For small business owners deeply entrenched in their day-to-day operations, tax planning isn’t always at the forefront of their minds. Most of them aren’t financial experts and they don’t have time to learn the ins and outs of what qualifies as a tax break, so some of their most valuable potential credits and deductions go unclaimed.
Deductions and credits can add up to meaningful savings when applied correctly, but the rules around eligibility, documentation, and timing can be easy to miss without specialized guidance. In this guide, we break down some of the most commonly missed small business tax breaks to keep in mind as you prepare your 2025 return.
Small business tax deductions
Tax deductions reduce your taxable income, which can lower how much you owe overall. While many small business owners are familiar with obvious write-offs like rent or office supplies, others are frequently missed because they require more detailed tracking or clearer documentation.
“One of the most overlooked things a small business owner can do to ensure they maximize all available deductions is to keep complete and adequate records. This in conjunction with the help of a seasoned tax professional can ensure you claim every benefit available,” said Carl Breedlove, Principal Tax Research Analyst with The Tax Institute at H&R Block.
Here are three tax deductions worth exploring for your small business.
Professional services
Small business owners typically aren’t experts in every aspect of running a business, so they often rely on outside expertise to keep their operations running smoothly. The cost of these professional services is generally deductible when the services are directly related to operating the business.
Professional support can play a critical role in helping businesses avoid costly mistakes, stay organized throughout the year, and identify tax-saving opportunities they might otherwise miss. Some business owners might avoid hiring help to save money in the short-term, without realizing they can get a tax break for those upfront expenses.
“You may be hesitant to enlist the help of a professional for bookkeeping or tax preparation, but it is generally in your best interest to avoid pitfalls that end up costing you more money in the long run. On top of the savings for ensuring you claim every benefit you qualify for, you can also deduct the cost of these services which helps offset the upfront cost,” said Breedlove.
Travel expenses for business purposes
Business owners may be aware that business vehicle and mileage expenses are tax-deductible, but other travel costs incurred while working away from their primary work location may be deductible, too. This can include airfare, lodging, transportation, and certain meals, provided the travel is primarily for business purposes.
The rules can get nuanced, though, which is why many small businesses might avoid this deduction. For example, commuting between home and a regular workplace is not deductible, while travel to a temporary work site or client meeting may be. A tax professional can help you better understand which expenses do and don’t qualify.
Retirement savings contributions
While saving for retirement isn’t always the highest financial priority for new small business owners, contributions to certain types of plans can reduce your taxable income while helping you plan for the future. A solo 401(k) or a Simplified Employee Pension (SEP) IRA allows eligible business owners to make deductible contributions that grow on a tax-deferred basis until withdrawal. Some plans also offer a Roth option, which uses after-tax contributions and allows tax-free withdrawals later.
SEP IRAs give you additional flexibility, particularly for small businesses with variable income. Contributions are deductible as an adjustment to income for the business owner, while contributions made on behalf of employees are deductible as business expenses. Because contribution rules and limits vary by plan type, retirement savings deductions are often underused or miscalculated by new business owners.
One of the most overlooked things a small business owner can do to ensure they maximize all available deductions is to keep complete and adequate records.Carl Breedlove, Principal Tax Research Analyst with The Tax Institute at H&R Block
Small business tax credits
Tax credits are powerful because they reduce your tax bill dollar for dollar. However, they’re also some of the most commonly overlooked tax benefits, thanks to narrow eligibility rules and highly specific documentation requirements. New business owners might assume these credits don’t apply — or miss them entirely — without expert guidance, especially with recent tax legislation changes that took effect in 2025.
“If you haven’t used a tax professional in the past, 2025 may be the year to take the plunge. Certain credits like the commercial clean vehicle credit were eliminated under the One Big Beautiful Bill. Other credits that you may have claimed in the past, such as the paid family and medical leave credit, were expanded. A tax professional can help you determine what options are still available to you and whether a larger benefit is available compared to prior years,” said Breedlove.
Ask your tax professional about whether you’re eligible to claim these three tax credits.
Small business health care tax credit
If you offer health insurance coverage to your employees, you may qualify for the small business health care tax credit. This credit is designed to help offset the cost of premiums for eligible employers with fewer than 25 full-time equivalent employees.
Because the eligibility requirements are fairly specific (e.g., employees must earn less than a specified average annual wage, and you have to pay at least half the cost of employee-only health coverage), many small business owners assume they don’t qualify and never explore the credit further. Others miss it because the credit is only available when coverage is purchased through the Small Business Health Options Program (SHOP) Marketplace. However, you can claim this credit for two consecutive taxable years for up to 50 percent of the premiums you paid.
Retirement plan startup cost credit
In addition to deducting your own contributions to a qualifying retirement savings account, you might also be eligible for credit if you offer this benefit to your employees. Businesses that start a new retirement plan for their employees, such as a SEP IRA, SIMPLE IRA, or 401(k), may be able to claim up to $5,000 per year for three tax years to help offset setup and administrative costs.
To claim this credit, you must have 100 or fewer employees who earned at least $5,000 from you in the prior year (among other eligibility requirements), and businesses with 50 or fewer can claim 100% of their eligible startup costs. Businesses with 51-100 employees can claim 50% of their eligible startup costs. This credit can make it more affordable for small businesses to offer benefits that support employee retention and long-term financial stability.
Paid family and medical leave credit
Employers that provide qualifying paid family and medical leave to employees may be able to claim a tax credit for a portion of the wages paid during that leave. The paid family and medical leave credit, which was recently made permanent with the 2025 One Big Beautiful Bill Act, is intended to encourage businesses to offer paid leave beyond what is legally required.
To be eligible for this credit, you must have a written policy in place and meet specific wage replacement thresholds.
Trust Block Advisors to save you money on your small business taxes
Identifying which tax credits and deductions you qualify for is only part of the equation. To take advantage of them, you need accurate records, proper documentation, and a clear understanding of how today’s financial decisions can affect your annual tax filings. This is where working with experienced professionals can make all the difference.
Block Advisors, built by H&R Block, is a small business–focused tax, bookkeeping, and payroll service built to support businesses at every stage of growth. Whether you’re self-employed, running a partnership, or managing an S or C corp, Block Advisors’ small business-certified tax professionals can handle simple and complex tax situations, backed by decades of experience.
“A Block Advisors tax professional can help you with more than just tax preparation. They can help you when making decisions about entity structure, bookkeeping, and even payroll. Meeting with a professional on a quarterly basis can ensure you not only have a smooth experience at tax time, but also helps you make decisions throughout the year as you build toward financial success,” Breedlove explained.
If you’re just getting started, Block Advisors’ business formation support can help you establish your LLC or corporation with confidence and potential tax savings in mind. From there, you can access full-service bookkeeping at rates up to 50% less than a typical accountant, and payroll services to further simplify your compliance requirements and end-of-year filings. Bringing your essential financial services under one roof with Block Advisors means you can stay organized year-round instead of scrambling at tax time.
With flexible options to meet in person, work online, or drop off documents, Block Advisors makes it easier for small business owners to get expert support on their own schedule. Schedule a free consultation with Block Advisors to learn how you can save time, reduce your tax liability, and keep more of your hard-earned revenue.
