We’re heading into the last quarter of 2026, which is my favorite time of the year. We finally have some real data to work with for year-end planning. Now is the time to evaluate where you are relative to the goals you set for yourself, your team, and your business. You have plenty of time left to ensure you hit your goals, and perhaps, beat them.
Fair warning: this gets technical. You don’t need every detail, you need to understand enough to ask your advisors the right questions. This is especially important for tax advisors. There’s a real shortage of preparers, the good ones are at capacity, and we hear constantly that clients’ preparers aren’t proactive enough. I hit this myself two years ago after buying a short-term rental – several calls and a family referral before I found someone.
At PieCapital, we’re working hard to make tax preparers our BFFs with our detailed tax letters, tax return reviews, and referrals as needed so our clients receive the care & attention they deserve.
Below are three strategies business owners can consider to make an impact on their 2026 taxes. Also, we received an update on the Corporate Transparency Act (CTA) that was in the news back in 2024, so check out the Tax Updates section if that rings a bell. It now applies only to foreign entities, and FinCEN is purging what U.S. businesses filed. Nothing left to do federally – but check whether your state has its own ownership reporting rule.
Lastly, key deadlines from now to year-end – with December 31 as the one you can’t fix in January.
3 Ways Business Owners Can Cut Their 2026 Tax Bill
The One Big Beautiful Bill Act (OBBBA) provided specific updates and/or extensions for business owners to encourage growth. According to the McKinsey Institute for Economic Mobility, small and medium-size businesses are a cornerstone of the U.S. economy: 99% of all companies in the United States are small businesses.
You control expenses far more than income, and I know you already watch spending closely – so I don’t suggest this lightly. But if you’ve had a good year and want to lower your tax bill, your upcoming purchases deserve a hard look.
Quick vocabulary check: a deduction reduces your income before tax is calculated. Depreciation is that same deduction stretched across the years that an asset is useful. Section 179 and bonus depreciation are the exceptions – they let you take the whole thing in year one, which is why purchase timing matters so much.
Q: What types of purchases/investments will effectively reduce your taxable income to be eligible for a deduction instead of depreciation over time?
A: Equipment, machinery, certain vehicles, off-the-shelf software, and improvements to real property (roofs, HVAC, fire protection, security). Not single use items like supplies.
Q: How much time do you have to make an impact for 2026?
A: Item must be purchased and placed in service by December 31, 2026. Placed in service is key – you can’t just order/purchase the equipment, it needs to be incorporated into your operations by year end.
Buying equipment, vehicles or property? Check your year-to-date purchases against the $4,090,000 phaseout with your tax advisor, and get anything you want to deduct placed in service by December 31. Details and a side-by-side comparison in Section 179 vs. Bonus Depreciation below.
Pass-through owners (business income flows onto your personal return): see the QBI section below and run projections with your team. Generating more non-business income can sometimes help, but only a projection will tell you.
If you started any energy-efficient projects earlier this year, like changing light fixtures or windows, document the construction start date now – that date is what determines whether you still qualify. See Section 179D below.
Section 179 is the one most owners already know by name – it lets you deduct the full cost of equipment and property in the year you buy it, instead of spreading the deduction over many years. Bonus depreciation is its bigger sibling: no dollar cap, and it reaches estates and trusts that Section 179 leaves out. Many owners can use either one.
Two details apply to both. Vehicles carry their own caps – $32,000 for SUVs 6,000–14,000 lbs GVWR, roughly $20,400 for passenger cars and light trucks, and no cap above 14,000 lbs. And your state may not conform to the federal rules, which can leave you with a different depreciation method for the same property and a higher state bill – worth asking your advisor.
ACTION: Review this year’s purchases with your tax advisor. Determine where you stand against the $4,090,000 phaseout, which method fits best for federal and state, and what additional purchases would do to your bottom line.
Here’s how the two compare side by side:
If your business income lands on your personal return, this is the one I’d want you to understand best. It lets you deduct up to 20% of your business income before tax is calculated – and it’s now permanent.
- Eligible Entities: Sole Proprietors (Schedule C), Partnerships, S-corps, LLCs
- Deduction Amount: 20% of net qualified business income
- Excluded Income:
- Capital gains/losses
- Certain dividends & interest income
- Earned/salary income received as W-2 & guaranteed payments
- Second cap: it also can’t exceed 20% of your taxable income minus net capital gain – so a big gain year can shrink it
- Excluded Income:
- Who gets the full deduction? Anyone under these 2026 income thresholds:
- $201,750 for single filers/ $403,500 for married couples filing jointly
- Above those thresholds, it depends on your business type:
- Service businesses – health, law, accounting, consulting, financial services, performing arts, athletics, or any business built on its owners’ skill or reputation – phase out entirely above $276,750 single / $553,500 joint.
- Every other business keeps it, but capped by a formula based on your W-2 wages and business property.
- NEW $400 Minimum Deduction
- If you materially participate in an active trade or business and have at least $1,000 of QBI from it.
ACTION: Ask your tax advisor whether recognizing additional non-business ordinary income would lower your overall tax bill – Roth conversions and W-2 income are the two sources I’d look at first.
This one is mostly a look-back. OBBBA ended the Section 179D deduction for any project whose construction begins after June 30, 2026, so no new work qualifies – but two groups of owners still have something to claim.
- Projects already underway: If construction began on or before June 30, 2026, it stays eligible even if it finishes in 2027 or 2028 – the test is the start date, not completion. Document that date now: timestamped photos, contractor payment applications, permit dates.
- Buildings from earlier years: Owners who never claimed 179D on qualifying buildings may still capture it through a look-back study, often without amending a prior return.
- What qualified: Energy-efficient HVAC, lighting, and building envelope work on commercial buildings of any size, and multifamily rentals four or more stories – cutting energy use at least 25% against the applicable ASHRAE standard.
ACTION: Ask your tax advisor to review any project that broke ground in the first half of 2026, plus your buildings from recent years. I’d do this before it drops off the planning agenda for good.
Tax Updates
Remember the Corporate Transparency Act (CTA) – the 2024 rule that had nearly every business filing ownership details with the Financial Crimes Enforcement Network (FinCEN)?
After rounds of litigation and shifting deadlines, FinCEN’s final rule (August 11, 2026, effective August 14) permanently exempts all U.S. companies and U.S. persons from CTA reporting. Only foreign entities registered to do business here still report.
- If you complied with CTA in 2024: your information will be deleted from the database
- No further action is required by U.S. businesses
- One caveat: state-level ownership disclosure rules are separate and still apply. New York’s LLC Transparency Act, for example, has its own filing requirement.
Frequently Asked Questions
What’s the difference between a tax deduction and depreciation?
A deduction reduces your taxable income in the year you claim it. Depreciation spreads that same deduction across the years an asset is useful, rather than all at once. Section 179 and bonus depreciation are exceptions that let you deduct the full cost in the first year instead of over time.
What’s the difference between Section 179 and bonus depreciation?
What purchases qualify for Section 179 or bonus depreciation?
When does equipment need to be purchased and in use to qualify for a 2026 deduction?
What is the Qualified Business Income (QBI) deduction, and who qualifies?
Is the Corporate Transparency Act (CTA) reporting requirement still in effect for U.S. businesses?
Can business owners still claim the Section 179D energy-efficient building deduction?
What’s the most important tax deadline for business owners before year-end?
Upcoming Deadlines
- 3rd Quarter Estimated Payments Due for C-corps & Individual taxpayers
- 2025 Tax Returns & any employer retirement plan contributions due for Partnerships & S-corps on extension
- Deadline to set up a SIMPLE IRA or Safe Harbor 401(k) Plan for 2026
- Note: a Safe Harbor 401(k) also requires at least 30 days’ advance notice to employees before the safe harbor period begins – so if you’re reading this in September, the notice is the urgent part, not the paperwork
- 2025 Tax Returns & any employer retirement plan contributions due for C-corps & Individuals on extension
- 4th Quarter Estimated Payments due for calendar-year C-corps
- Property must be placed in service to claim Section 179 or bonus depreciation for 2026
- Deadline to establish a new 401(k) plan if you want employee deferrals for 2026
- Last day for charitable contributions
- S-corp owners: reasonable compensation must be run through payroll by year-end – this also drives your W-2 wage figure for the QBI limit
- Required minimum distributions, if you’re 73 or older or hold an inherited retirement account
- Bottom line – if only one date gets your attention this quarter, make it December 31. It’s the one you can’t fix in January.
Next Month: How to Get the Most Value From Your 401(k)
Most owners set up a 401(k) and never look at it again. Next month: the design choices that decide how much of the plan’s value lands with you, what it really costs you in fees and employer contributions, and the deadlines that lock it all in.
