Year-End Tax Moves for Small Business Owners in 2026, Part 1
The last few weeks of the year are your best opportunity to lower your 2026 tax bill. Once December 31 passes, the window closes on most year-end tax moves.
This year matters more than usual. The One, Big, Beautiful Bill Act (OBBBA), signed in July 2025, changed several rules that take effect in 2026.
Seven Year-End Tax Moves to Consider:
Buy the equipment you already need and put it to work by December 31
Put more into retirement and check your deadlines
Know where you stand on the 20% QBI deduction
Get your contractor paperwork in order
Plan your charitable giving under the new rules
Mark two payroll and estimated tax dates
Start with clean books
Let's start with the first three—the planning moves. Remember, not every move fits every business. Focus on the ones that suit yours.
1. Equipment Purchases
If you are planning to buy a computer, vehicle, machinery, or furniture early next year, buying it now may give you the deduction a year sooner.
The OBBBA made 100% bonus depreciation permanent for qualifying property acquired after January 19, 2025. In plain terms, you can often deduct the full cost in the year you start using it, instead of spreading it over several years.
Don't buy just for the deduction. Spending $10,000 to save $2,500 in taxes still costs you $7,500. Buy what helps your business and let the timing work in your favor.
Some states don't follow the federal bonus depreciation rules. Your state deduction may look different.
2. Retirement Contributions
Retirement contributions lower your taxable income and build your own savings at the same time. The limits went up for 2026:
Plan | 2026 limit | Extra if you're 50+ | Deadline |
401(k), including a solo 401(k), employee deferral | $24,500 | $8,000 ($11,250 if you're 60–63) | Owners on payroll: from a 2026 paycheck |
SIMPLE IRA (set up by Oct. 1, 2026), employee deferral | $17,000 | $4,000 ($5,250 if you're 60–63) | From a 2026 paycheck |
SEP-IRA, total contribution | $72,000 | — | Tax filing deadline, including extensions |
Traditional or Roth IRA | $7,500 | $1,100 | April 15, 2027 (income limits may apply) |
To max out a 401(k) or SIMPLE IRA, adjust your deferrals before your last payroll of the year. The right plan depends on your profit, your entity type, and whether you have employees.
3. Qualified Business Income (QBI) Deduction
If you own a sole proprietorship, partnership, LLC, or S corporation, you may be able to deduct up to 20% of your qualified business income. The OBBBA made this deduction permanent and added two changes for 2026:
A more gradual phase-out. Above about $201,750 of taxable income ($403,500 if married filing jointly), the deduction can shrink, especially for service businesses. It now tapers off more slowly.
A new $400 minimum if you actively run a business with at least $1,000 of qualified income.
Why this matters in December: if your income is close to the limits, timing can make a real difference. Adding to a retirement plan can keep more of the deduction. If you use cash-basis accounting, so can sending invoices in January instead of December or paying some expenses early.
For S corporation owners, the salary you pay yourself also affects this deduction. It's worth reviewing before your last payroll of the year.
In Part 2, I'll cover the other four moves: contractor paperwork, charitable giving, payroll and estimated tax dates, and clean books.
Not sure which of these moves fit your business? Book a free consultation and I'll go over your numbers with you before December 31.
The information provided in this blog is for general informational purposes only and is not intended to be comprehensive or serve as professional advice. Every business and financial situation is unique. I encourage you to consult with a qualified professional to address your specific needs and circumstances.
