For business owners, the final weeks of the year can shape your tax bill, cash flow, and longer-term plans for the business.
The 2026 tax year also looks different from a few years ago. The One Big Beautiful Bill Act, signed in July 2025, extended many expiring provisions from the 2017 Tax Cuts and Jobs Act and changed several rules that affect business owners directly.
Below, we outline several year-end tax planning strategies you may want to review with your tax professional and wealth advisor before December 31.
1. Revisit Equipment and Capital Purchases
The act permanently extended bonus depreciation and set it at 100% for property acquired and placed in service on or after January 19, 2025. It also raised the Section 179 expensing maximum to $2.5 million, with a reduction once the cost of qualifying property tops $4 million.
If your business plans to buy equipment, vehicles, or software, placing those assets in service before year-end may allow you to deduct the cost in 2026 rather than spread it over several years. A signed purchase order alone may not qualify; the asset generally has to be ready and available for use.
Large deductions come with trade-offs. Bonus depreciation can push a pass-through business into a loss. The act also made the excess business loss limitation for noncorporate taxpayers permanent, which caps how much business loss can offset your other income. State rules can also differ from federal rules, so discuss your strategy with your advisor and tax professional.
2. Fund Retirement Plans for Yourself and Your Team
For 2026, employees can defer up to $24,500 into a 401(k), and participants 50 and older can add an $8,000 catch-up contribution, for a total of $32,500. Participants ages 60 through 63 qualify for a higher catch-up limit of $11,250.
Salary deferrals come out of pay, so your final 2026 payroll runs may offer the last chance to make 2026 deferrals. Owners may also add employer contributions, such as profit-sharing, within IRS limits. Deadlines vary by plan type.
For some high earners, a defined benefit or cash balance plan may allow larger deductible contributions than a 401(k) alone. Owners approaching retirement might also want to weigh their Social Security claiming strategy alongside business income.
3. Time Income and Expenses Around Your Bracket
Cash-basis businesses may have some flexibility at year-end. You may be able to delay invoicing into January or pull deductible expenses into December, an approach that might make sense if you expect a lower bracket next year. The reverse can be the more attractive option if you expect higher income in 2027.
The OBBBA also made the Section 199A deduction permanent at 20% and widened the phase-in range for specified service businesses to $75,000 for non-joint returns and $150,000 for joint returns. If your taxable income sits near these ranges, a year-end income projection may show whether small shifts could change your deduction.
4. Coordinate Investment and Charitable Decisions
Tax-efficient investing can work alongside your business planning. Harvesting losses in a taxable portfolio may offset capital gains from other sales during the year, which can be especially relevant in a year with a large gain or concentrated stock sale.
Charitable rules have also changed. Starting with the 2026 tax year, itemizers face a new floor equal to 0.5% of adjusted gross income for charitable deductions. Front-loading a larger gift into a donor-advised fund can generate a current-year deduction while you grant the money to charities over time.
5. Review Your Exit and Legacy Plans
The end of the year is a natural checkpoint for business exit and succession planning. If you’re close to a sale or transition, the choices you make now about entity structure, compensation, and ownership can shape your tax outcome later.
For qualified small business stock acquired after the OBBBA enactment, the gain exclusion rises to 75% for stock held at least four years and 100% for stock held five years or more. The act also set the estate and lifetime gift tax exemption at $15 million per person ($30 million for married couples) in 2026, indexed for inflation afterward.
Gifting business interests or using trusts can help move future appreciation out of your estate. Owners with concentrated holdings may want to explore grantor retained annuity trusts.
Start the Conversation Now
Many of these strategies are time-sensitive, dependent upon action taken before December 31. Reviewing them now can give you and your advisors room to model scenarios rather than react under deadline pressure.
SignatureFD works with individuals, families, and business owners navigating complex tax decisions. Our approach to wealth management for business owners connects tax planning services with your investment, retirement, liquidity, and legacy goals. Reach out to our team to start your year-end review.
