For a business owner, the tax bill you pay in April is mostly decided by what you do — or don't do — before December 31. That's what year-end tax planning is really about: once the calendar turns, most of your options are gone. The last quarter of the year is when planning actually pays, so here's what to look at while there's still time to act.
Fund your retirement plan — yours and the business's
Retirement contributions are one of the largest deductions most owners have, and many leave part of it on the table. For 2026 you can defer up to $24,500 into a 401(k)-type plan, plus an $8,000 catch-up at 50 or older (a $32,500 total), and a larger $11,250 super catch-up if you're 60 to 63. Depending on how your business is structured, a SEP or solo 401(k) may let you set aside significantly more as the employer. Some plans have to be established before year-end even if you fund them later — so the deadline to decide can be sooner than the deadline to pay.
Time your income and expenses on purpose
If you're on the cash method, you have real control over which year income and deductions land in. Would you rather recognize that December invoice this year or next? Should you prepay January expenses now? The right answer depends on whether you expect this year or next to be your higher-income year — which is exactly the conversation to have before you send the invoice, not after.
Buy needed equipment before December 31
If your business genuinely needs equipment, placing it in service before year-end can accelerate the deduction. For 2026, Section 179 lets you expense up to $2,560,000 of qualifying equipment (that cap starts to phase out once you place more than $4,090,000 in service in the year), and — thanks to the One Big Beautiful Bill Act — 100% bonus depreciation is back for qualifying property placed in service after January 19, 2025. Between the two, most equipment a small business buys can be fully deducted the year it's put to work (vehicles and a few other categories carry their own limits). The rule of thumb stays the same: buy it because the business needs it and let the timing capture the deduction — never buy something you don't need just for a write-off.
Don't lose your QBI deduction to poor planning
Many pass-through owners can deduct up to 20% of qualified business income. Above certain income thresholds that deduction phases out and depends on W-2 wages and business type — which means moves you make late in the year (retirement contributions, wage decisions, income timing) can be the difference between keeping the full deduction and losing part of it. It's one of the highest-leverage year-end items for a profitable business.
Review your entity and your estimated payments
Year-end is a natural checkpoint for two bigger questions: is your business still taxed the right way (sole prop, S-corp, etc.) for where your income has landed, and are your quarterly estimated payments on track so you don't get hit with an underpayment penalty? Our comprehensive tax planning services can help you audit these structures before the deadline. Keep in mind the Q4 estimated payment is due in mid-January.
Consider gifting, if it fits
For owners thinking about the next generation, the 2026 annual gift exclusion lets you give up to $19,000 per recipient ($38,000 for a married couple) with no gift-tax filing — a simple year-end move for those who want to transfer wealth gradually.
The point of doing this now
Every item above shares one thing: it only works before the year closes. A short planning session in the fall is worth far more than the best-prepared return in April.
