2026 Year End Tax Planning Checklist
Switch on the year end moves you're weighing. See what each one could take off your 2026 federal tax, and get a dated checklist of everything that has to happen before December 31.
Switch on a move to see its effect.
Your checklist
0 of 0 done2026 Year End Tax Planning Checklist from GATP Solutions, gatpsolutions.com/year-end-tax-planning-checklist/ · accounting@gatpsolutions.com. General information, not tax advice.
year end tax moves, each with its own 2026 limit and deadline.
- Equipment and vehiclesIn use by Dec 31
- 401(k) deferralsFinal paycheck
- State tax through the businessPaid by Dec 31
- Prepaid expensesPaid by Dec 31
- January invoicingDecide by Dec 31
- Charitable giftsPaid by Dec 31
- Owner-paid business costsBy Dec 31
- SEP or profit-sharingReturn due date
How This Year End Tax Planning Checklist Works
Most year end checklists are written for investors. This one is built for year end tax planning for small business owners: it turns the moves you're considering into an estimate of the federal tax each one saves, and a tax planning checklist sorted by deadline.
Tell us how the business is taxed
S corporation, partnership, C corporation or sole owner, plus industry, accounting method and your top federal bracket. These decide which moves and deadlines appear.
Switch on the moves you're weighing
Enter an amount for each. The estimate multiplies it by your bracket, or by 21% for a C corporation's own deductions, and applies the 2026 caps as you type.
Work the checklist
Every move lands on a dated list with the filings that follow in January. Tick items off as they're done, or save the list as a PDF for your team.
What the Estimate Includes, and What It Leaves Out
The number on the result panel is a planning guide built on your bracket. Here is exactly what goes into it.
The result panel
- Est. federal tax saved: each amount times your bracket, or 21% for a C corporation's company-level moves.
- Deductions: the total of the amounts you switched on, after the 2026 caps.
- Due by Dec 31: checklist items that close with the year and can't be fixed on the return.
- Timing moves: prepaying expenses and invoicing in January move tax to 2027 rather than removing it, and the panel says so.
- Your checklist: every move you switched on, plus the January filings for your type of business, sorted by date.
Not modelled
- Payroll tax: Social Security and Medicare on wages or self-employment income.
- State income tax: many states don't follow federal bonus depreciation.
- The 20% pass-through deduction: a bigger deduction can shrink it, so the real saving can be lower.
- Charitable floors: 0.5% of income for itemizers and 1% for C corporations.
- Alternative minimum tax: prepaying state or property tax can backfire for owners subject to it.
- Bracket edges: a large deduction can pull part of your income into a lower bracket.
General information, not tax advice. Bracket math is a close guide for planning. Your GATP team runs the full return figures on your file before December 31.
The 2026 Limits Behind Each Move
The 2025 tax law (the One Big Beautiful Bill Act) reset several limits business owners plan around, and the IRS has published the 2026 inflation adjustments. These are the figures this page uses.
| Rule | 2026 amount | Note |
|---|---|---|
| Bonus depreciation | 100% | Property acquired after Jan 19, 2025, now permanent |
| Section 179 expensing | $2,560,000 | Reduced once purchases pass $4,090,000 |
| Passenger car, first-year cap | $20,300 | $12,300 without bonus depreciation |
| Section 179 on heavy SUVs | $32,000 | Over 6,000 lbs gross vehicle weight |
| 401(k) employee deferral | $24,500 | +$8,000 at 50+, +$11,250 at ages 60 to 63 |
| Roth catch-up wage test | $150,000 | Based on 2025 wages from the employer |
| SEP and profit-sharing cap | $72,000 | Up to 25% of pay |
| HSA contribution | $4,400 | Self-only; $8,750 family, +$1,000 at 55+ |
| SALT deduction cap | $40,400 | Cut by 30% of income above $505,000, never below $10,000 |
| 20% pass-through deduction limits start | $403,500 | Joint; $201,750 other filers |
| Standard deduction | $32,200 | Joint; $16,100 single |
| Senior deduction, age 65+ | $6,000 | Per person, 2025 to 2028; phases out above $75,000 MAGI ($150,000 joint) |
| Capital losses against other income | $3,000 | After offsetting gains; the rest carries forward |
| Annual gift exclusion | $19,000 | Per recipient |
| Estate and gift exemption | $15,000,000 | Per person |
| Excess business loss limit | $256,000 | $512,000 on a joint return |
| 1099-NEC threshold | $2,000 | Was $600 |
| Corporate tax rate | 21% | Flat |
Year End Tax Strategies for Business Owners
A tax return records a year that has already happened. Most of these year end tax moves only count if they happen by December 31, which is why they sit at the top of your checklist.
Equipment and vehicles
Property acquired after January 19, 2025 can be written off in full in the year it is placed in service. Ordered or paid for is not enough: it has to be delivered and ready to use.
Section 179 is the second route, up to $2,560,000 for 2026, but it can't create a loss. Items up to $2,500 each can be expensed under the de minimis rule ($5,000 with audited statements).
Owner salary and the 20% deduction
An S corporation owner's salary has to be reasonable and run through payroll by the last 2026 pay date. Health insurance the company pays goes in Box 1 of the owner's W-2.
Above $403,500 of joint taxable income, the 20% deduction is capped by W-2 wages, so salary and deduction get settled together. Check the figure with our S Corp Reasonable Salary Calculator.
401(k), SEP and plan credits
Deferrals of up to $24,500 have to come out of a 2026 paycheck. Owners who earned over $150,000 in 2025 wages make catch-ups as Roth. A SEP can wait until the return due date, at up to 25% of pay with a $72,000 cap.
Starting a plan? Employers with 100 or fewer employees can claim a startup credit of up to $5,000 a year for three years, plus $500 a year for adding auto-enrollment.
State tax through the business
The 2026 SALT cap is $40,400, shrinking by 30% of income above $505,000 to a $10,000 floor. At $600,000 of income, only $11,900 of state tax is deductible on the personal return.
Many states let a partnership or S corporation pay the owners' state tax itself, outside the cap. The payment generally has to leave by December 31. Our state taxes team confirms the election.
Timing income, bonuses and bad debts
On the cash method, the side of December 31 a payment lands on decides the year. Prepaid costs count if the benefit runs 12 months or less, and a check received in December is 2026 income.
On the accrual method, staff bonuses fixed by December 31 and paid by March 15, 2027 count for 2026, though bonuses to S corporation owners count only when paid. Worthless receivables can be written off.
Charitable gifts
New for 2026, itemized gifts count only above 0.5% of income, and a C corporation's only above 1% of taxable income, up to 10%. Non-itemizers can deduct up to $1,000 of cash gifts ($2,000 joint).
The gift has to be complete in 2026. A pledge, or a check written in January, belongs to 2027.
Entity structure check
Year end is when owners ask whether an S corporation election would cut 2027 payroll tax. For a calendar-year company, Form 2553 is due within 2 months and 15 days of the start of the year it should apply to, so March 15, 2027.
C corporation founders should know the 2025 law expanded the small business stock exclusion: for stock issued after July 4, 2025, 50% to 100% of the gain is excluded after 3 to 5 years, up to $15,000,000 per company.
R&E costs and hiring credits
Domestic research and development costs are deductible in full again for tax years starting after 2024, instead of being spread over five years. Smaller businesses can elect to apply the change back to 2022.
Current IRS guidance on the Work Opportunity Tax Credit covers workers who started by December 31, 2025, so check its status before counting on it for 2026 hires.
Meals, vehicles and the home office
Business meals stay 50% deductible. From 2026, the cost of an on-site employee cafeteria and of meals provided for the employer's convenience is no longer deductible at all, so code those separately in the books.
Mileage logs and home office records need to be complete for the year before the books close, since they can't be rebuilt reliably later.
Personal Year End Moves Owners Shouldn't Skip
Year end tax planning doesn't stop at the business return. These moves sit on your personal return, alongside the business moves above.
Investments and accounts
- Tax-loss harvesting: realized losses offset gains first, then up to $3,000 of other income. The rest carries forward to 2027.
- Timing a sale: an asset or investment sale that closes on January 2 is a 2027 gain. Weigh that against where your 2026 income lands.
- HSA: up to $4,400 for self-only coverage or $8,750 for family coverage in 2026, plus $1,000 at age 55 or older, if you have a qualifying high-deductible plan.
- Itemize or bunch: the 2026 standard deduction is $32,200 on a joint return. Owners near that line often group two years of gifts into one.
Giving and family
- Appreciated stock: giving shares held over a year can be deducted at market value, within 30% of income, with no capital gains tax on the growth.
- Donor-advised fund: lets you take several years of gifts as a 2026 deduction and grant the money out later.
- Annual exclusion gifts: $19,000 per recipient in 2026, which can include interests in the business itself.
- Estate and gift exemption: set at $15,000,000 per person for 2026 by the 2025 law, worth a look in any succession plan.
- Senior deduction: $6,000 per person aged 65 or older through 2028, but it phases out above $75,000 of income ($150,000 joint).
Extra Year End Items for Real Estate, Healthcare and Ecommerce
Year end tax planning for businesses depends on the industry. Pick yours in the tool and these items join your checklist.
Real estate
A cost segregation study splits a building into 5-, 7- and 15-year parts that qualify for 100% bonus depreciation. The building has to be in service by December 31; the study can follow before filing.
Non-passive rental losses need more than 750 hours in real property businesses, and more than half of working time. On a joint return, one spouse passes both tests alone. A 1031 exchange runs on 45 and 180-day clocks.
Healthcare practices
Medical practices are specified service businesses, so the 20% deduction phases out between $403,500 and $553,500 of joint taxable income and is gone above it.
Retirement contributions lower taxable income, and a cash balance or other defined benefit plan can be set up as late as the filing due date, including extensions.
Ecommerce
The December 31 inventory count sets cost of goods sold. Damaged or out-of-date stock can be valued below cost only if it is offered at the lower price within 30 days of the count, or disposed of.
Platforms issue a 1099-K once a seller passes $20,000 and 200 transactions, showing gross sales before fees and refunds. Sales into other states need a sales tax nexus check.
January Filings, and What Can Still Wait
The second half of year end business tax planning keeps January for filing instead of chasing statements.
Due in early 2027
- Reconciliations: every bank, card and loan account through December 31. Months behind? Clean-up bookkeeping in November costs far less than in March.
- December 15, 2026: a calendar-year C corporation's fourth estimated tax installment.
- January 15, 2027: fourth-quarter estimated tax for individuals. Paying 100% of 2025 tax (110% above $150,000 of income) avoids the penalty.
- February 1, 2027: W-2s and 1099-NECs for contractors paid $2,000 or more. The 2026 W-2 adds codes TT for overtime and TP for tips.
- March 15 and April 15, 2027: S corporation and partnership returns, then C corporation and individual returns, prepared by our business tax team.
Still open until the return is filed
- SEP-IRA: set up and funded up to the return due date, including extensions.
- Employer profit-sharing: contributions to an existing 401(k) follow the same deadline.
- Solo 401(k): a sole owner with no employees can adopt one after year end, by the filing deadline without extensions.
- Cost segregation: the study on a building placed in service in 2026 can be done before filing.
- S corporation election for 2027: Form 2553 by March 15, 2027 for a calendar-year company.
- $2,500 de minimis election: made on the return itself, not in December.
Year End Tax Planning Questions
What are the most effective end of year tax strategies for a business?
The ones with a hard December 31 date: equipment placed in service, owner salary and 401(k) deferrals run through payroll, state tax paid through the business, and charitable gifts completed. Cash-basis businesses can also time invoices and prepay expenses. The tool above prices each one at your bracket.
Can you give me an example of tax planning?
A business in the 32% bracket buys a $180,000 machine. Delivered and running by December 28, it is deducted in full on the 2026 return and saves about $57,600 of federal tax. If it arrives on January 4, the same deduction moves to 2027.
What are the 10 most overlooked tax deductions for business owners?
The ones we see missed most: S corporation owner health insurance on the W-2, the $2,500 de minimis election, owner-paid costs reimbursed under an accountable plan, state tax paid through the business, SEP contributions after year end, cost segregation on buildings, worthless receivables, the retirement plan startup credit, home office and mileage with proper records, and domestic R&E costs, which are fully deductible again.
What should a year end close checklist include?
Every bank, card and loan account reconciled, receivables and payables cut off at December 31, an inventory count, the fixed asset list updated for purchases and disposals, payroll tied to the quarterly 941s, and a W-9 on file for every contractor. Those are the items an auditor or a tax preparer checks first.
How does the new $6,000 tax deduction work?
It is an extra deduction of $6,000 per person aged 65 or older for 2025 through 2028, claimed whether or not you itemize. It phases out above $75,000 of modified adjusted gross income, or $150,000 on a joint return, so most owners of seven-figure businesses get little or none of it.
What is the $2,500 expense rule?
It is the de minimis safe harbor. A business without audited financial statements can expense items costing up to $2,500 per invoice or per item, instead of depreciating them, by attaching an election statement to the return. With audited statements the limit is $5,000.
What is the 70/30 rule for S corporations?
There is no IRS 70/30 or 60/40 rule for splitting S corporation income between salary and distributions. The IRS standard is reasonable compensation: what the business would pay someone else for the owner's duties, based on training, time spent and pay for comparable roles.
What are the biggest tax mistakes business owners make?
Dates, not math: equipment ordered but not delivered by December 31, an S corporation salary that never ran through payroll, a 401(k) deferral planned but never withheld, holding customer checks to push income into January, and accruing bonuses to owners who are related parties.
Can I still lower my 2026 taxes after December 31?
Yes, within limits. A SEP can be set up and funded, and employer profit-sharing contributions made, up to the return due date including extensions. Equipment, salary, 401(k) deferrals, state tax payments and gifts close on December 31.
How is the tax saving in the tool estimated?
Each amount you enter is multiplied by the federal bracket you pick, and company-level moves of a C corporation by the 21% corporate rate. The 2026 caps for 401(k) and SEP contributions are applied. Payroll tax, state tax and the 20% pass-through deduction are not included.
Do I need a 1099 for a contractor I paid $1,500 in 2026?
Not a 1099-NEC. For payments made in 2026 the threshold is $2,000. Collecting a W-9 from every contractor is still worth doing, since payments often cross $2,000 by December.
Start Before the December Rush
Thirty minutes on your 2026 numbers: which moves save the most for you, and what has to happen before December 31. Year end business tax planning is part of our tax planning work.
Sources
- IRS, Rev. Proc. 2025-32 and Rev. Proc. 2026-15 (Section 179, QBI thresholds, loss limit, vehicle caps)
- IRS, 100% bonus depreciation guidance and de minimis safe harbor
- IRS, Notice 2025-67, Publication 560 and retirement plan startup credit
- IRS, Publication 969 (HSAs) and Publication 526 (charitable contributions)
- IRS, 2025 tax law: individuals, senior deduction and estate and gift tax
- IRS, S corporation compensation, Form 2553 instructions and Work Opportunity Tax Credit
- 26 U.S.C. §164, §170, §174A, §267, §274, §469, §1031, §1202, §1211, §6655; 26 C.F.R. §1.471-2
- IRS, Form 1099-NEC FAQ, Form 1099-K FAQ, 2026 W-2 instructions and 2026 Form 1040-ES
General information, not tax advice. Figures are 2026 federal amounts checked against IRS publications and the Internal Revenue Code in October 2026. Your state rules and actual numbers decide what applies, and your GATP team confirms that on your file.