The best time to reduce your tax burden isn’t April 15—it’s December. Year-end tax planning allows you to make strategic moves that can save thousands before the year closes.

ACTIONS TO TAKE BEFORE DECEMBER 31

Accelerate Deductions – If you’re profitable, prepay business expenses, professional fees, and insurance premiums before year-end. Make sure expenses are for services rendered in 2026.

Defer Income – If cash flow allows, delay invoicing clients or delaying receipt of income until January to push it into the next tax year.

Max Out Retirement – Contribute to a SEP‑IRA or Solo 401(k) for 2026. Total employer contributions (including SEP and the employer portion of a Solo 401(k)) are generally limited to the lesser of 25% of eligible compensation or 72,000 per person, and pre‑tax contributions reduce taxable income dollar‑for‑dollar, while any Roth contributions do not.

Equipment Purchases – Buy business equipment and take Section 179 expensing. The maximum Section 179 deduction for 2026 is $2,560,000, with a phase-out starting at $4,090,000 in total qualifying property. Section 179 expensing allows the benefit of the full deduction immediately instead of taking depreciation over a period of years.

Harvest Losses – If you have investment losses, sell them to offset capital gains and reduce taxable income (up to $3,000/year).

Estimated Tax Payments – Make your Q4 estimated tax payment before December 31 to avoid underpayment penalties.

Business Structure Review – If you’ve been profitable, consider S Corp election for 2027. The election must be filed by March 15, 2027 for 2026 tax year.

Foreign Nationals – Review FBAR and FATCA filing requirements. Ensure all foreign accounts are properly reported.

The key: Don’t wait until tax season. Work with your tax advisor as early as November to for your tax planning.

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