10 Tax Strategies Before December 31st - Strategic Tax Planning Blog
Tax Strategy January 6, 2026 10 min read

2026 Tax Planning: What Business Owners Need to Know Now

A new year means new opportunities. Here's your comprehensive guide to the tax changes, updated limits, and strategic planning moves that will help you keep more of what you earn in 2026.

A professional woman is sorting through tax documents, highlighting her role in tax preparation and analysis in a contemporary office setting.

Why This Matters: Smart tax planning happens year-round, not just at tax time. Starting 2026 with a clear strategy gives you 12 months to implement changes, maximize deductions, and structure your income for optimal results. Here's what you need to focus on right now.

1. Know the 2026 Tax Changes

The new year brings updated tax brackets, contribution limits, and thresholds. Understanding these changes now helps you plan effectively for the year ahead.

Key 2026 Updates:

  • Standard Deduction: $15,000 (single) / $30,000 (married filing jointly)
  • Social Security Wage Base: $176,100 (up from $168,600)
  • 401(k) Contribution Limit: $23,500 ($31,000 with catch-up)
  • SEP IRA / Solo 401(k) Limit: $70,000

2. Maximize Retirement Contributions Early

Don't wait until December to think about retirement contributions. Setting up automatic contributions now ensures you'll hit your maximum limits and get the full tax benefit.

2026 Contribution Limits:

  • 401(k): $23,500 (plus $7,500 catch-up if over 50)
  • SEP IRA: Up to 25% of compensation or $70,000
  • Solo 401(k): $70,000 total ($77,500 with catch-up)
  • Traditional/Roth IRA: $7,000 ($8,000 with catch-up)
  • HSA: $4,300 (self) / $8,550 (family)

3. Review Your Q1 Estimated Tax Payment

Your first quarterly estimated tax payment for 2026 is due April 15th. Now is the time to calculate what you'll owe based on projected income and avoid underpayment penalties.

Don't Forget: If you owe more than $1,000 at tax time and haven't paid at least 90% of your current year liability (or 100% of last year's), you'll face penalties. Plan ahead!

4. Evaluate Your Business Entity Structure

The start of a new year is the ideal time to evaluate whether your current business structure is still optimal. With updated Social Security wage bases, the savings from an S-Corp election may be even more significant in 2026.

Potential Savings Example:

Business profit: $175,000

Sole Proprietor:

~$24,700

in self-employment tax

S-Corp (with strategic salary):

~$10,800

in employment tax

Potential annual savings: $13,900+

5. Plan Your Equipment & Asset Purchases

Section 179 and bonus depreciation remain powerful tools in 2026. If you know you'll need major equipment purchases this year, planning them strategically can maximize your deductions.

2026 Depreciation Highlights:

  • Section 179 limit: $1.25 million
  • Bonus depreciation: 60% for assets placed in service in 2026
  • Qualifying assets include computers, equipment, vehicles, and software

6. Set Up Your Bookkeeping Systems

January is the perfect time to clean up your books and establish good habits for the year. Proper categorization and documentation throughout 2026 will save you headaches at tax time.

Bookkeeping Best Practices:

  • Set up automatic receipt capture and categorization
  • Start a mileage tracking app for business driving
  • Document your home office square footage and usage
  • Schedule monthly bookkeeping reviews

7. Review Your Health Insurance Strategy

If you're self-employed, your health insurance premiums are 100% deductible. But there are additional strategies—like Health Savings Accounts (HSAs)—that can provide triple tax benefits.

HSA Triple Tax Advantage

Tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses

2026 HSA Limits

$4,300 (individual) or $8,550 (family), plus $1,000 catch-up if 55+

8. Consider Income Timing Strategies

If you expect your income to vary significantly between 2025 and 2026, there may be opportunities to shift income or deductions between years to minimize your overall tax burden.

2025 Returns Due Soon: Remember, you can still make IRA and HSA contributions for 2025 until April 15, 2026. Don't miss this opportunity to reduce last year's tax bill!

9. Plan Your Charitable Giving

Strategic charitable giving can provide significant tax benefits. Consider these approaches for 2026:

Donate Appreciated Stock

Avoid capital gains tax while getting a deduction for the full fair market value

Donor-Advised Fund

Bunch multiple years of giving for a larger deduction, then distribute over time

10. Schedule Your Tax Strategy Session

The most successful business owners don't wait until tax season to think about taxes. They work with a tax strategist throughout the year to identify opportunities and implement strategies proactively.

The Best Time to Plan: January through March is ideal for tax planning—you have the full year ahead to implement strategies, and you can address your 2025 return at the same time.

The Bottom Line: Don't Wait

These strategies are powerful—but only if you implement them before December 31st. Once the calendar flips to January 1st, most of these opportunities are gone for good.

The difference between reactive tax preparation and proactive tax strategy is often tens of thousands of dollars. Business owners who plan ahead keep more of what they earn.

Need Help Implementing These Strategies?

Our team specializes in strategic tax planning for business owners and high-income earners. We'll analyze your situation and create a customized strategy to minimize your tax burden legally and ethically.

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