Can You Pay 2026 Rent Today? (Yes)

It’s December 30.

You have cash in the bank and want to lower your 2025 taxable income.

You ask: “Can I pre-pay my January-June rent or insurance right now and deduct it on my 2025 return?”

The Answer

Yes, thanks to the IRS “12-Month Rule” (Reg. 1.263(a)-4(f)).

The Rule

A cash-basis taxpayer can deduct a prepaid expense immediately if:

  1. The benefit does not extend beyond 12 months.
  2. The benefit does not extend beyond the end of the tax year following the year of payment.

The Play

  • Insurance: Pay your full 2026 business liability policy ($2,000) today. Fully deductible in 2025.
  • Rent: Pay your January-December 2026 rent today. Fully deductible in 2025.
  • Software: Pay the annual subscription for Salesforce/Zoom/Adobe today. Fully deductible in 2025.

The Catch