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The past few years’ economic shifts have shaped the way businesses operate. The business landscape will continue to evolve significantly in 2025, in part due to potential upcoming tax policy changes. While these changes may present challenges for businesses of any size, they can also offer potential opportunities. In this article, we’re looking into the future and discussing what companies should plan for in 2025. 

Inflation

Inflation is the rate at which prices for goods and services rise. Inflation was high from 2021-2023, but it declined throughout 2024. 

Our Prediction on Inflation for 2025 

Inflation is expected to continue to slow towards the Federal Reserve’s target of 2% in 2025. 

Interest

The Federal Reserve slows inflation by raising interest rates, which tends to slow down spending. Because inflation decreased throughout 2024, the Federal Reserve lowered interest rates to a range of 4.75% to 5% in September 2024. 

Our Prediction on Interest Rates for 2025 

Although the Federal Reserve just lowered rates in late 2024 they are still expected to reduce interest rates further in 2025 because they are confident that inflation will keep shrinking. 

Tax Policy 

Several major tax policies from the Tax Cuts and Jobs Act (TCJA) of 2017 are currently set to expire in 2025. One significant expiring tax policy from the TCJA is the 20% deduction for qualified small business income. Also, as with any election year, each candidate is proposing tax changes as part of their platform. 

Predicted Tax Policies for 2025 

No matter what, there will be a different president and a different administration in the White House in 2025, which is why tax policy changes are expected in 2025. 

What Businesses Can Do to Prepare for 2025 

Even with inflation expected to slow and interest rates potentially decreasing, the uncertainty around tax policy and economic conditions calls for careful year-end business planning. Here are some important considerations for business planning in 2025. 

Examine Your Pricing 

Consumers could start spending more if their spending power increases in 2025. Businesses may want to reassess their pricing strategies to help maintain a balance between profitability and customer affordability. This may mean implementing flexible pricing options or adjusting your prices to possibly offer more value to different customer groups. 

Plan for Interest Rate Changes 

Interest rates are projected to decrease in 2025, so this may be an ideal time for businesses to evaluate financing options for business expansion or significant purchases. Businesses should also consider assessing their debt structure and refinancing existing loans to lock in lower interest rates and potentially reduce long-term financial burdens. 

Prepare for Tax Policy Changes 

Businesses should be ready to make informed decisions by working with business tax planners so that once tax policy outcomes become more apparent in 2025, they are ready. Be sure to stay up to date on legislative developments regarding tax policies. 

Planning Ahead 

The current economic climate presents both uncertainty and opportunities for businesses. With proactive business planning, your business can possibly position itself for success in 2025 and beyond. The key is planning with flexibility in mind so your business can make informed decisions and adapt to the evolving economic landscape. 

Have questions about business planning for 2025? We’re ready to help. Contact us to meet with our team of business advisory and business tax planning experts.