October is the most underrated month for tax planning. Most business owners wait until December (or worse, March) to think about taxes. By then, your options are limited.
But in October? You still have time to implement strategic tax planning moves that could legitimately save you thousands when April rolls around.
Here’s your October tax action plan.
Why October is the Perfect Tax Planning Month
You have three months left to act. That’s enough time to implement meaningful strategies, not just panic-buying equipment in December.
You can see your full year picture. With 9-10 months of data, you can accurately project your year-end tax liability and plan accordingly.
Quarterly estimates are due October 15th. This deadline forces you to look at your numbers, making it the perfect time for strategic planning.
You beat the year-end rush. Your CPA isn’t slammed yet and can actually have strategic conversations with you.
Calculate Your Current Tax Liability (Do This First)
Before making any moves, you need to know where you stand.
What to do:
- Pull your P&L through September 30th
- Project October-December revenue and expenses
- Calculate estimated taxable income for the year
- Multiply by your tax rate to estimate tax owed
- Subtract what you’ve already paid in estimated taxes
Quick projection method:
- Take your Jan-Sept profit
- Multiply by 1.33 (to project full year)
- Adjust for known Q4 changes
- Apply your tax rate (typically 25-40% for small businesses)
Example:
- Jan-Sept profit: $180,000
- Projected annual: $240,000
- Tax rate: 30%
- Estimated tax: $72,000
- Already paid: $45,000
- Gap to close: $27,000
Now you know what you’re working with. Time to reduce that number legally.
October Tax Move #1: Accelerate Deductible Expenses
The strategy: Pay for deductible business expenses in 2025 instead of waiting until 2026.
What qualifies:
- Annual software subscriptions
- Professional memberships and certifications
- Insurance premiums (if you can prepay)
- Maintenance contracts and service agreements
- Professional development and training
- Office supplies and equipment under $2,500
- Marketing and advertising campaigns
Action steps:
- Review your 2026 Q1 planned expenses
- Identify what can be paid by December 31st
- Confirm with vendors they’ll accept early payment
- Make sure you have cash flow to support this
Real example: Paying $12,000 in annual software subscriptions in December 2025 instead of January 2026 could save you $3,000-$4,800 in taxes (depending on your tax bracket).
Important: Only do this with expenses you’d incur anyway. Don’t create unnecessary expenses just for tax deductions.
October Tax Move #2: Maximize Retirement Contributions
The strategy: Increase retirement plan contributions before year-end to reduce taxable income.
Options available:
Solo 401(k):
- Employee contribution: Up to $23,000 ($30,500 if 50+)
- Employer contribution: Up to 25% of compensation
- Total contribution limit: $69,000 ($76,500 if 50+)
- Deadline: December 31st for employee portion, tax filing deadline for employer portion
SEP IRA:
- Contribute up to 25% of net self-employment income
- Maximum: $69,000 for 2025
- Deadline: Tax filing deadline (with extension)
Simple IRA:
- Employee contribution: $16,000 ($19,500 if 50+)
- Employer match required
- Deadline: December 31st
Action steps:
- Calculate maximum contribution you’re eligible for
- Determine how much you can afford to contribute
- Contact your plan administrator to increase contributions
- Set up automatic contributions for remaining months
Tax savings example: $30,000 retirement contribution at 30% tax rate = $9,000 tax savings
October Tax Move #3: Strategic Equipment Purchases (Section 179)
The strategy: Purchase and place in service business equipment before December 31st to claim immediate deductions.
Section 179 highlights:
- Deduct up to $1,220,000 in 2025
- Equipment must be purchased AND in use by December 31st
- Includes vehicles, machinery, computers, furniture, software
- Can’t exceed business income (can’t create a loss)
Bonus depreciation:
- Additional first-year deduction of up to 60% (for 2025)
- Applies to new and used equipment
- Can be taken after Section 179
What qualifies:
- Computers and technology
- Office furniture and fixtures
- Machinery and equipment
- Business vehicles (with limitations)
- Software and certain improvements
What to consider:
- Do you actually need this equipment?
- Will it generate revenue or improve efficiency?
- Can you afford it without compromising cash flow?
- Is financing available if needed?
Action timeline:
- October: Research and price equipment
- November: Make purchase decisions and order
- December: Take delivery and place in service
Warning: Don’t buy equipment solely for the tax deduction. The tax savings is 25-40% of the cost—you’re still spending 60-75% of the money.
October Tax Move #4: Hire Your Kids (If You Have Them)
The strategy: Employ your children in your business for legitimate work and shift income to their lower tax bracket.
The benefits:
- Kids can earn up to $14,600 (2025 standard deduction) tax-free
- Business gets the deduction
- No payroll taxes if your business is unincorporated and they’re under 18
- Teaches work ethic and financial responsibility
Requirements:
- Work must be legitimate and age-appropriate
- Pay must be reasonable for the work performed
- Proper documentation required (timesheets, job descriptions)
- Must actually pay them and file appropriate forms
Examples of legitimate work:
- Social media management
- Filing and administrative tasks
- Model for marketing materials
- Data entry and organization
- Cleaning and maintenance
Action steps:
- Document job responsibilities
- Establish reasonable hourly rate
- Set up payroll (or payment process)
- Keep detailed time records
- Issue W-2 at year-end
Tax savings example: Paying your 16-year-old $10,000 for legitimate work saves you $3,000-4,000 in taxes while teaching them valuable skills.
October Tax Move #5: Review and Adjust Quarterly Estimates
The strategy: Ensure you’ve paid enough estimated taxes to avoid underpayment penalties.
Safe harbor rules:
- Pay 90% of current year tax liability, OR
- Pay 100% of prior year tax liability (110% if AGI > $150,000)
- Whichever is lower
What to do:
- Calculate total tax liability for 2025
- Add up all payments made so far
- Determine if you’re on track
- Make adjustment payment if needed
October 15th deadline: Q3 estimated payment is due. Use this as your checkpoint.
Action steps:
- Review year-to-date income and deductions
- Project Q4 results
- Calculate required payment
- Make payment by deadline if needed
Penalty avoidance: Missing estimated payments can result in penalties even if you get a refund. Better to pay quarterly and adjust than face penalties.
October Tax Move #6: Harvest Business Losses
The strategy: If you have underperforming investments or assets, realize losses before year-end to offset gains.
What qualifies:
- Worthless inventory
- Uncollectible accounts receivable
- Obsolete equipment or assets
- Business investments that failed
Action steps:
- Identify assets with losses
- Document the loss properly
- Write off before December 31st
- Maintain documentation for IRS
Important: This is about recognizing losses that already exist, not creating artificial losses.
October Tax Move #7: Maximize Business Expense Deductions
Often-missed deductions:
Home office deduction:
- Simplified method: $5 per square foot (up to 300 sq ft = $1,500)
- Actual expense method: Percentage of home expenses
Vehicle expenses:
- Standard mileage: 70 cents per mile (2025 rate)
- Actual expenses: Gas, maintenance, insurance, depreciation
- Keep detailed mileage logs
Education and training:
- Courses that improve current business skills
- Industry conferences and seminars
- Professional certifications
Travel:
- Airfare, hotels, rental cars
- Meals while traveling (50%)
- Must have legitimate business purpose
Action steps:
- Review all business expenses for the year
- Ensure proper documentation
- Catch up on mileage logs
- Gather receipts for any missing documentation
October Tax Move #8: Consider Income Deferral
The strategy: If possible, delay receiving income until January to push it into next year’s tax return.
When this makes sense:
- You’re having an unusually high-income year
- You expect lower income next year
- You’re near a tax bracket threshold
- You want to spread income across years
How to do it:
- Bill for December services in January
- Delay year-end bonuses until January
- Push contract signing into new year
- Time large project completion for early January
Caution: This only works if you’re on cash basis accounting and you have control over payment timing.
October Tax Move #9: Bunch Deductions If Itemizing
The strategy: Concentrate deductible expenses into one year to exceed standard deduction threshold.
What to bunch:
- Charitable contributions (make two years’ worth in one year)
- State and local taxes (if beneficial)
- Medical expenses (if near the 7.5% threshold)
- Investment expenses
Action steps:
- Calculate if you’re near itemizing threshold
- Identify expenses you can accelerate
- Make strategic payments before year-end
- Document everything properly
October Tax Move #10: Set Up a Defined Benefit Plan
The strategy: For high-income business owners 50+, defined benefit plans allow massive tax-deductible contributions.
Potential benefits:
- Contributions of $100,000-$300,000+ annually
- Significantly higher than 401(k) limits
- Catch-up contributions for older owners
- Predictable retirement income
Requirements:
- Must be established by December 31st
- Requires actuarial calculations
- Generally makes sense for businesses with few employees
- Multi-year commitment required
Action timeline:
- October: Consult with pension specialist
- November: Complete plan design
- December: Establish and fund plan
Your October Tax Planning Checklist
Week 1: Assessment
☐ Calculate projected annual income
☐ Estimate total tax liability
☐ Review quarterly payment status
☐ Schedule call with CPA/tax advisor
Week 2: Strategic Planning
☐ Identify applicable strategic tax planning moves
☐ Prioritize based on potential savings
☐ Assess cash flow impact
☐ Create implementation timeline
Week 3: Equipment & Expenses
☐ List equipment needs for next 6 months
☐ Price major purchases
☐ Review prepayable expenses
☐ Get vendor quotes and delivery timelines
Week 4: Retirement & Income
☐ Calculate maximum retirement contributions
☐ Increase contribution amounts if needed
☐ Review income deferral opportunities
☐ Document all decisions
Common October Tax Planning Mistakes to Avoid
Mistake 1: Waiting until December
- Best options may not be available
- Equipment may be back-ordered
- CPAs are too busy for strategy sessions
Mistake 2: Making decisions in isolation
- Coordinate with your tax advisor
- Consider multi-year tax impact
- Think about cash flow implications
Mistake 3: Buying things you don’t need
- Tax tail shouldn’t wag the business dog
- You’re still spending 60-75% even after tax savings
- Only accelerate expenses you’d make anyway
Mistake 4: Poor documentation
- Keep receipts and records for everything
- Document business purpose
- Maintain contemporaneous records
Mistake 5: Ignoring state taxes
- State strategies may differ from federal
- Some states have different rules
- Multi-state businesses need extra planning
The Bottom Line
Smart strategic tax planning moves in October can save you thousands in April—but only if you actually implement them.
This week:
- Calculate your projected tax liability
- Identify your top 3 tax-saving opportunities
- Schedule a call with your tax advisor
This month:
- Implement quick wins (expense acceleration, retirement contributions)
- Research and price major equipment purchases
- Update your estimated tax payments
By December 31st:
- Execute all planned strategies
- Document everything properly
- Review results with your advisor
The difference between tax planning in October vs. December? Options, time, and thousands of dollars in savings.
Start today. Pull up your profit and loss statement right now and do the quick calculation. You might be shocked at what you could save.
P.S. Need expert guidance? We’re here to help.
