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2025 Year-End Tax Planning for NYC & Long Island Businesses (Before the 2026 Changes Hit)
As 2025 moves towards the end of its final quarter, business owners across New York City and Long Island are preparing for a tax season that carries more weight than usual. Several federal provisions are scheduled to change in 2026, and New York State has increased its focus on audits and compliance. Business owners in Manhattan, Queens, Brooklyn, Nassau County, and Suffolk County are dealing with rising costs, stronger enforcement, and thinner margins. Planning early gives you leverage. Waiting until filing season does not.
Year-end tax planning isn’t something to rush through in February or March. The most important decisions must be made before December 31. That’s when the adjustments that actually lower next year’s bill can still be made. The goal isn’t just to reduce taxes—it’s to avoid surprises and make sure your business enters 2026 on steady footing.
Why This Year Matters More Than Usual
Many people assume tax laws stay stable from year to year. They won’t going into 2026. Several federal rules that business owners depend on are set to expire or revert. These shifts affect tax brackets, deductions, and planning strategies. If you’re an S-Corp owner in Brooklyn or a professional practice in Nassau County, these changes influence how you pay yourself, how your business is structured, and how much tax you owe next year.
State and city enforcement is also rising. If you operate a restaurant in Manhattan, a contractor in Suffolk County, or a retailer in Queens, you’ve probably noticed more notices, more requests for information, or more sales tax reminders. New York is tightening its approach, and businesses that wait until filing season often find themselves reacting instead of planning.
The last factor is cash flow. Owners throughout New York and Long Island are dealing with increased payroll costs, rising insurance, higher rent, and general economic pressure. Year-end tax planning helps make sure taxes don’t create another strain when the year turns over.
How Entity Structure Affects 2025 Decisions
The structure of your business—S-Corp, partnership, LLC, or sole proprietorship—directly affects how year-end planning works. Some owners haven’t reviewed their structure in years. That’s a mistake heading into 2026.
If you’re an S-Corp owner in NYC, your salary affects payroll taxes and how much you can save. Too low and you risk an audit; too high and you pay more than needed. Partnerships across Long Island have different rules around allocations, basis, and losses that can help or hurt depending on how year-end is handled. Sole proprietors often pay the most tax overall, especially in New York, simply because they’re using the least efficient structure for their income level.
This isn’t about paperwork. It’s about determining whether your current structure continues to make financial sense before changes in 2026 hit.
Cash Flow & Year-End Tax Planning Before Year-End
Tax planning is really cash planning. Many New York business owners find out what they owe during filing season, long after they can adjust anything. By then it’s too late. Year-end lets you estimate your final numbers, see where your income is trending, and adjust accordingly.
Businesses across NYC and Long Island approach this differently depending on industry:
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Restaurants can time inventory purchases or equipment replacements.
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Contractors in Nassau or Suffolk may have year-end materials purchases that affect profit reporting.
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Medical and dental practices often acquire equipment near year-end for depreciation purposes.
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MSPs may renew software annual licenses that influence deductions.
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Real estate investors adjust for repairs, improvements, and depreciation schedules.
The goal is to avoid a large tax bill in the spring that strains cash flow. Year-end tax planning puts you in front of that problem instead of reacting to it.
Depreciation Planning When Rules Are Changing
Bonus depreciation has been decreasing, which affects every business that buys equipment, vehicles, or improvements. Many business owners assume they still get 100% deductions. They don’t. New York businesses need to be aware of the current rate so they don’t plan based on old rules.
Restaurants upgrading kitchen equipment, MSPs buying servers, medical practices purchasing imaging devices, or contractors acquiring vehicles all face decisions on whether to use Section 179 or bonus depreciation. Some improvements qualify as repairs instead of capital assets, which changes the timing of deductions. New York real estate investors also face shifts in cost segregation benefits as rules adjust.
Making these decisions in December allows deductions to fall in the 2025 tax year where they have immediate impact.
Payroll Adjustments Before the Year Closes
Payroll is often one of the biggest sources of risk for New York businesses. Restaurants in NYC face strict tip reporting rules. Medical practices must manage provider compensation correctly. MSPs and contractors must carefully classify workers. Small mistakes can lead to penalties or notices.
Before December closes, businesses should review:
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owner salary levels for S-Corps
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employee overtime calculations under NYC rules
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tip reporting accuracy for restaurants
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classification of contractors vs employees
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payroll taxes and year-end true-ups
The cost of correcting payroll issues next year can be high. Cleaning it up in December avoids compliance problems in 2026
Payroll, Compensation, and Owner Draw Adjustments Before Dec 31
Payroll and owner compensation is where year-end tax planning has the most leverage. The IRS expects consistency in how S-Corp owners pay themselves, and NY State takes a hard line on proper withholding. If you discover a compensation imbalance in January, you cannot retroactively fix it.
A year-end payroll review helps determine:
• whether your “reasonable compensation” level is defensible
• whether underpayment or overpayment has occurred during the year
• whether year-end bonuses shift you into a more favorable deduction position
• whether adjusting W-2 wages before year-end reduces estimated tax pressure
• whether owner distributions have created an imbalance with salary
This section is also where NYC and Long Island employers often face the most audit exposure. Under-withholding, late deposits, or classification mistakes compound quickly. Correcting them in Q4 avoids penalties that often exceed the tax savings you were aiming for.
Planning for New York PTET Election and Payments
PTET (Pass-Through Entity Tax) has become one of the most important planning tools for New York S-Corps and partnerships. But many businesses either use it incorrectly or don’t understand its timing. PTET is an election that cannot be made after the window closes. Waiting until filing season is too late.
Businesses in Queens, Manhattan, Nassau, and Suffolk should confirm:
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whether PTET makes sense for 2025
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whether cash flow supports the payments
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whether partners or shareholders qualify for the credit
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how PTET interacts with other deductions
Handled correctly, PTET reduces state taxes. Handled late or casually, it creates problems.
Industry-Specific Considerations Across NYC & Long Island
Every major industry you serve has its own set of year-end decisions that influence tax results.
Restaurants adjust inventory, tip reporting, labor costs, and sales tax reconciliation.
Medical and dental practices deal with equipment purchases, payroll, and insurance receivables.
Real estate investors manage depreciation, repairs vs improvements, passive-loss rules, and NYS withholding.
Contractors and home service companies adjust job costing, WIP, and year-end expenses.
MSPs must reconcile deferred revenue, prepaid expenses, and contract terms.
Retailers handle inventory valuation, shrinkage, and sales tax exposure.
These decisions are not simply accounting exercises—they determine how taxable income is calculated. Identical revenue can produce different tax outcomes depending on how the year is closed.
What Businesses Should Finish Before December 31
The most effective year-end planning includes:
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Updated financials through at least Q3
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A projection for Q4 income
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Review of owner salary levels
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A decision on PTET election and payment
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Evaluation of fixed asset purchases
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Review of sales tax exposure
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Updated estimates for federal, NYS, and NYC taxes
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Industry-specific adjustments that influence final numbers
Businesses in New York City and Long Island are operating in an environment where margins are tight and regulations are increasing. Year-end planning ensures that taxes don’t become an additional burden when 2026 arrives.
Year-End Tax Planning Moves That NYC and Long Island Businesses Can Still Make Before December 31
Year-end planning is not a generic checklist. NYC and Long Island businesses face state-specific rules, phase-outs, and timing traps that don’t apply elsewhere. The final weeks of the year are when the biggest mistakes happen: businesses delay decisions, miss elections, or defer conversations until tax season—when it’s too late to change anything meaningful. Adding the right tax moves before December 31 can cut thousands off your 2025 tax bill and position you better for 2026’s IRS and NYS rule changes.
One of the most important year-end steps is reviewing how income and expenses fall across calendar years. NYC and Long Island service businesses, landlords, medical practices, restaurants, and solopreneurs often shift revenue unintentionally—especially if they rely on cash-basis accounting. Understanding when to accelerate or delay income at year-end helps you line up cash flow with your tax strategy, rather than letting your tax return dictate surprise liabilities later.
This is also the stage where many businesses mis-handle depreciation. Larger purchases made before year-end can qualify for Section 179 or bonus depreciation, but the timing rules matter. Some assets must be placed in service—not just purchased—before December 31. For contractors, MSPs, dentists, restaurants, and anyone buying equipment, this distinction determines whether a 2025 deduction exists at all. A quick review of your fixed-asset plan can prevent a costly oversight here.
Payroll is another choke point. S-Corp owners across NYC and Long Island often finalize “reasonable compensation” too late, which risks IRS scrutiny and causes mismatched W-2 and K-1 allocations. Cleaning up payroll before year-end creates a clean starting point for 2026, ensures accurate payroll tax filings, and strengthens audit protection. The same applies to contractor payments and 1099 preparation—verifying vendors now prevents January chaos and reduces the chance of filing penalties.
Finally, year-end is when you decide if major elections—like PTET—should be made or adjusted. PTET can be a five-figure tax swing for S-Corps and partnerships, but only if reviewed before deadlines. If you operate across boroughs or counties, local apportionment rules come into play as well. A short NYS/NYC tax projection now gives you clarity on whether PTET saves you money or increases your total tax.
In short, the last stretch of the year is where NYC and Long Island businesses lock in their 2025 tax position. A focused year-end review lets you make final adjustments with intention, rather than filing reactively in March or April. Proper timing, elections, payroll cleanup, depreciation planning, and income management are the levers that matter most—and each one has a deadline tied to December 31.
Get Year-End Tax Planning Support Before the 2025 Deadline
NYC and Long Island businesses that plan before December avoid surprises in 2026. If you want a full review of payroll, deductions, PTET, depreciation, and entity structure, you can schedule a free consultation and get clear numbers before year-end.
