But here’s the deal…If your 2025 taxable income goes over $197,300 (single) or $394,600 (married), that 20% deduction can phase out fast — or disappear completely.

Here are 3 year-end moves contractors can make before December 31, 2025, to lock in the full deduction 👇

Harvest Capital Losses

If you’ve sold property or investments for a gain this year, that gain can push you over the 199A limit — cutting your deduction.

• Sell losing investments before year-end to offset those gains.

One contractor for example dropped taxable income below the limit and doubled their 199A deduction (from ~$10,900 to $20,000) by harvesting $40,000 in losses.

Make Charitable Contributions

Another way to reduce taxable income (and get your deduction back) — give strategically.

– Donate appreciated stock (you avoid paying capital gains and get a full deduction).- Or prepay 2026 charitable gifts before Dec. 31 to claim them this year.

In one case, a $40K donation created $13,595 in total tax savings when combined with a higher 199A deduction.

Buy Business Assets Before Year-End

New equipment, trucks, or tools can help twice:- You can fully write off the cost using bonus depreciation or Section 179.- The deduction may drop your taxable income under the 199A limit, reactivating the full 20% write-off.

Example: A business owner above the income cap bought $50K in equipment before year-end, saving nearly $24,000 in total federal taxes between the write-off and the revived 199A deduction.

Summary

The 20% deduction (Section 199A) is now permanent.

Stay under $197K/$394K taxable income to keep it.

Before Dec. 31, 2025:

Harvest losses

Give appreciated stock

Buy and place new equipment in service