The best time to cut your 2026 tax bill is the next 12 weeks, not next April. Once December 31 passes, most of the moves that lower a small business’s tax bill are gone for good.
October is the sweet spot. You have nine months of real numbers on the books, a good read on how the year will finish, and still enough time to act on equipment purchases, retirement plans, and owner pay before the calendar runs out. Below is a practical checklist for owners of construction firms, medical practices, manufacturers, restaurants, real estate businesses, and other growing companies.
What’s different in 2026?
2026 is the first full tax year under most of the One Big Beautiful Bill Act (OBBBA), so last year’s plan may not fit this year’s rules. These federal changes matter most for small businesses:
| Item | 2026 rule (federal) | What it means for you |
|---|---|---|
| Bonus depreciation | 100%, now permanent, for property acquired after January 19, 2025 | Most new and used equipment can be written off in full the year it goes into service. |
| Section 179 expensing | Up to $2,560,000; phase-out begins at $4,090,000 of purchases | Few small businesses hit the cap. The real limit is your taxable business income. |
| Heavy SUVs (6,001-14,000 lbs) | Section 179 capped at $32,000 per vehicle | Bonus depreciation can cover the rest of the cost. |
| QBI deduction (Section 199A) | 20% deduction made permanent; new $400 minimum for active owners with $1,000+ of QBI | Owner pay, retirement contributions, and entity choice all affect how much you keep. |
| Forms 1099-NEC and 1099-MISC | Filing threshold rises from $600 to $2,000 for payments made in 2026 | Fewer forms for small vendors, but you still need W-9s on file. |
| Form 1099-K | Back to $20,000 and 200 transactions | Payment app activity under that level generally won’t trigger a federal form. |
| SALT deduction cap | About $40,400, reduced for income above $505,000 (never below $10,000) | Itemizers get more room, but the phase-down creates a planning band for higher earners. |
| Charitable giving | New 0.5% of AGI floor for itemizers; 1% floor for C corporations | Small annual gifts may produce no deduction. Bunching gifts into one year can help. |
| Domestic research costs | Immediate expensing restored | Businesses that capitalized R&D costs in 2022-2024 may have recovery options with tight deadlines. |
Inflation-adjusted figures come from IRS Revenue Procedure 2025-32. Some OBBBA provisions are still receiving IRS guidance, so confirm current amounts before acting.
Your year-end checklist
Start with a projection, then act. You can’t decide whether to speed up or delay income without knowing where 2026 will land.
October: get your number
- Close the books through September and build a full-year projection of profit and tax.
- Review owner compensation. S corporation owners should confirm their salary is reasonable before the final payroll run.
- Ask whether your entity type still fits. An S corporation election for 2027 can be filed by March 15, 2027, but the analysis takes time.
November: make the decisions that need lead time
- Plan equipment, vehicle, and technology purchases. Assets must be placed in service by December 31, not just ordered or paid for.
- Choose a retirement plan. A Solo 401(k) generally must be adopted by December 31; a SEP IRA can be set up later, with contributions of up to 25% of compensation (max $72,000 for 2026).
- Consider timing. Cash-basis businesses may defer billing or prepay certain expenses to shift taxable income between years.
- Plan charitable gifts with the new 2026 floors in mind.
December: finish strong
- Confirm new assets are delivered, installed, and in use.
- Accrue year-end bonuses for non-owner employees. Accrual-basis businesses can usually deduct them in 2026 if paid by March 15, 2027.
- Report health insurance premiums for more-than-2% S corporation shareholders on their W-2.
- Collect W-9s from every vendor now, not in late January.
- Make your final estimated payment: December 15 for C corporations, January 15, 2027 for individuals and pass-through owners.
One caution: don’t buy something you don’t need just for the deduction. A $50,000 write-off still costs you $50,000 in cash.
What Connecticut businesses should know
Connecticut doesn’t follow every federal rule, so a plan that works on your federal return can look different on your state return.
- Bonus depreciation doesn’t fully carry over. Connecticut has long decoupled from federal bonus depreciation. Owners of pass-through businesses generally add back the deduction on their state return and recover it over later years. For corporations, the 2026 state budget law (Public Act 26-68) added further decoupling. Electing Section 179 instead of bonus depreciation on some assets can change your state result.
- The pass-through entity tax is optional and annual. Partnerships, LLCs, and S corporations can choose to pay Connecticut tax at the entity level (6.99%), which may help owners work around the federal SALT cap. Owners receive a credit for 87.5% of the tax paid. The election is made each year on a timely filed Form CT-1065/CT-1120SI, and it’s worth modeling against the higher 2026 federal SALT cap before you commit.
- A new R&D credit for pass-throughs. Starting with 2026 tax years, Public Act 26-68 opens Connecticut’s research credit to qualifying LLCs, partnerships, and S corporations, through a voucher program run by the Department of Economic and Community Development. Manufacturers and other businesses that develop products or processes should ask whether they qualify.
- Estimated payments. For calendar-year entities paying the pass-through entity tax, the final 2026 estimate is due January 15, 2027.
Let’s plan before the calendar decides for you
The businesses that get good news in April are usually the ones that had a plan in October. December is for finishing, not deciding.
At Accavallo & Company, we help owners in construction, healthcare, manufacturing, food and beverage, real estate, and the nonprofit sector turn year-end planning into real savings. Reach out to schedule your year-end planning meeting. Calendars fill quickly after Thanksgiving, so now is the best time to start.
This article is for general information only and is not tax, legal, or financial advice. Tax rules change and every situation is different. Consult a qualified tax professional before acting.
Sources consulted: Manay CPA, 2026 Year-End Tax Planning Guide · PKF O’Connor Davies, NY and CT budget changes · Reed, Connecticut PET 2026 · IRA Financial, 2026 contribution limits
