By the FL Innovation News editorial team · Business Development
By Sindy Ramos · Savvy Numbers
There is a version of tax planning that happens on December 28, in a rush, with a business owner asking whether they can “buy something” to lower the bill. And there is the version that happens in September, calmly, with three months to actually execute. The second version saves real money. That is why I write this column every fall, not every December.
Here are the moves that matter for 2026 — including a few rules that changed — and the order to make them in.
What changed for 2026
Recent federal legislation reshaped several small-business provisions, and they are worth knowing before you plan (see this summary of 2026 changes):
- 100% bonus depreciation is back. Qualifying equipment, vehicles, and certain property can be fully expensed in the year placed in service, rather than depreciated over years.
- The Section 179 limit is $2,560,000 for 2026 — far more headroom than most small businesses will ever use, which means the constraint is cash, not the cap.
- The 20% QBI deduction stabilized. The pass-through deduction that many owners feared would expire is staying, with a new $400 minimum for 2026 if you have at least $1,000 of qualified business income.
Move 1: Equipment and vehicles — place them in service before December 31
If you were going to buy the truck, the laptops, the machine, or the furniture in Q1 anyway, buying and placing it in service before year-end can put the deduction on this year’s return. Two paths get you there:
| Section 179 | Bonus depreciation | |
|---|---|---|
| 2026 limit | $2,560,000 | No dollar cap (100%) |
| Can it create a loss? | No — limited to business income | Yes |
| Pick and choose assets? | Yes, asset by asset | Applies by asset class |
| Best for | Profitable years, targeted purchases | Big purchases, or years you want a loss |
The rules live in IRS Publication 946. The one thing I beg clients not to do: buy something you do not need to “save on taxes.” Spending a dollar to save thirty cents is not a strategy.
Move 2: Fund your retirement plan — the limits went up
This is the deduction that also builds your future. The 2026 IRS limits:
- 401(k) employee deferral: $24,500, plus an $8,000 catch-up at 50 (and a higher catch-up for ages 60–63).
- SIMPLE IRA: $17,000.
- SEP-IRA / Solo 401(k) total: up to 25% of compensation, capped at $72,000 for 2026.
A Solo 401(k) usually beats a SEP for a one-owner business because you get both the employee deferral and the employer contribution. Note the trap: a Solo 401(k) generally has to be set up by December 31 even if you fund it later — a SEP can be opened up to your filing deadline.
Move 3: S-corp owners — check your salary before the last payroll
If you elected S-corp status (here is our LLC vs. S-corp breakdown), your “reasonable salary” needs to be run through payroll by year-end. Too low invites IRS attention; too high wastes payroll tax. This is a Q4 conversation, not an April one, because you cannot retroactively run payroll for a year that is over.
Move 4: Time your income and expenses
- Cash-basis businesses can pay January’s bills in December, prepay a few months of a deductible expense, and hold a late-December invoice until January if this year is already a high-income year.
- Do the opposite if next year will be the bigger year: pull income forward into a lower bracket.
- Write off what is dead. Uncollectible invoices, obsolete inventory, and equipment you retired all belong on this year’s return.
Move 5: Clean the books now, not in March
Every move above depends on knowing your real 2026 profit in September, which means reconciled accounts and categorized transactions. This is also the moment to get audit-ready if you plan to borrow, raise, or sell in 2027 — lenders and buyers want clean, current statements, not a shoebox.
Your Q4 checklist
- ☐ Estimate 2026 profit from reconciled books (September)
- ☐ Decide on equipment purchases and the 179-vs-bonus approach (October)
- ☐ Open the Solo 401(k) if you want one (before December 31)
- ☐ Finalize S-corp salary and run it through payroll (December)
- ☐ Make the Q4 estimated payment (January 15)
- ☐ Fund SEP/401(k) employer contributions (by filing deadline)
Frequently asked questions
Is 100% bonus depreciation available for 2026?
Yes. Recent legislation restored full bonus depreciation for qualifying property, so eligible purchases placed in service this year can generally be expensed in full.
What is the Section 179 limit for 2026?
$2,560,000, well above what most small businesses spend in a year. The practical limit is that Section 179 cannot take you below zero business income.
How much can I put in a SEP-IRA or Solo 401(k) in 2026?
Up to 25% of compensation, with a total limit of $72,000; a Solo 401(k) also allows the $24,500 employee deferral, which is why it usually wins for solo owners.
When should I start year-end tax planning?
September or October. Most of the valuable moves — equipment timing, plan setup, S-corp salary — require weeks to execute and cannot be done retroactively after December 31.
The bottom line
December tax planning is damage control. September tax planning is strategy. Know your number now, make the moves that fit your actual business, and skip the ones that only make sense on a tax form. If you want a second set of eyes on your Q4 plan, that is exactly what our tax planning work is built for.
Related on FL Innovation News
- LLC vs. S-Corp: The Tax Move That Could Save You Thousands
- Q3 Estimated Taxes Are Due September 15
- Cash Flow vs. Profit: Why Profitable Businesses Still Run Out of Money
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- LLC vs. S-Corp: The Tax Move That Could Save You Thousands
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