Year-End Tax Planning Checklist for Business Owners (2026)

Key Takeaways

• The best tax planning happens October through December, not during tax season
• Equipment purchases, retirement contributions, and income timing decisions lock in on December 31st
• S-Corp owners should finalize salary vs. distribution splits before year-end
• Some strategies require October action (retirement plan setup) while others can wait until December
• Under OBBBA, 100% bonus depreciation is restored and QBI deduction is now permanent
• Download our printable checklist to track your progress

If you’re reading this in January or later, you’ve already missed some of your best tax-saving opportunities. Year-end tax planning isn’t something you do during tax season. It’s something you do in October, November, and December when you can still take action.

At SDO CPA, we call it “October planning, not April scrambling.” The strategies that save business owners $10,000 to $50,000+ annually require decisions before December 31st. Once the calendar flips to January, many options disappear completely.

This comprehensive tax planning checklist breaks down exactly what to do each month, which deadlines matter most, and how the 2026 OBBBA changes affect your planning.

Why Year-End Tax Planning Matters

The December 31st deadline isn’t arbitrary. It’s when most tax-saving opportunities expire.

What locks in at year-end:

• Section 179 deductions (equipment must be “in service”)
• Bonus depreciation on purchases
• Income and expense timing for cash-basis businesses
• Solo 401(k) employee contributions
• S-Corp salary and distribution decisions
• Capital gain and loss harvesting

What you can’t fix after January 1st:

• You can’t un-collect income that hit your bank account
• You can’t backdate equipment purchases
• You can’t change your S-Corp salary for the prior year
• You can’t establish a Solo 401(k) retroactively

According to IRS guidance on retirement plan deadlines, the timing of contributions and plan establishment affects your deduction eligibility.

Typical savings from proper year-end planning: Business owners who work with SDO CPA on year-end planning typically identify $5,000 to $50,000+ in additional savings compared to waiting until tax time.

The Year-End Tax Planning Timeline

Here’s how to think about the final quarter:

OCTOBER → Planning Phase Review financials, project income, identify opportunities

NOVEMBER → Decision Phase Make purchase decisions, finalize strategies, execute plans

DECEMBER → Execution Phase Complete purchases, run final payroll, make contributions

JANUARY → Too Late Filing and payment only; most planning options expired

Each phase builds on the previous one. Skip October planning, and you’ll scramble in December with fewer options.

October Tax Planning Checklist (8-10 Weeks Out)

October is when proactive business owners pull ahead. You have time to evaluate options, run scenarios, and make informed decisions.

Review Year-to-Date Financials

Start by understanding where you stand:

• Pull your profit and loss statement through September 30th
• Compare to the same period last year (look for significant changes)
• Identify one-time events that skewed income up or down
• Note any large receivables that will likely be collected in Q4

This baseline helps you project full-year income accurately.

Project Full-Year Income

You can’t plan if you don’t know where you’re headed.

• Estimate October-December revenue based on your pipeline
• Factor in receivables you expect to collect (cash basis timing matters)
• Calculate projected net income and compare to thresholds
• Identify which tax brackets you’ll likely fall into

For 2026, pay attention to the QBI threshold ($203,000 single / $406,000 married filing jointly). Landing just above or below affects your deduction significantly.

Set Up Retirement Plans (If Not Already)

Retirement plan deadlines catch many business owners off guard:

• Solo 401(k): Must be established by December 31st to make employee contributions for the current year. If you don’t have one yet, October is the time to set it up. Read our Solo 401(k) complete guide for details.
• SEP-IRA: Can be established and funded until your tax filing deadline (including extensions), but why wait? Starting now lets you make estimated payments with certainty. See our SEP-IRA guide.
• Defined Benefit Plans: Require October or November setup due to actuarial requirements. These plans allow contributions of $265,000+ for 2026 but need lead time.

Evaluate Entity Structure

October gives you time to consider changes for next year:

• S-Corp election: If you’re a sole proprietor or LLC and self-employment tax is killing you, consider S-Corp election. The Form 2553 deadline for 2027 is March 15, 2027, but planning starts now. Review our S-Corporation tax guide.
• Partnership restructuring: Changes to partnership agreements or ownership typically work best at year-end.
• Multi-entity coordination: If you have multiple businesses, October is the time to analyze how income and deductions are allocated.

Schedule Your Tax Planning Meeting

CPA calendars fill up fast in Q4. Book your planning session early.

What to bring:

• Prior year tax returns
• Current year P&L and balance sheet
• Projected income through year-end
• List of planned major purchases
• Questions about specific strategies

November Tax Planning Checklist (4-6 Weeks Out)

November is decision time. You’ve analyzed your situation in October. Now you execute on the strategies that make sense.

Equipment and Vehicle Purchases

Big purchases are powerful tax tools when timed correctly.

Section 179 for 2026:

• Deduction limit: $2.56 million
• Phase-out begins at: $3.05 million in total equipment placed in service
• Must be “placed in service” by December 31st (not just ordered or paid for)

100% Bonus Depreciation (Restored under OBBBA):

• Full immediate expensing available for 2026
• Applies to new AND used equipment
• No dollar limit
• Combined with Section 179 for maximum impact

For more detail, see our Section 179 deduction guide.

Heavy Vehicles (Over 6,000 lbs GVW): SUVs and trucks over 6,000 pounds gross vehicle weight qualify for enhanced deductions. Review our list of vehicles over 6,000 lbs for Section 179.

Critical reminder: Ordering equipment in November doesn’t count. It must be delivered AND operational by December 31st. Plan accordingly.

Capital Gain and Loss Harvesting

Review your investment portfolio with taxes in mind:

• Realize losses to offset capital gains from business asset sales
• Watch the wash sale rule: If you sell at a loss and repurchase substantially identical securities within 30 days, the loss is disallowed
• Coordinate with your investment advisor on timing
• Consider your overall income level (net investment income tax applies above $200,000 single / $250,000 MFJ)

Charitable Giving Strategy

Strategic charitable giving can reduce your tax bill:

• Bunch donations: If you’re close to the standard deduction threshold, consider making two years’ worth of donations in one year to itemize
• Donor-advised funds: Make a large contribution now, get the deduction, and distribute to charities over time
• Qualified charitable distributions: If you’re 70½ or older, donate up to $105,000 directly from your IRA to charity (counts toward RMD, excluded from income)
• Donate appreciated stock: Avoid capital gains tax while getting a deduction for the full market value

Accounts Receivable Review

For cash-basis businesses, collecting receivables means recognizing income:

• Delay collections if pushing income to next year benefits you
• Accelerate collections if next year will be a higher-income year
• Write off bad debts that won’t be collected
• Document collection efforts for any bad debt deductions

Prepaid Expense Strategy

The IRS 12-month rule allows deducting prepaid expenses if the benefit doesn’t extend beyond 12 months:

• Prepay insurance premiums (up to 12 months)
• Prepay rent for the first part of next year
• Stock up on supplies you’ll use in the coming months
• Business credit card timing: Charges post when made, not when the bill is paid (for accrual-like treatment)

December Tax Planning Checklist (Final Month)

December is execution mode. The strategies are chosen; now you complete them.

Maximize Retirement Contributions

Hit your contribution limits before the year ends.

2026 Contribution Limits:

Critical deadline: Solo 401(k) employee contributions (the $24,500) MUST be made by December 31st. Employer contributions can wait until your filing deadline.

S-Corp Salary and Distribution Final Decisions

If you’re an S-Corp owner, December is crunch time for compensation:

• Run final payroll by December 31st
• Set reasonable compensation that balances SE tax savings with QBI deduction optimization
• Process health insurance premiums for 2% shareholders through payroll
• Document salary justification in case of IRS scrutiny

Read our guide on reasonable compensation for S-Corps and S-Corp distribution tax rules.

Section 179 and Bonus Depreciation Final Purchases

Last call for equipment deductions:

• Verify delivery dates with vendors; in-transit doesn’t count
• Get equipment operational before midnight December 31st
• Keep delivery receipts and photos showing equipment in use
• Finance vs. purchase: Financing still qualifies for full deduction (you deduct the full price, not just payments)

Income Timing Decisions

Cash-basis businesses have control over when income is recognized:

• Delay invoicing for work completed in late December (invoice January 2nd)
• Hold deposits from hitting your account until January
• Accelerate collections if next year is higher income
• Defer bonuses to employees if it benefits both parties

Expense Timing Decisions

Pull expenses into the current year if beneficial:

• Pay Q4 estimated taxes before December 31st for additional state tax deduction (subject to SALT cap)
• Prepay January expenses within the 12-month rule
• Make needed repairs before year-end
• Purchase supplies you’ll use in Q1

Year-End Payroll Adjustments

Final payroll affects multiple calculations:

• Bonus timing (December vs. January payroll)
• W-2 wages for QBI calculation purposes
• S-Corp shareholder health insurance (must be on W-2)
• HSA contributions through payroll

See our year-end payroll checklist for complete guidance.

2026-Specific Considerations (OBBBA Changes)

The One Big Beautiful Bill Act (OBBBA) signed in 2025 made several permanent and temporary changes affecting 2026 planning.

QBI Deduction Planning

The QBI deduction is now permanent. Previously scheduled to expire, you can now plan with certainty.

2026 QBI Thresholds:

• Full deduction (no limitations): Below $203,000 single / $406,000 MFJ
• Phase-out range: $203,000-$272,300 single / $406,000-$544,600 MFJ
• Above phase-out: Wage and property limitations apply fully; SSTB income gets zero deduction

New for 2026: The $400 minimum deduction. If your QBI is $1,000 or more, you’re guaranteed at least $400 in QBI deduction regardless of income level.

Use our QBI calculator to model scenarios.

SALT Cap Increase

The state and local tax (SALT) deduction cap increased from $10,000 to $40,000 under OBBBA:

• New cap: $40,000 for all filing statuses
• PTE elections: Still valuable for those exceeding $40,000 in state taxes
• State tax prepayment: Consider prepaying Q4 estimated state taxes before December 31st (counts toward current year’s SALT)

100% Bonus Depreciation Restored

OBBBA restored full bonus depreciation:

• 2026 rate: 100% (was scheduled to drop to 40%)
• New and used property: Both qualify
• No phase-down for the foreseeable future
• Combined with Section 179: Use both for maximum deductions

Printable Year-End Tax Planning Checklist

Download the Complete Checklist

Get our printable PDF checklist with all action items, deadlines, and space to track your progress. Includes S-Corp, partnership, and sole proprietor versions.

[Download PDF Checklist] (Email capture form)

October Checklist Preview:

•  Pull year-to-date P&L statement
•  Compare to prior year same period
•  Project full-year taxable income
•  Evaluate retirement plan options
•  Set up Solo 401(k) if needed (December 31st deadline)
•  Consider S-Corp election for next year
•  Schedule tax planning meeting with CPA

November Checklist Preview:

•  Identify equipment purchase opportunities
•  Verify delivery timing for large purchases
•  Review investment portfolio for tax-loss harvesting
•  Plan charitable contributions
•  Review accounts receivable (collect or defer?)
•  Identify prepayment opportunities

December Checklist Preview:

•  Make Solo 401(k) employee contributions
•  Complete SEP-IRA or other retirement contributions
•  Run final S-Corp payroll (salary, health insurance)
•  Complete Section 179 equipment purchases
•  Execute income timing decisions
•  Accelerate deductible expenses
•  Pay Q4 estimated taxes if beneficial

What Happens If You Miss Year-End?

Not everything expires on December 31st. Here’s what you can still do:

Strategies That Extend Past December 31st

• SEP-IRA contributions: Can be made until your filing deadline, including extensions (October 15th for calendar-year businesses on extension)
• Traditional IRA contributions: April 15th deadline (no extension)
• HSA contributions: April 15th deadline (no extension)
• Solo 401(k) employer contributions: Filing deadline including extensions

Strategies Locked In at Year-End

These cannot be done retroactively:

• Section 179 and bonus depreciation: Equipment must be in service by December 31st
• Solo 401(k) employee contributions: December 31st deadline
• S-Corp salary decisions: Can’t change W-2 after the year closes
• Income timing (cash basis): Once received, it’s income

Planning for Next Year

Missed year-end? Start planning for next year now:

• S-Corp election (Form 2553): Due March 15th for current year treatment
• Q1 estimated payments: Due April 15th
• Entity restructuring: Best done early in the year
• Retirement plan setup: Don’t wait until next October

Review our business tax deadlines calendar for all key dates.

Year-End Planning by Entity Type

Different entities have different priorities.

S-Corporation Year-End Checklist

If you operate as an S-Corp, focus on:

•  Reasonable salary analysis (not too high, not too low)
•  Shareholder health insurance added to W-2
•  Retirement plan contributions (employee and employer)
•  Distribution timing for cash flow and basis
•  QBI wage limitation optimization
•  Final payroll processing by December 31st

Review our complete S-Corporation tax guide.

Partnership Year-End Checklist

Partnership planning involves multiple stakeholders:

•  Guaranteed payment adjustments (affects SE tax and QBI)
•  Partner basis verification before distributions
•  Distribution planning for cash flow needs
•  Special allocation review for tax optimization
•  PTE election decision for state tax purposes
•  K-1 projections for partner planning

See our complete guide to partnership taxation.

Sole Proprietor Year-End Checklist

Operating on Schedule C? Your priorities:

•  Self-employment tax strategies (retirement contributions reduce SE income)
•  Expense timing for Schedule C deductions
•  Home office deduction calculation and documentation
•  Health insurance deduction (self-employed health insurance)
•  S-Corp election evaluation for next year (if SE tax is painful)
•  Estimated tax payments for Q4

Frequently Asked Questions

When should I start year-end tax planning?

October is the ideal starting point. This gives you 8-10 weeks to identify strategies, make decisions, and execute before December 31st. Starting in December limits your options significantly and forces rushed decisions.

What’s the deadline for retirement contributions?

It depends on the account type. Solo 401(k) employee contributions ($24,500 for 2026) must be made by December 31st. Employer contributions and SEP-IRA contributions can be made until your tax filing deadline, including extensions. Traditional IRA and HSA contributions are due April 15th.

Can I still do tax planning in January?

Some strategies remain available. IRA contributions, HSA contributions, and SEP-IRA contributions can still be made for the prior year. However, most business deductions, income timing strategies, and equipment purchases lock in on December 31st.

Do equipment purchases have to be delivered by year-end?

Yes. For Section 179 and bonus depreciation, equipment must be “placed in service” by December 31st. Ordering, paying, or having equipment in transit doesn’t count. The asset must be delivered, installed if applicable, and operational.

How do I know if my S-Corp salary is optimized?

Your salary should be reasonable for your role and industry while leaving room for distributions. The optimization point balances self-employment tax savings (lower salary) with QBI deduction benefits (higher salary above the threshold). We analyze your specific income level, entity structure, and tax situation to find the right number.

What if I can’t afford all the recommended strategies?

Prioritize based on return on investment. Retirement contributions often deliver the highest ROI because they provide immediate deductions plus tax-deferred growth. Equipment purchases make sense if you genuinely need the equipment. Work with your CPA to rank strategies by impact and affordability.

Get Help With Year-End Planning

Year-end tax planning isn’t something you should figure out alone when the stakes are high.

When to DIY:

• Simple tax situation with few moving parts
• You’re familiar with the strategies and comfortable executing
• You have time in October and November to research and plan

When to hire help:

• Multiple entities or complex ownership structures
• Income near QBI or tax bracket thresholds
• Significant equipment purchases or retirement contributions planned
• Unfamiliar with the strategies or their interactions

What a Planning Session Includes:

When you work with SDO CPA on year-end planning, we:

1. Analyze your year-to-date financials and project full-year income
2. Model scenarios for different strategies (equipment, retirement, timing)
3. Quantify the tax impact of each option
4. Create a prioritized action plan with specific deadlines
5. Support implementation through year-end

The goal is making sure you don’t leave money on the table. Most business owners who engage in proactive planning save multiples of the fee in taxes.

Ready to plan? Schedule your year-end planning session with SDO CPA. October appointments fill fast.