Year-End Planning for 2026: The Items That Are Actually New

Standard year-end advice is standard for a reason and it still applies: defer income if you expect a lower bracket next year, accelerate deductions, fund retirement accounts, harvest investment losses, review your entity structure.

Rather than repeat that, this covers what's specific to 2026 — the things that changed this year and the items with a hard December 31 deadline.

Payroll: the item with the least slack

Tips and overtime tracking. Separate W-2 reporting of qualified tips and qualified overtime is mandatory for the 2026 tax year, on forms due in January 2027. The 2025 grace period does not carry forward, and penalties apply per incomplete W-2.

If your payroll system has been tracking these categories correctly all year, you're fine. If it hasn't, December is the last month in which the year's data can be reconstructed with any reasonable effort. Confirm with your payroll provider specifically — not that they're aware of the requirement, but that your account is configured for it.

Only FLSA-required overtime is qualified overtime. State-mandated or contractual overtime beyond the federal requirement is not.

Verify the wage base was applied correctly. The Social Security wage base for 2026 is $184,500. Systems still running the 2025 figure stopped withholding early, which produces W-2 corrections in January.

Mileage reimbursement. The business mileage rate changed mid-year — 72.5 cents through June 30, 76 cents from July 1. If your reimbursement program never updated, employees have been under-reimbursed since July and your own deduction calculation needs the split.

Vendor and 1099 preparation

The 1099-NEC and 1099-MISC threshold is $2,000 for payments made in 2026, up from $600. Attorneys' gross proceeds stay at $600 and royalties stay at $10.

Two things to do before January:

Update the threshold setting in your accounting system. Most are still at $600.

Audit your W-9 file now, while vendors are still engaged and reachable. Chasing a W-9 in January from a subcontractor who finished in March is a familiar and avoidable frustration.

Also verify state requirements if you pay contractors across state lines. Not every state adopted the federal $2,000 threshold.

Equipment and capital purchases

100% bonus depreciation is permanent and Section 179 limits rose to $2.56 million with a $4.09 million phase-out. Both allow immediate expensing.

The December 31 test is placed in service, not ordered or paid for. Equipment delivered and put to use on December 29 is deductible this year. The same equipment arriving January 3 is not.

Two cautions. First, a large deduction can push income low enough to waste other benefits, including the QBI deduction, and can create losses you can't use immediately. Bigger isn't automatically better. Second, many states don't conform to federal bonus depreciation or cap Section 179 far below the federal limit, so the state result may differ substantially.

Don't forget that building systems — roofs, HVAC, fire protection, security systems on non-residential property — can qualify for Section 179. Businesses that replaced an HVAC unit this year often don't raise it.

Income thresholds worth checking before December 31

Several benefits turn on income levels, and small adjustments near a threshold produce outsized results.

The ACA premium tax credit cliff. If you buy marketplace health coverage, the enhanced credits expired at the end of 2025 and the 400% federal poverty level cliff is back. Crossing it by a dollar eliminates the credit entirely. A December retirement or HSA contribution can be worth several thousand dollars if it keeps you under the line. This is the highest-value threshold check for a self-employed person this year.

QBI phase-out ranges. The deduction is permanent now and there's a $400 minimum for anyone with at least $1,000 of qualified business income. But the phase-outs still bite, particularly for service businesses.

Retirement plan establishment deadlines. Some plan types must be established before December 31 even if contributions are made later. If a solo 401(k) or defined benefit plan is under consideration, the establishment deadline is the constraint, not the funding deadline.

Items you can now stop worrying about

Beneficial ownership reporting. FinCEN's final rule, effective August 2026, permanently exempts U.S.-formed entities and U.S. persons. Nothing to file, nothing to update. Any correspondence demanding a BOI filing or fee is not from FinCEN.

Whether QBI, bonus depreciation, or R&D expensing will survive. All are permanent. Multi-year decisions that were contingent on renewal are now safe to make.

What to actually do in the next six weeks

Pull a year-to-date profit and loss and compare it to the same point last year. Estimate where taxable income lands. Identify which thresholds you're near.

Then have one conversation covering all of it, rather than five separate ones in April about things that could no longer be changed.

This article is general information, not tax advice for your specific situation. State conformity, thresholds, and deadlines vary. Please talk with us before acting on anything here.