Small Business 7-Step Tax Plan

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By: Tax Hotline
Winter 2026 (Vol. 43, No. 4)

Your Small Business 7 Step Tax Plan for 2026

1. Maximize asset deductions. Use 100% bonus depreciation (restored) and expanded Section 179 limits (up to $2.5M) for equipment, vehicles, and qualified property placed in service this year.

2. Optimize SALT & PTE elections. With the SALT cap now higher ($40K+ and increasing), revisit pass-through entity (PTE) tax elections in high-tax states to deduct state taxes at the entity level and generate owner credits.

3. Claim full QBI deduction. Secure the permanent 20% qualified business income deduction for pass through entities (S corps, partnerships, sole props); review income classification, wages, and SSTB limitations.

4. Boost retirement & benefits. Increase contributions to 401(k)s, SEP IRAs, etc., with higher 2026 limits (e.g., $24,500 employee deferral + catch-ups); consider Roth options if applicable.

5. Harvest losses & time income and expenses. Offset gains via tax-loss harvesting; accelerate deductions or defer income to leverage wider brackets and higher standard deductions.

6. Leverage incentives. Explore Qualified Opportunity Zones (preserved), R&D credits, energy-efficient deductions, and charitable strategies (e.g., appreciated assets).

7. Plan for inflation adjustments. Project income to stay in lower brackets with broader ranges and higher deductions/exemptions.