Can I Still Lower My 2026 Tax Bill Before the End of the Year?

Have You Reviewed Your Income and Expenses for 2026?

For business owners, year-end planning starts with understanding where the business stands. Compare your income and expenses through October with what you expect for November and December. If your business has been more profitable than expected, you may have a larger tax obligation than you anticipated. This review can also identify legitimate business expenses that haven't been recorded or purchases that were already planned but haven't been completed.

Depending on your accounting method, the timing of income and deductible expenses may affect your 2026 taxes. However, moving income or expenses between years isn't automatically beneficial. A deduction taken this year may not be as valuable as one taken next year.

Could Retirement Contributions Reduce Your Taxable Income?

Retirement contributions may offer another opportunity to reduce taxable income, depending on the type of plan and whether contributions are made on a traditional, pretax basis. For business owners and self-employed individuals, options may include a Solo 401(k), SEP IRA, or SIMPLE IRA. Each has different contribution limits, eligibility requirements, and deadlines.

Some contributions must be made by year-end, while others may be permitted after December 31 under the applicable rules.

If you're considering establishing a plan or making additional contributions, review the requirements before assuming you can wait until tax-filing season.

Should You Make Business Purchases Before December 31?

If your business needs equipment, technology, or other qualifying assets, purchasing them before year-end may provide a tax benefit.

Certain purchases may qualify for Section 179 expensing or bonus depreciation, potentially allowing a substantial deduction in the year the property is placed in service.

However, buying something solely for a tax deduction isn't necessarily a good financial decision. The purchase should make sense for your business, and the timing and type of asset matter.

Before making a year-end purchase, consider whether the equipment is necessary for your business, when it will be ready for use, and how the deduction could affect your 2026 taxes. 

Have You Checked Your Estimated Tax Payments?

If you're self-employed, receive income without sufficient withholding, or have had a significant increase in income, review the estimated tax payments you've already made.

The final regular estimated tax payment for the 2026 tax year is due January 15, 2027.

Making an additional payment may help reduce the balance due when you file, but it does not necessarily eliminate penalties for earlier underpayments.

For more information, read our article: Do I Need to Make Quarterly Estimated Tax Payments?

Are There Charitable Contributions You Still Plan to Make?

If charitable giving is part of your financial plans, consider whether completing your intended contributions before December 31 makes sense.

The tax benefit depends on your filing status, income, whether you itemize deductions, and the type of contribution. Changes to charitable deduction rules for 2026 also make it important not to assume that the same deduction rules from prior years still apply.

Keep appropriate records and obtain required acknowledgments for deductible contributions.

What Should You Do Before the Year Ends?

Start by gathering your year-to-date income information, business expense records, retirement contribution information, and estimated tax payments.

A year-end tax review can help identify opportunities while there's still time to act.

The goal isn't simply to find more deductions. It's to understand your tax position, make informed financial decisions, and avoid surprises when you file your 2026 return.

If you haven't reviewed your 2026 tax situation, now is a good time to contact Barklee Financial Group to discuss your year-end tax planning.