Why does year-end tax planning have to happen before December 31?
Because most tax moves count only in the year they actually happen. Wages are deducted when paid, equipment when it is placed in service, and 401(k) deferrals when they come out of a paycheck. After December 31, you can report the year, but you can rarely change it.
Tax planning happens before the year closes. Tax filing happens after. The checklist below is the order we work through with owners every fall, starting with the numbers and ending with the January paperwork.
What should be on a 2026 year-end tax checklist?
Ten items cover most business owners: a projection, clean books, owner pay, retirement, equipment, income timing, the QBI deduction, state taxes, charitable giving and January deadlines.
- Run a 2026 tax projection. Estimate your income, deductions and tax for the full year so you know which moves are worth making and how big your fourth quarter estimate should be.
- Close the books through November. A projection built on messy numbers is a guess. Reconcile bank and card accounts first.
- Check S corp salary and health insurance. Make sure your reasonable salary has been paid through payroll and that health premiums will land on your W-2.
- Fund retirement plans. Decide on 401(k) deferrals, employer contributions, SEP or Solo 401(k) setup before year end.
- Place equipment and vehicles in service. Purchases count in the year they are delivered and ready to use, not the year you sign.
- Time income and expenses. Cash basis businesses can sometimes delay billing or prepay certain costs, if the projection says it helps.
- Check the QBI deduction. See where your taxable income lands against the 2026 thresholds.
- Review state taxes. Look at your state's pass-through entity tax election, if it has one, and its deadlines.
- Plan charitable giving. The 2026 rules changed for both itemizers and non-itemizers.
- Prepare for January. Collect W-9s, confirm payroll forms, and set aside the fourth quarter estimate.
What are the key 2026 numbers?
These are the figures business owners ask about most at year end. Each one comes from the IRS source listed next to it.
| Item | 2026 amount | Source |
|---|---|---|
| 401(k) employee deferral | $24,500, plus an $8,000 catch-up at 50 and over, or $11,250 at ages 60 to 63 | Per IRS, IR-2025-111 |
| IRA contribution | $7,500, plus a $1,100 catch-up at 50 and over | Per IRS, IR-2025-111 |
| Section 179 expensing | $2,560,000, reduced dollar for dollar once purchases exceed $4,090,000 | Per IRS, Rev. Proc. 2025-32 |
| QBI deduction threshold | $201,750 of taxable income ($403,500 married filing jointly) | Per IRS, Rev. Proc. 2025-32 |
| Gift tax annual exclusion | $19,000 per recipient | Per IRS, Rev. Proc. 2025-32 |
| Form 1099-NEC threshold | $2,000 or more paid in 2026, up from $600 | Per IRS, 1099-NEC instructions |
Which deadlines fall on December 31?
S corp payroll, 401(k) employee deferrals for S corp owners, and placing equipment in service all have a hard December 31 deadline. Retirement plan employer contributions and IRA contributions can generally wait until the return is due.
S corp owners have the most to do. Salary, the health insurance W-2 adjustment and 401(k) deferrals all run through payroll, so the last 2026 payroll is the last chance. Our S corp year end payroll checklist walks through each step, and our guide to reasonable S corp salary covers how to set the number.
Equipment is the other big one. A truck, machine or computer counts this year only if it is delivered and ready for use by December 31. Per IRS guidance on the 2025 law, 100 percent bonus depreciation is back for qualifying property acquired after January 19, 2025. Our post on the year end vehicle write-off covers the vehicle rules.
Sole proprietors with no employees have a little more room: a new Solo 401(k) can be opened after year end for its first year, up to the filing deadline.
How does the QBI deduction affect year-end planning?
The qualified business income deduction can be worth up to 20 percent of business income, and the 2025 law made it permanent. Above the 2026 threshold of $201,750 of taxable income ($403,500 joint), per IRS Rev. Proc. 2025-32, wage and property limits start to apply.
For service businesses such as consulting, health, law and accounting, the deduction phases out above the threshold. That makes taxable income near the line worth managing, often through retirement contributions or the timing of income and expenses.
What changed for charitable giving in 2026?
Two things, per IRS Topic 506. If you itemize, only gifts above 0.5 percent of your AGI are deductible. If you do not itemize, you can deduct up to $1,000 of cash gifts ($2,000 married filing jointly), but not gifts to donor advised funds.
For some owners that means bunching several years of giving into one year makes more sense than before. For others, the new non-itemizer deduction is enough. The projection tells you which.
What is due in January 2027?
The fourth quarter 2026 estimated tax payment is due January 15, 2027. Forms W-2, W-3 and 1099-NEC are due February 1, 2027, because January 31 falls on a Sunday.
Collect a W-9 from every contractor now, while they still answer your emails. If your distributions or profit ran higher than planned, the January estimate may need to be bigger too.
Next step
Year end planning works best as part of year round tax planning, built on outsourced accounting that keeps the books current. We work with business owners nationwide. Book a free discovery call to see if it fits.
Frequently asked questions
When should I start year-end tax planning?
October or November is ideal. That leaves time to run a projection, close the books and still make payroll, retirement and equipment moves before December 31.
Can I still lower my 2026 taxes after December 31?
A few moves remain, such as IRA contributions, employer retirement contributions and, for sole proprietors with no employees, opening a first-year Solo 401(k) by the filing deadline. Most other moves must happen by December 31.
What is the 2026 Section 179 limit?
Per IRS Rev. Proc. 2025-32, the 2026 Section 179 limit is $2,560,000, reduced dollar for dollar once qualifying purchases placed in service during the year exceed $4,090,000.
Should I buy equipment just to save taxes?
Only if the business needs it. A deduction saves a fraction of what you spend, so buy because the equipment pays for itself, and use the tax benefit as a bonus.
When is the fourth quarter estimated tax payment due?
The fourth quarter estimated payment for 2026 is due January 15, 2027.