December 31, 2026, is more than a calendar date.
It is a planning deadline.
Business owners who wait until tax season often discover that their best opportunities have already passed. Equipment was not placed in service. Retirement contributions were not structured correctly. Estimated payments were too low. Entity decisions were postponed.
Do not wait.
“Your year-end tax plan should be decided before the year ends, not after the tax return is prepared.”
These seven moves help business owners control taxable income, preserve deductions, and build a stronger financial plan for 2027.
Your taxable income does not happen by accident. Timing matters.
Review your projected 2026 income now. Then decide whether accelerating or deferring certain income and deductions creates the better result.
Depending on your accounting method, cash flow, and tax bracket, you may consider:
The goal is not simply to create the largest possible deduction. The goal is to manage your entire tax picture.
A deduction that lowers qualified business income may also reduce the value of the 20% QBI deduction. A large expense may create a loss that cannot be used immediately. A bonus may affect payroll taxes, retirement contributions, and future cash flow.
Model the full outcome before making the move.
The 2026 tax year creates a major equipment-planning opportunity.
For 2026, qualifying property placed in service by December 31 may qualify for 100% bonus depreciation. Under current law, 100% bonus depreciation was made permanent by the One Big Beautiful Bill Act for qualifying property acquired and placed in service after January 19, 2025. Property acquired on or before January 19, 2025, or under a written binding contract entered into before January 20, 2025, remains under the older phase-down schedule.
Potentially qualifying property may include:
The key phrase is placed in service.
Ordering an item is not always enough. The property generally needs to be delivered, installed, and ready for business use before the deadline.
Also evaluate Section 179 expensing. Section 179 may allow qualifying equipment and software to be expensed immediately, subject to annual limits, taxable-income restrictions, and phase-out rules.
Do not automatically choose one method.
Compare:
The IRS explains depreciation rules in Publication 946 and provides election details through the Instructions for Form 4562.
Pass-through business owners may qualify for a deduction of up to 20% of qualified business income.
The deduction is now permanent under the OBBBA.
For 2026, the full deduction is generally available below $201,750 of taxable income for single and head of household filers and $403,500 for married filing jointly. There is also a new $400 minimum deduction for active owners with at least $1,000 of QBI.
This deduction can apply to owners of:
The QBI deduction is valuable. But it is not automatic.
Your deduction may depend on:
Large depreciation deductions can lower taxable income. They can also lower QBI. That does not mean depreciation is wrong. It means the decision requires a complete projection.
Review your books. Separate business income from investment income. Confirm reasonable S corporation compensation. Examine whether your payroll and property levels support the deduction.
The IRS qualified business income guidance provides an overview of the rules.
Retirement planning is also tax planning.
Business owners should review whether a retirement plan can reduce 2026 taxable income while building long-term retirement income.
Potential strategies include:
Employee elective deferrals for many 401(k) plans generally must be made through payroll by the end of the calendar year. Employer contributions may have more flexible deadlines.
Depending on the plan type, business structure, and tax filing deadline, some employer contributions may extend into 2027. SEP IRA contributions, for example, may generally be made by the business tax return deadline, including extensions. Cash balance plans require more careful advance design and funding coordination.
Do not make a retirement contribution simply because it creates a deduction.
Ask:
A retirement plan should reduce taxes today and support income for life.
The federal state and local tax deduction cap is temporarily higher for eligible taxpayers in 2026. The cap is $40,400 for single, head of household, and married filing jointly filers, and $20,200 for married filing separately, subject to income-based phase-down rules and other limitations.
The cap begins to phase down at $505,000 of modified adjusted gross income, or $252,500 for married filing separately. It is reduced by 30 cents for every dollar of excess MAGI, with a floor of $10,000 or $5,000 for married filing separately.
That creates a planning question:
Is it worth accelerating state tax payments before December 31?
The answer depends on your income, filing status, itemized deductions, state rules, cash flow, and whether you benefit from the deduction this year.
Review:
Business owners should also evaluate a pass-through entity tax, often called a PTET election. In certain states, an eligible partnership or S corporation may pay state income taxes at the entity level. That may create a federal business deduction and reduce the impact of the individual SALT limitation.
State deadlines vary.
Do not send a large payment without modeling the federal and state result first.
New above-the-line deductions may apply to qualifying overtime compensation and tip income for eligible workers.
These deductions may help qualifying employees reduce federal taxable income. Business owners also have an important responsibility: accurate payroll and year-end reporting.
The overtime deduction is limited to the premium portion only — the 0.5x differential required by the FLSA — and is capped at $12,500 for single filers and $25,000 for joint filers. The tip deduction is capped at $25,000 for employees in customarily tipped occupations.
Both deductions are claimed on Schedule 1-A of Form 1040. Both phase out by $100 for every $1,000 of MAGI above $150,000 for single filers or $300,000 for joint filers.
Employers should work with their payroll provider to track qualified amounts separately. The information must be reported correctly on year-end forms. Employers report overtime in Box 12 of Form W-2 with code TT and tips with code TP.
These deductions do not reduce FICA taxes or federal withholding.
Review:
The deductions generally belong to qualifying individuals. The business must maintain accurate records and reporting.
If your business operates in hospitality, restaurants, healthcare, transportation, or another industry with substantial overtime or tipped compensation, this review deserves immediate attention.
Do not wait for January to discover that the payroll system did not capture the necessary information.
A strong year-end plan does more than reduce your 2026 tax bill.
It prepares your business for the next year.
Before December 31, review:
Your business structure may have worked several years ago. That does not mean it remains efficient today.
Your income may have changed. Your family may have changed. Your employees, investments, retirement goals, and estate plan may have changed.
“Your tax plan must change when your life and business change.”
UniFirst Financial and Tax Consultants uses a holistic process to coordinate tax planning, retirement planning, wealth management, and long-term income goals. Our objective is to help business owners reduce taxes significantly almost all the time while staying within IRS guidelines.
Our approach is customized and unlike those offered anywhere else in the financial industry.
The best time to identify a tax opportunity is before the deadline.
The best time to correct a missed opportunity is today.
Contact Us for Your Free Assessment
We will review your projected income, deductions, retirement contributions, business structure, and year-end opportunities. There is no obligation.
As Proverbs 21:5 reminds us:
“The plans of the diligent lead surely to abundance.”
205 Van Buren St., Suite 120
Herndon, VA 20170
Phone: (888) 581-3320
Email: patrick@unifirstfinancial.com
Website: unifirstfinancial.com
This article provides general educational information. Tax rules, deadlines, eligibility requirements, and state conformity rules may change. Review your specific situation with qualified tax and financial professionals before taking action.
Our strategies are unlike those offered anywhere else in the financial industry
- we offer a no obligation free assessment so you can put our claim to the test.