Year-End Tax Planning Checklist 2026: 15 Moves to Make Before December 31

By Vivian London, London's Tax Services | 09/29/2026

December 31 is the most expensive deadline nobody puts on their calendar. April 15 gets the dread, the reminders and the late-night shoebox sessions, but April only reports what you already did. The moves that actually shrink your bill have to happen before the ball drops in Times Square. So here is the year-end tax planning checklist for 2026, written for New York business owners, high earners and families, with the New York State and New York City rules that national checklists skip.

The short version: 2026 is the first full year under the One Big Beautiful Bill Act, and several rules changed in ways that reward planning before December 31. The SALT cap is $40,400 but shrinks for incomes over $505,000, charitable deductions now have a floor, 100% bonus depreciation is permanent, and 401(k) limits went up to $24,500. Run a projection first, then work the list below in order of dollars. Most items stop counting for 2026 at midnight on New Year's Eve.

Why year-end tax planning matters more in 2026

Year-end tax planning is the work you do in the last quarter to lower this year's tax bill while you can still change the outcome. In a normal year that means timing income, funding retirement accounts and cleaning up investments. In 2026 there is more on the table, because it is the first full year of the One Big Beautiful Bill Act, the biggest rewrite of the tax code since 2018.

Three changes make this year different:

• The SALT cap got bigger, with a catch. The federal deduction for state and local taxes rose to $40,400 for 2026, which matters enormously in New York. But it phases back down toward $10,000 once your modified adjusted gross income passes $505,000. For high earners, that makes timing income a SALT question as well as a bracket question.
• Charitable giving has new rules. Starting in 2026, itemizers only get a deduction for charitable gifts above 0.5% of their adjusted gross income, and people who take the standard deduction can deduct up to $1,000 ($2,000 married filing jointly) of cash gifts for the first time. That flips the old advice on "bunching" for a lot of households.
• Business write-offs are friendlier and permanent. 100% bonus depreciation is back for good, Section 179 covers up to $2.56 million, and the 20% qualified business income (QBI) deduction is permanent. The December deadline is now about which tax year gets the deduction, not about beating a phase-out.

Here is our honest opinion after 20+ years of doing this: most people who overpay are not missing some exotic loophole. They are missing a December decision they did not know they had.

Step zero: run a projection before you touch anything

Every move on this list is worth more or less depending on your bracket, your New York residency, and whether you itemize. So before you buy a truck or write a check to charity, build a rough projection of 2026:

1. Year-to-date income from your pay stubs, your profit and loss statement, and any 1099 or K-1 income you expect.
2. Taxes already paid: federal and New York withholding plus estimated payments.
3. Big one-time items: a property sale, a bonus, a Roth conversion, a business sale.
4. Last year's return, because it sets your safe harbor for estimated taxes.

If your books are behind, catch them up first. A projection built on guesses produces confident, wrong decisions. (If this is the step where you realize your books are a shoebox, our guide to when to hire a bookkeeper is short and judgment-free.)

The 2026 numbers you need

Keep this table open while you work the checklist. Every figure is for tax year 2026.

Year-end tax planning for business owners

If you own a business, this is where the real money is. Work these in order.

1. Decide on S corp status and your reasonable salary before the last payroll

If you run an LLC taxed as a sole proprietorship or partnership with steady profit, an S corp election can move part of that profit out of the 15.3% self-employment tax. If you already are an S corp, the last payroll of the year is your final chance to set a defensible reasonable salary for 2026. Too low invites IRS attention. Too high wastes the benefit.

New York City owners need an extra line of math: the city does not recognize the S election and taxes S corporations under its General Corporation Tax. We wrote a full breakdown of when an S corp is worth it in New York, including the city math.

2. Buy equipment and put it in service by December 31

With 100% bonus depreciation now permanent, a $40,000 piece of equipment placed in service by December 31 is a $40,000 deduction on your 2026 federal return. "Placed in service" means installed and in use, not ordered. A machine on a delivery truck on January 2 deducts in 2027.

Smaller purchases have their own shortcut, the one people ask about as "the $2,500 rule." Under the de minimis safe harbor, a business without audited financial statements can expense items costing up to $2,500 each (per item or per invoice) instead of depreciating them, as long as it makes the election with its return. Laptops, tools, furniture and small equipment often fit.

The New York wrinkle: New York does not follow federal bonus depreciation on the state return, so you get the full write-off federally but depreciate over the normal life for New York. The deduction is still worth taking. Just do not expect the state return to mirror the federal one.

3. Time your income and expenses

If your business uses cash-basis accounting, you have two dials:

• Defer income. Send December invoices in early January if you expect the same or a lower bracket next year.
• Accelerate expenses. Pay January rent, insurance, subscriptions and supplier bills in December. Prepaid expenses that do not extend more than 12 months past the payment generally deduct when paid.

Do not play this game blindly. If 2027 will be a bigger year, pulling income into 2026 at a lower rate can be the smarter move. This is exactly why step zero comes first.

4. Fund a retirement plan that doubles as a tax cut

For a self-employed owner, a solo 401(k) can shelter up to $72,000 of 2026 income (more with catch-up contributions), split between an employee deferral and an employer contribution. A SEP IRA is simpler but only takes the employer side. A defined benefit or cash balance plan can go much higher for owners in their late 40s and up with high, steady profit.

Deadlines matter here. If you are an S corp owner, your 401(k) salary deferrals must come out of payroll by December 31. Employer contributions and SEP contributions can generally wait until your filing deadline, and since SECURE 2.0 a sole proprietor with no employees can even open a brand new solo 401(k) after year end and make first-year deferrals by the filing deadline (not including extensions). Decide now anyway, so the cash is there.

5. Reimburse yourself through an accountable plan

If you work from home, use your personal phone for business, or drive your own car, an S corp can reimburse you under a written accountable plan. The business deducts it, and you receive it tax-free. The plan should be adopted and the reimbursements paid by year-end to keep 2026 clean.

6. Put your kids on payroll, properly

Paying your children a reasonable wage for real work shifts income to them at a lower rate or no rate at all. A child's wages up to the standard deduction ($16,100 in 2026) carry no federal income tax. For a sole proprietorship owned by a parent, wages to a child under 18 are also free of Social Security and Medicare tax. Keep timesheets and pay through payroll by December 31.

7. Decide on New York's PTET for 2027, and make your December payment

New York's pass-through entity tax (PTET) lets partnerships and S corps pay New York income tax at the entity level and deduct it federally, which gets around the SALT cap. The election for each year is due by March 15 of that year, so the 2027 decision belongs in your year-end meeting. If you already elected for 2026, the December 15 estimated payment is deductible on the 2026 federal return when paid. New York City has a parallel city PTET, open to city partnerships and to S corporations whose shareholders are all city residents.

With the SALT cap now at $40,400, PTET is not automatically a win for every owner. It shines for owners whose income is high enough that their personal SALT cap phases back down, and for anyone whose state and city taxes run far above the cap. The full rules are in our New York PTET guide.

8. Clean up your books and your 1099 list

Reconcile every bank and card account through November, chase your receivables, and collect W-9s from anyone you paid. For payments made in 2026, the 1099-NEC threshold rose to $2,000. Year-end is when missing records turn into missing deductions. Our guide to small business tax deductions in 2026 has the full write-off list to check against.

Year-end tax planning for individuals and families

9. Max out workplace retirement accounts through your last paychecks

Your employer's payroll system usually needs a few weeks of notice. If you can afford to raise your 401(k) or 403(b) deferral toward the $24,500 limit, do it in November so the last two or three paychecks catch up. For New Yorkers in a combined federal, state and city bracket over 40%, every $1,000 deferred can save more than $400 this year.

10. Rethink charitable giving under the new rules

The 2026 rules change the math:

• If you take the standard deduction, you can now deduct up to $1,000 ($2,000 married filing jointly) of cash gifts to qualifying public charities. Gifts to donor advised funds do not count for this one.
• If you itemize, only the part of your giving above 0.5% of AGI is deductible. On a $300,000 AGI, the first $1,500 of gifts produces no deduction.
• If you are 70 and a half or older, a qualified charitable distribution straight from your IRA keeps the gift out of your income entirely, which can beat any deduction and counts toward your required minimum distribution.
• Appreciated stock held more than a year is still one of the best things to give: you deduct the full value and never pay tax on the gain.

11. Harvest investment losses, and watch the wash sale rule

Selling investments at a loss offsets gains dollar for dollar, plus up to $3,000 of ordinary income, with the rest carried forward. The trade has to settle in your plan by December 31 based on the trade date. Buying the same or a substantially identical investment within 30 days before or after the sale disallows the loss, so switch to something similar, not identical.

12. Consider a Roth conversion in a lower-income year

If 2026 was a light year, a Roth conversion lets you pay tax on retirement money at today's lower rate. New York adds a twist in your favor: after age 59 and a half, up to $20,000 a year of pension and annuity income can be excluded on the New York return, and conversion income can qualify, so a modest annual conversion may cost little or nothing in state tax. Conversions must be completed by December 31 and cannot be undone.

13. Take required minimum distributions

If you are required to take a distribution from an IRA or inherited IRA, the deadline for 2026 is December 31 (April 1, 2027 only for your very first one). The penalty for missing it is 25% of the shortfall, reduced to 10% if you fix it promptly.

14. Use your HSA, FSA and 529

• HSA: contributions for 2026 can be made until April 15, 2027, but payroll contributions save Social Security and Medicare tax too, so front-load through your employer if you can.
• FSA: most use-it-or-lose-it balances expire at year-end or shortly after. Book the appointment now.
• New York 529: contributions to a NY 529 plan made by December 31 are deductible on your 2026 New York return, up to $5,000 single or $10,000 married filing jointly.

15. Make annual gifts to family

You can give up to $19,000 per person in 2026 without touching your lifetime exemption or filing a gift tax return. A married couple can give $38,000 per recipient. For families near the New York estate tax threshold, which is far lower than the federal $15 million exemption and has a cliff that can tax the whole estate, steady annual gifting is one of the simplest tools there is.

New 2026 deductions to check before the year closes

The One Big Beautiful Bill Act added several temporary deductions for individuals that run from 2025 through 2028. They are claimed on your return rather than "done" by December 31, but year-end is when you check whether you qualify and whether your records will prove it:

• The senior deduction: an extra $6,000 per person age 65 or older ($12,000 for a married couple who both qualify), on top of the standard deduction or itemized deductions. It phases out at 6% of modified adjusted gross income above $75,000 single or $150,000 joint. Keeping income under the phase-out, for example by timing IRA withdrawals or Roth conversions, can protect it.
• No tax on tips: workers in occupations that customarily receive tips can deduct up to $25,000 of qualified tips, phasing out above $150,000 of income ($300,000 joint).
• No tax on overtime: the premium part of required overtime pay (the "half" in time-and-a-half) is deductible up to $12,500 ($25,000 joint), with the same income phase-out.
• Car loan interest: up to $10,000 a year of interest on a loan for a new vehicle assembled in the United States, bought for personal use, phasing out above $100,000 of income ($200,000 joint).

All four are available whether or not you itemize. If you are an employer, accurate payroll reporting of tips and overtime is what makes your team eligible.

New York-specific year-end moves

National checklists stop at the federal return. In New York, the state and city layer is where a lot of the money hides.

• Check your residency. If you moved in or out of New York City or New York State this year, part-year returns and day counts decide which city tax you owe. Keep calendars, receipts and travel records now, not in April.
• Pay your fourth quarter New York estimate in December if it helps you itemize. State and local tax paid in 2026 counts toward the 2026 SALT deduction. With the cap at $40,400, more New Yorkers have room under it than in past years. Only pay taxes actually owed, and never prepay property taxes that have not been assessed.
• Watch the MCTMT if you are self-employed. Self-employed people in the MTA region (New York City, Westchester, Rockland, Nassau, Suffolk and several other counties) owe the Metropolitan Commuter Transportation Mobility Tax on net earnings in the region. Good news for 2026: the threshold jumped from $50,000 to $150,000 per person, so many freelancers who paid it last year will not owe it this year. Adjust your estimates accordingly.
• Yonkers residents pay a surcharge on their New York State tax, which raises the value of every deduction on the state side.
• New York City sole proprietors and partnerships may owe the city's 4% Unincorporated Business Tax on top of personal income tax. It changes the entity math.

What not to do before December 31

A few year-end "strategies" cost more than they save:

• Buying things you do not need for a deduction. A deduction returns a fraction of what you spend. Spending $10,000 to save $3,500 still leaves you $6,500 poorer.
• Overpaying estimated taxes out of anxiety. The IRS pays no interest. Use the safe harbor instead: pay 100% of last year's tax (110% if your 2025 AGI was over $150,000) or 90% of this year's, and you avoid the underpayment penalty.
• Undocumented moves. An accountable plan with no written plan, kids on payroll with no timesheets, a vehicle with no mileage log. The deduction lasts right up until someone asks for proof.
• Doing it all on December 30. Brokerages, payroll providers and plan administrators all slow down in the last two weeks. Your deadline is really mid-December.

A realistic year-end timeline

Year-end tax planning FAQ

When should I start year-end tax planning?

October is ideal and November still works. By mid-December, payroll providers, brokerages and retirement plan administrators slow down, so leaving it to the last week usually means some moves cannot be completed in time.

What are the best year-end tax moves for small business owners in 2026?

The biggest are usually an S corp election or reasonable salary adjustment, buying and placing equipment in service to use 100% bonus depreciation, funding a solo 401(k) or other retirement plan, reimbursing yourself under an accountable plan, and deciding on New York's PTET for 2027.

Can I still lower my 2026 taxes in December?

Yes. Retirement deferrals through payroll, equipment placed in service, charitable gifts, loss harvesting, Roth conversions, New York 529 contributions and prepaid business expenses all count for 2026 if completed by December 31.

Is the SALT cap $40,000 in 2026?

It is $40,400 for 2026, up from $40,000 in 2025. It shrinks for taxpayers with modified adjusted gross income above $505,000 and cannot fall below $10,000. The higher cap is scheduled to run through 2029 and return to $10,000 in 2030.

Does New York follow federal bonus depreciation?

No. New York generally decouples from federal bonus depreciation, so equipment you fully expense on your federal return is depreciated over its normal life on your New York return. The federal deduction is still available and usually still worth taking.

Do I need to make a fourth quarter estimated tax payment?

If you are self-employed or have income without withholding, the fourth quarter federal and New York estimates for 2026 are due January 15, 2027. You avoid underpayment penalties by paying at least 100% of last year's tax (110% if your 2025 AGI was over $150,000) or 90% of this year's.

Is year-end tax planning worth paying for?

For business owners, landlords and households with higher incomes, usually yes, because one well-timed decision on entity, retirement or equipment is often worth several thousand dollars. For a simple W-2 household the savings may be small. We cover the cost question in detail in how much tax planning costs.

Turn the checklist into your number

A checklist saves nothing on its own. The money is in knowing which five of these fifteen apply to you and what each is worth, while there is still time to act. That is what our tax planning service in White Plains and Westchester does (and for city residents, tax planning in New York City): we run your projection with the federal, New York State and New York City rules in, then walk you through the moves that pay. Bring last year's return and a year-to-date profit and loss, and in 15 minutes we will tell you what is still possible for 2026. Book a free 15-minute consult or call (646) 917-7714. No pressure, no obligation. December 31 does not extend.