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

Disclaimer: This content is provided for educational purposes only and is not legal, tax, accounting, or financial advice. Every situation is unique, so consult your own attorney, CPA, or financial advisor before making decisions based on this information.