401(k)Some 401(k) plans accept after-tax money above your regular contribution, up to the plan’s total limit, and let you convert it to Roth right away. That…Explore with diligence
• Solo 401(k), including for real estate in retirementA business with no employees other than the owners and their spouses can have a solo 401(k), with high limits. It can also hold real estate bought with…Explore with diligence
• Defined benefit or cash balance planA pension-style plan lets a business put away far more each year than a 401(k), often over $100,000 for an owner in their 50s, and deduct it. It can…Explore with diligence
• Roth conversion in a low-income or down yearConverting pre-tax retirement money to Roth means paying tax now so it grows tax-free after. It costs least in a year your income is low, or when the…Explore with diligence
• Self-directed IRA for private investmentsA self-directed IRA can own private funds, real estate and notes, so their returns grow tax-deferred, or tax-free in a Roth. Many…Explore with diligence

Equipment and vehicles

• Buy planned equipment before December 31Equipment placed in service by December 31 can usually be written off this year instead of over several years. 100% bonus depreciation is back for…Explore
• Buy a business vehicleA truck or SUV over 6,000 pounds gross vehicle weight used mostly for business can be written off largely or fully in the year it’s put in service.…Explore with diligence

Real estate

• Real estate professional statusRental losses are usually “passive” and can’t offset other income. A real estate professional (more than 750 hours a year, and more than half of…Explore with diligence
• Cost segregation on a property you buyAn engineering study splits a building into parts with shorter lives (fixtures, flooring, parking lots) that can be written off much faster. With 100%…Explore with diligence
• Short-term rental to offset other incomeA rental whose average stay is seven days or less isn’t treated as a rental under the passive rules. If you materially participate (often 100 or more…Explore with diligence
• Year-end investment in a fund that passes through depreciationSome real estate funds buy property late in the year and pass large first-year depreciation to investors on the K-1. That loss can offset other passive…Explore with diligence
• 1031 exchange when you sell investment propertySell investment or business real estate and buy more, and the gain isn’t taxed now. Reinvest the full sale price and replace the debt to defer all of it.Explore
• Offset a sale with depreciation from a new purchaseInstead of a formal 1031 exchange, buy a new property in the same year you sell one, and use cost segregation on it. The first-year depreciation can…Explore with diligence
• Delaware statutory trust as 1031 replacementA Delaware statutory trust (DST) owns large properties in shares. A share counts as replacement property in a 1031 exchange, which helps when you can’t…Explore with diligence
• Invest a gain in an Opportunity Zone fundPut a capital gain into a Qualified Opportunity Fund within 180 days and the tax on it is put off. Hold the fund ten years and its growth comes out…Explore with diligence

Energy

• Oil and gas drilling investmentMost of the cost of drilling a well (intangible drilling costs) can be deducted in the first year. A working interest isn’t passive, so the deduction…Explore with diligence
• Business solar credit (closing)Home and business solar are now different rules. The home credit (§25D) is gone: it ended for costs paid after December 31, 2025. A business solar…Explore with diligence
• Buy transferable tax credits at a discountClean energy projects can sell their credits. A buyer pays, say, 90 to 95 cents per dollar of credit and uses it against their own tax.Explore with diligence

Investments

• Harvest investment losses, including cryptoSelling investments that are down lets the loss offset gains, plus up to $3,000 of other income a year, with the rest carried forward. The wash-sale…Explore
• Hold income funds that pay REIT dividendsOrdinary dividends from a real estate investment trust (REIT) get a 20% deduction, so they’re taxed at a lower effective rate than interest. Some…Explore
• Film production investmentFilm and TV production costs used to be written off in the year spent under Section 181. That election expired for productions starting after 2025 (a…High caution

Insurance

• Cash value life insurance and the bank replacement strategyWhole life policies build cash value that grows tax-deferred, and you can borrow against it without tax while the policy stays in force. In the bank…Explore with diligence
• Private placement life insuranceA life insurance policy built for wealthy investors that holds investments like hedge or private funds inside it, so their returns grow without yearly…High caution

Giving

• Donor-advised fund, funded with appreciated stockGive appreciated investments instead of cash: you deduct their full value and never pay tax on the gain. A donor-advised fund lets you take several…Explore
• Charitable remainder trustPut an appreciated asset, like a business or property, into a trust. The trust sells it without tax, pays you income for life or a set term, and what’s…Explore with diligence
• Conservation easement on land you ownPermanently giving up the right to develop land you own, through an easement held by a land trust, can earn a charitable deduction for the value given up.High caution

Credits

• R&D tax creditMoney spent developing or improving products or processes can earn a tax credit, not just a deduction. Small companies can sometimes apply it against…Explore with diligence

Education, not advice. Tax law changes and every situation is different, so confirm the details with your CPA or tax advisor before acting. This page was last checked against tax law as of October 2026, including the 2025 tax law, in October 2026.