The most impactful tax planning decisions for NJ business owners must happen before December 31, not during tax season. Deferring income, accelerating deductions, maximizing retirement contributions, and evaluating the NJ BAIT election are all strategies that Greg Monaco, CPA reviews with every client during Q4 planning sessions. The difference between proactive year-end planning and reactive April filing can be thousands of dollars in tax savings.
"The decisions you make between now and December 31 determine how much you owe next April," Greg Monaco, CPA explains. Tax season starts long before you file your return.
Should I Review My Estimated Tax Payments Before Year-End?
Compare what you’ve paid to date against your projected total liability. Underpayment penalties apply if you haven’t paid at least 80% of your current year’s liability for NJ or 90% for federal.
How Do I Defer Income and Accelerate Expenses Before December 31?
For cash-basis businesses, consider delaying invoices so payment arrives in January, prepaying deductible expenses before December 31, and purchasing needed equipment to claim Section 179.
How Do I Maximize Retirement Contributions Before Year-End?
SEP-IRAs allow contributions up to 25% of net self-employment income. Solo 401(k) plans offer even higher limits. The employee deferral deadline is December 31.
Should I Make the NJ BAIT Election Before Year-End?
If your business is a pass-through entity, evaluate the NJ Business Alternative Income Tax election. It effectively bypasses the $10,000 SALT deduction cap.
Should I Review My Entity Structure Before Year-End?
If your LLC earned significantly more this year, S-Corp election for next year might save thousands. The deadline to file Form 2553 is March 15.
What Should I Document Before the Year Closes?
Organize receipts, reconcile your books, and make sure all business expenses are properly documented before the year closes.
Key Takeaway
Year-end tax planning is the single highest-value conversation you can have with your CPA. Strategies like income deferral, Section 179 purchases, retirement contributions, and the NJ BAIT election all have December 31 deadlines. Start the conversation in October or November, not January.
Related reading: Quarterly Estimated Taxes in NJ | NJ BAIT Election | Section 179 and Bonus Depreciation in NJ | Retirement Plans for NJ Business Owners | Tax planning services
Frequently Asked Questions
When is the deadline for year-end tax planning moves?
Most year-end tax planning strategies must be completed by December 31 to apply to the current tax year. This includes income deferral, expense acceleration, Section 179 equipment purchases, and retirement plan contributions (for SEP-IRA, the contribution can be made until the filing deadline, but the plan must be established by December 31). The BAIT election is made on the entity return filed the following year, but estimated BAIT payments should be made during the tax year.
Does NJ allow bonus depreciation?
No. New Jersey does not conform to federal bonus depreciation. Assets must be depreciated over their normal useful lives for NJ purposes, creating an addback on your NJ return in the year you claim bonus depreciation federally. NJ does allow Section 179, but caps it at $35,000 (2025) compared to the federal limit of $1,250,000. This NJ/federal difference requires maintaining separate depreciation schedules.
Should I make a BAIT election before year-end?
The BAIT election itself is made annually on the entity's NJ tax return, so it does not need to be finalized before December 31. However, you should evaluate whether the election makes sense during Q4 tax planning and begin making estimated BAIT payments (Form BAIT-100) before year-end to avoid underpayment penalties. For most qualifying NJ pass-through businesses whose owners itemize and exceed the SALT cap, the election produces meaningful federal tax savings.
