Take Advantage of a Valuable Business Tax Credit and Other 2025 Tax Updates

As businesses navigate ongoing economic uncertainty, including a reported 4% unemployment rate as of January 2025, many employers continue to face hiring challenges. For those actively seeking to build strong, reliable teams, there’s good news: a valuable business tax credit is available—but only for a limited time. The Work Opportunity Tax Credit (WOTC) is one such incentive that can make a real difference for your bottom line while helping more individuals gain meaningful employment.

That’s just one of several tax-related changes affecting businesses this year. From new retirement plan rules to updates on vehicle depreciation and identity protection, here’s what you need to know to stay ahead.

Take Advantage of the Work Opportunity Tax Credit (WOTC)

One of the most accessible tools available to employers in 2025 is the Work Opportunity Tax Credit—a valuable business tax credit that rewards businesses for hiring individuals from certain groups who face barriers to employment. These groups include:

Military veterans
Ex-felons
Long-term unemployed individuals
Recipients of government aid programs
Eligible summer youth workers

The WOTC allows employers to claim a one-time credit for each eligible new hire, potentially saving thousands in taxes. But timing is everything. To claim this credit, employers must submit IRS Form 8850 to their state workforce agency within 28 days of the employee’s start date. Miss that window, and the opportunity disappears.

This valuable business tax credit is set to expire at the end of 2025 unless extended by new legislation. That means there’s a limited window to take advantage of this program—employers should act now while it’s still available. Not only can the WOTC ease the cost of hiring, but it can also support efforts to build a more inclusive and diverse workforce.

SECURE 2.0 and Automatic Enrollment in Retirement Plans

Starting in 2025, new retirement plan rules under the SECURE 2.0 Act will reshape how employees begin saving for their future. The law requires that employers offering newly established 401(k) and 403(b) plans automatically enroll eligible employees at a starting contribution rate of at least 3% of pay. This rate increases by 1% annually until reaching a 10% cap—unless employees choose to opt out.

This shift aims to increase retirement readiness among American workers and ensures that savings begin as early as possible in an employee’s career. Importantly, these rules apply only to retirement plans created after December 29, 2022. Businesses that existed prior to this date and certain entities such as churches, government agencies, and some small employers are exempt from the requirement.

Employers should review their retirement plan offerings and compliance needs before 2025 rolls around. For many, updating or initiating a retirement plan will now come with new administrative steps and responsibilities.

2025 Depreciation Limits for Business Vehicles

Thinking about upgrading your company’s fleet? The IRS has announced the updated depreciation limits for passenger vehicles placed in service in 2025. For “luxury” vehicles used for business, the depreciation caps are:

$20,200 for the first year
$19,600 for the second year
$11,800 for the third year
$7,060 for each subsequent year

These limits apply to a wide range of vehicle types, including passenger cars, SUVs, trucks, and vans. If you’re leasing a business vehicle instead of buying, the IRS has also updated its lease inclusion amounts, which must be factored into your tax reporting.

Understanding how these limits apply can help you determine the most tax-efficient way to manage vehicle purchases and leases. As always, good recordkeeping and clear documentation of vehicle use are essential to maximizing your deductions.

Business Identity Theft on the Rise

Cybercrime continues to evolve, and unfortunately, so do the risks to businesses. Business identity theft is a growing concern, capable of disrupting operations and damaging financial standing.

Signs that your business may be a victim include:

Rejected e-filed tax returns due to a duplicate filing
Unexpected rejection of routine extension requests
Mismatched IRS tax transcripts that don’t align with your actual returns

To mitigate risk, implement cybersecurity best practices like anti-malware software, firewalls, multi-factor authentication, encrypted backups, and strict access controls for sensitive files. These protections aren’t just IT solutions—they’re essential financial safeguards.

If you believe your business information has been compromised, swift action is critical. The IRS and state tax agencies can provide guidance on recovery, but early detection remains your best defense.

Corporate Tax Rates and Small Business Stock Incentives

Tax policy continues to be a major focus for business advocates. TechNet, a bipartisan coalition of technology industry leaders—including executives from Apple, Amazon, and Google—recently outlined several tax policy recommendations for lawmakers. Their goal? To maintain a competitive tax environment for innovation-driven businesses.

Key points include:

Preserving the 21% corporate income tax rate
Retaining favorable tax treatment for qualified small business stock (QSBS), which allows for significant capital gains exclusions
Reinstating full deductions for research and development (R&D) and software development costs
Raising the 1099-K reporting threshold to reduce administrative burdens on small businesses

TechNet also supports extending the 25% advanced manufacturing investment credit, which particularly benefits industries like semiconductors.

These policy positions may affect how businesses plan for investment, hiring, and growth in the years to come. Staying informed about these developments ensures that your tax strategy aligns with the broader regulatory landscape.

From hiring incentives to retirement planning to cybersecurity, 2025 presents several opportunities—and challenges—for business owners. Of all the updates, the Work Opportunity Tax Credit stands out as a particularly valuable business tax credit that rewards inclusive hiring and provides meaningful financial relief. With its scheduled expiration approaching, there’s never been a better time to explore whether your business qualifies.

Navigating the changing tax landscape doesn’t have to be overwhelming. Whether you’re considering a new hire, setting up a retirement plan, or evaluating major purchases, thoughtful planning can make all the difference.

Contact Us

The team at Burton McCumber & Longoria is here to help you make sense of these updates and guide your business through every stage of tax planning and compliance. Contact us today to learn how we can help you take full advantage of this year’s most valuable business tax credits and more.