Tax Season 2025: What SMBs Need to Know This Year

Quick look: As spring approaches, so does tax season. For employers, that means navigating a complex web of regulations and deadlines. Read on to explore key tax provisions affecting small businesses this year and how the experts at a professional employer organization (PEO) can help your company stay compliant, optimize deductions, and streamline operations.

It’s that time of year again: tax season. The intricacies of calculating tax liability are complicated, especially for small business leaders with many other responsibilities also on their shoulders.

To ease the burden, the following article outlines key deadlines, credits, and regulations affecting employers this year, and how outsourcing payroll and tax administration can help your small- or medium-sized business (SMB) stay compliant, efficient, and successful.

2025 tax filing deadlines

Knowing when your company’s tax returns are due is critical. Below are the key filing deadlines for tax season 2025, according to the IRS:

• Calendar-year C corporations must file their 2024 income tax return by April 15, 2025.
• Partnerships and S corporations reporting on a calendar year basis must file their 2024 income tax returns by March 17, 2025.
• Limited liability companies (LLCs) with multiple members must file partnership returns unless they’ve elected to be taxed as corporations.
• LLCs with one member and sole proprietorships must file their return with the owner’s.
• Business owners must file their personal 2024 income tax returns by April 15, 2025.

Employers should review their state’s business tax return filing requirements, as deadlines often align with federal deadlines but may differ.

Organizations located in federal disaster areas should also note they may have extended filing deadlines; please click here to explore further details from the IRS.

5 tax tips for small business owners in 2025

Every company—and its tax situation—is different. However, below, we outline several major regulations that employers should keep in mind, from credits for implementing new employee retirement plans to how a multistate workforce may affect tax liability.

Note: This is not an exhaustive list of changes affecting SMBs this tax year. Please refer to your accountant and/or tax experts for more information. You may also find more details on federal tax credits for businesses on the IRS website.

Expanded relief for disaster victims

Signed into law in December 2024, the Federal Disaster Tax Relief Act (H.R. 5863) provides further tax relief for those affected by qualified wildfire disasters and the train derailment that occurred in East Palestine, Ohio, on February 3, 2023. Qualified wildfire disasters include “any federally declared disaster (as defined in section 165(i)(5)(A) of the Internal Revenue Code of 1986) declared, after December 31, 2014, as a result of any forest or range fire.”

Specifically, the Act entails updated tax provisions regarding:

• Qualified wildfire relief payments: Taxpayers may exclude from their gross income all qualified wildfire relief payments received during taxable years beginning after December 31, 2019, and before January 1, 2026. (Note: victims of the southern California wildfires that began in January 2025 have various extended filing deadlines for tax year 2024.)
• East Palestine train derailment payments: Victims of the train derailment may treat their relief payments as qualified disaster relief payments and exclude them from their gross income.

Please click here to learn more about the IRS’ most recent disaster tax relief provisions (by year and by state).

SECURE 2.0 Act tax credits

Designed to strengthen Americans’ retirement savings and enable more small businesses to offer related employee benefits, the SECURE 2.0 Act includes potentially advantageous provisions for employers preparing their 2024 tax returns:

Retirement plan administration costs

Per the SECURE 2.0 Act, businesses with 50 or fewer employees may be eligible for a 100% tax credit for out-of-pocket administrative costs associated with new retirement plans, including financial professional or third-party administer (TPA) compensation, recordkeeping fees, and employee education expenses. The maximum amount of the credit is $5,000 annually for each of the first three years.

Organizations with 51-100 employees may qualify for the original SECURE Act provision, which includes a 50% tax credit for administrative costs, with an annual cap of $5,000 per employer for three years.

Automatic enrollment credit

Employers with retirement plans featuring an auto-enrollment provision are eligible for an annual $500 credit for each of the first three years.

Employer contribution costs

The Act states that businesses with up to 100 employees may be eligible for a tax credit for their contributions toward workers’ retirement savings accounts. This credit is capped at $1,000 per employee earning no more than $100,000 per year, and phases down over five years from the year of plan adoption, as follows:

• Year 1: 100%
• Year 2: 100%
• Year 3: 75%
• Year 4: 50%
• Year 5: 25%

Organizations with 51-100 employees may also qualify for this credit. However, the credit percentage for each applicable year is reduced by 2% for each employee in excess of 50 during the previous tax year.

Military spouse participation

According to the Department of Labor, 90% of military spouses are women, and Transamerica reports that approximately 40% of women aren’t confident they’ll be able to fully retire with a comfortable lifestyle. Further, many working military spouses don’t remain employed long enough to become eligible for or become vested in their employer’s retirement plan.

These facts highlight the importance of boosting military spouses’ retirement savings, something the SECURE 2.0 Act aims to do using business tax credits. Specifically, the Act allows businesses with fewer than 100 employees to receive a credit if they make military spouses:

• Eligible for plan participation within two months of hire,
• Eligible for any matching or non-elective contribution that they would have been eligible for otherwise at two years of service, and
• Immediately 100% vested in all employer matching contributions.

Commercial Clean Vehicle Credit

Organizations that purchased and placed into service a “qualified commercial clean vehicle” during tax year 2024 may be eligible for a tax credit.

Per the IRS, a “qualified commercial clean vehicle” must be subject to a depreciation allowance (except for vehicles placed into service by a tax-exempt organization and not subject to a lease). Qualified vehicles must also be:

• Made by a qualified manufacturer (see IRC 30D(d)(1)(C)),
• Acquired for use by the business and not for resale,
• Primarily used in the United States,
• Not allowed a credit under sections 30D or 45W,
• Treated as a motor vehicle for purposes of title II of the Clean Air Act and manufactured primarily for use on public streets, roads, and highways (not including vehicles operated exclusively on a rail or rails) or is mobile machinery as defined in § 4053(8) of the Code, and
• Either:
  • A plug-in electric vehicle that draws significant propulsion from an electric motor with a battery capacity of at least 7-kilowatt hours if the gross vehicle weight rating (GVWR) is under 14,000 pounds, 5-kilowatt hours if the GVWR is 14,000 pounds or more, or
  • A fuel cell motor vehicle that satisfies the requirements of IRC 30B(b)(3)(A) and (B).

The tax credit amount is the lesser of 15% of the taxpayer’s tax basis in the vehicle (30% in the case of a vehicle not powered by a gasoline or diesel internal combustion engine), or the vehicle’s incremental cost.

Lastly, for tax year 2024, the credit is limited to:

• $7,000 for compact plug-in hybrid electric vehicles with a gross vehicle weight rating (GVWR) less than 14,000 pounds,
• $7,500 for all street electric vehicles, other than compact car PHEVs, with a GVWR of less than 14,000 pounds, and
• $40,000 for all other vehicles.

Standard mileage rates

When filing their tax returns, those who used their car for commercial purposes may be able to take a deduction based on the mileage used.

For tax year 2024, if you used your car for business activities, you can deduct 67 cents per mile. This is up 1.5 cents from the 2023 standard mileage rate of 65.5 cents.

Remote workforce considerations

A dispersed workforce boasts many benefits: a broader talent pool, a healthier work-life balance, potential cost savings, and more. However, employing workers in multiple states can become tricky when it comes to taxes.

When an organization has employees working in multiple states, it may establish a tax nexus, requiring the company to file income tax returns and pay state and local taxes in those jurisdictions.

Companies should review the income tax rules for all states where they employ staff to determine their tax liability, if any, in those locations.

PEOs: making tax season less taxing

Running a small business can be all-consuming. When you’re focused on growth, finding the time and resources to navigate tax management is challenging. However, failing to do so can have significant repercussions.

That’s where a PEO comes in. PEOs, a type of human resource outsourcing provider, are committed to helping small businesses stay compliant and efficient by enabling them to maximize their credits, avoid back taxes and penalties, and understand which policies apply to their unique organization.

For example, ExtensisHR, a nationally recognized PEO, has a team of tax and payroll professionals who assist with:

• Tax filing (federal, state, and local) and W-2 preparation
• Payroll tax liability management
• Payroll processing
• Tax credit support
• Employee records maintenance
• And more

Further, ExtensisHR pairs each customer with a dedicated payroll specialist to make the process efficient, dependable, and risk-free.

Struggling to manage your company’s taxes? We’re here to help. Explore ExtensisHR’s PEO solution, or contact our experts today to learn more.