The December 31, 2026 tax deadline: 10 moves small business owners can't push to April

Some year-end tax moves count only if they happen by December 31. Others look urgent but can wait until April or later. Mixing them up is how owners rush a purchase they didn't need or miss a deduction they could have had.

2026 is also the first full year of several One Big Beautiful Bill Act (OBBBA) changes: a $2,000 threshold for Form 1099, new floors on charitable deductions, and a $40,400 SALT cap that shrinks at higher incomes. Below are the ten moves with a hard December 31 deadline, then the ones that can wait. For the broader planning picture, see Year-end tax moves to make before December 31 and 2026 small business taxes under the OBBBA.

Do these by December 31, 2026

1. Put equipment and vehicles in service. Property acquired after January 19, 2025 qualifies for 100% bonus depreciation, and the 2026 Section 179 limit is $2,560,000 (phasing out above $4,090,000 of purchases). The deduction follows the date the asset is installed and ready to use, not the order or payment date, so a January delivery moves the write-off to 2027. See Section 179 vs. bonus depreciation.
2. Pay deductible expenses (cash-method businesses). Bills paid by December 31 count in 2026, and charges on a business credit card count on the day you charge them. Prepaying a service such as insurance can be deductible now if the benefit doesn't extend beyond 12 months. Sending some invoices in January can push income into 2027, if your cash flow allows.
3. True up S-Corp payroll. Your 2026 reasonable salary, any owner bonus, and health insurance the S-Corp paid for 2% shareholders must run through the final 2026 payroll so they land on your W-2. A bonus to an S-Corp owner is deductible only in the year it is actually paid. See S-Corp reasonable compensation.
4. Max out 401(k) deferrals through payroll. Employees, including S-Corp owners, can defer up to $24,500 in 2026, plus $8,000 at age 50 or older, or $11,250 at ages 60 to 63. Deferrals must come out of 2026 paychecks, so the last payroll of the year is the deadline. Employer contributions can follow later (see the table below).
5. Pay your children for real work. Wages must be paid by December 31, match work actually done, and be backed by timesheets. A child can earn up to the 2026 standard deduction of $16,100 with no federal income tax. In a sole proprietorship, or a partnership owned only by the parents, wages to a child under 18 also skip Social Security and Medicare tax. See Hiring your children.
6. Pay the last 2026 PTET estimate. If your partnership or S-Corp elected a pass-through entity tax for 2026, such as New Jersey's BAIT, a cash-method entity deducts the state tax in the year it pays it. A payment made by December 31 counts on the 2026 federal return; one made in January counts in 2027. See SALT cap and PTET.
7. Give to charity under the new 2026 rules. Itemizers can now deduct only gifts above 0.5% of AGI (the first $1,500 at $300,000 of AGI), and C corporations only gifts above 1% of taxable income. Non-itemizers get a new deduction of up to $1,000 ($2,000 married filing jointly) for cash gifts, though gifts to donor-advised funds don't qualify. A gift counts in the year you charge it or mail the check.
8. Make the personal moves that close at year-end. Sell investments at a loss to offset gains (up to $3,000 of net loss also offsets other income), complete any Roth conversion, and make gifts of up to $19,000 per person under the annual exclusion. A year with large bonus depreciation can lower your income enough to make a Roth conversion cheaper.
9. Set up tips and overtime reporting. For 2026, employers must report qualified tips and qualified overtime separately on Form W-2 using new Box 12 codes, so workers can claim the new deductions (up to $25,000 for tips; $12,500 for overtime, $25,000 on a joint return). Before your last payroll, confirm your payroll system has been tracking both. See No tax on tips and overtime.
10. Collect W-9s now. For payments made in 2026, you file Form 1099-NEC only for contractors paid $2,000 or more, up from $600. The forms are due February 1, 2027. Payments made by card or through a payment app are reported by the processor on Form 1099-K, not by you. See 1099 thresholds for 2026.

Income near $505,000? The 2026 SALT cap of $40,400 shrinks by 30 cents for every dollar of MAGI above $505,000, down to $10,000 at about $606,333. In that range, every dollar you take out of MAGI through business deductions or retirement deferrals also restores 30 cents of SALT deduction, so the moves above are worth more.

These can wait until 2027

The first-year Solo 401(k) rule doesn't help S-Corp owners. Their own deferrals must come out of 2026 paychecks (move 4 above). See Retirement plans for business owners and Estimated tax safe harbor rules.

Your checklist

• Equipment you want to deduct in 2026 is delivered, installed and in use by December 31
• Final 2026 payroll includes owner salary, any owner bonus, 2% shareholder health insurance and 401(k) deferrals
• Children's wages paid, with timesheets
• Last 2026 PTET estimate paid by December 31
• Cash-method bills paid or charged, and outgoing invoices timed
• Charitable gifts made with the new 0.5% and 1% floors in mind
• Losses harvested, any Roth conversion done, $19,000 gifts made
• Payroll system tracks qualified tips and overtime
• W-9 on file for every contractor paid $2,000 or more
• January 15, March 15 and April 15 deadlines on your calendar

To see what these moves are worth on your own numbers, try the Small Business Tax Savings Calculator or the Owner Tax Planner.

Frequently asked questions

Does equipment I buy on December 30 count for 2026?

Yes, if it is delivered, set up and ready to use by December 31. Paying in December for a January delivery moves the deduction to 2027.

I'm an S-Corp owner. Can I still start a 401(k) after December 31?

The S-Corp can adopt a plan after year-end for employer contributions, but your own salary deferrals had to come out of 2026 paychecks. The rule that allows first-year deferrals until April 15 applies only to sole proprietors and single-member LLCs.

Do I need a 1099 for a contractor I paid $1,500 in 2026?

No. For payments made in 2026, Form 1099-NEC is required at $2,000 or more. Keep the W-9 on file anyway in case you pay that contractor more next year.

Should I give more to charity in 2026 or bunch gifts into one year?

If you itemize, the 0.5% floor applies once a year, so bunching two years of gifts into one year loses less to the floor. If you take the standard deduction, cash gifts of up to $1,000 ($2,000 joint) to operating charities are deductible every year.

What if bonus depreciation creates a loss?

Bonus depreciation can create or increase a loss; Section 179 is limited to your business income. A low-income year can be a good year for a Roth conversion, so ask us to model both together.

General information, not tax advice for your situation. Figures are for tax year 2026, as of October 29, 2026.