{"id":899,"date":"2026-10-26T16:21:20","date_gmt":"2026-10-26T16:21:20","guid":{"rendered":"https:\/\/luminarallc.com\/?p=899"},"modified":"2026-10-26T16:21:22","modified_gmt":"2026-10-26T16:21:22","slug":"year-end-tax-planning-2026","status":"publish","type":"post","link":"https:\/\/luminarallc.com\/es\/year-end-tax-planning-2026\/","title":{"rendered":"Year-End Tax Planning 2026: Small Business Checklist"},"content":{"rendered":"\n<!--\n  Luminara LLC blog post: \"Year-End Tax Planning 2026\"\n  HOW TO USE: Posts > Add New Post, paste the title from post-seo.md, add ONE \"Custom HTML\" block and paste everything in this file.\n  Set category, excerpt, Rank Math fields and slug from post-seo.md.\n  Dates in the byline and schema say November 2, 2026. 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Get your books current, buy and start using any equipment you plan to deduct, make retirement contributions that run through payroll, and confirm your contractors&#8217; W-9s. After that, two dates matter most: <strong>January 15, 2027<\/strong> for fourth-quarter estimated taxes, and <strong>February 1, 2027<\/strong> for 1099-NEC and W-2 filings. California owners should also check the state&#8217;s much lower equipment-expensing limit.<\/p>\n  <\/div>\n\n  <nav class=\"toc\" aria-label=\"In this article\">\n    <strong>In this article<\/strong>\n    <ol>\n      <li><a href=\"#books\">Start with current books<\/a><\/li>\n      <li><a href=\"#equipment\">Equipment and the 2026 depreciation rules<\/a><\/li>\n      <li><a href=\"#retirement\">Retirement contributions for 2026<\/a><\/li>\n      <li><a href=\"#paperwork\">Mileage, contractors and estimated taxes<\/a><\/li>\n      <li><a href=\"#california\">California differences<\/a><\/li>\n      <li><a href=\"#checklist\">Year-end tax planning 2026 checklist<\/a><\/li>\n      <li><a href=\"#faq\">Frequently asked questions<\/a><\/li>\n    <\/ol>\n  <\/nav>\n\n  <h2 id=\"books\">Start with current books<\/h2>\n  <p>Every year-end tax planning decision depends on one number: what your business actually earned in 2026. If your books stop in August, you&#8217;re guessing. You might buy equipment you don&#8217;t need to lower a tax bill that isn&#8217;t there, or you might miss a deduction because you didn&#8217;t see a strong fourth quarter coming.<\/p>\n  <p>Before December, reconcile every bank and credit card account through the end of the most recent month. Then categorize every transaction and run a year-to-date profit and loss report. If you&#8217;re more than a couple of months behind, our <a href=\"\/home-page\/catch-up-bookkeeping-accounting\/\">catch-up bookkeeping service<\/a> can bring your records current, so your planning is based on real numbers.<\/p>\n\n  <h2 id=\"equipment\">Equipment and the 2026 depreciation rules<\/h2>\n  <p>The One Big Beautiful Bill Act made two big changes to how businesses deduct equipment, vehicles and other property:<\/p>\n  <ul class=\"check\">\n    <li><strong>Section 179 expensing up to $2.5 million.<\/strong> The limit rose from $1 million to $2.5 million for property placed in service in tax years beginning after December 31, 2024. The deduction starts to phase out once you place more than $4 million of qualifying property in service in a year, and both amounts are indexed for inflation after 2025.<\/li>\n    <li><strong>100% bonus depreciation is permanent.<\/strong> Qualified property acquired after January 19, 2025 can be fully deducted in the year it&#8217;s placed in service.<\/li>\n  <\/ul>\n  <p>The key word in both rules is <em>placed in service<\/em>. Equipment that is ordered in December but delivered and set up in January counts toward 2027, not 2026. Buy only what the business needs. A deduction reduces your tax by your tax rate, not by the full price you paid.<\/p>\n  <p>Source: IRS, <a href=\"https:\/\/www.irs.gov\/newsroom\/working-families-tax-cuts-businesses\" target=\"_blank\" rel=\"noopener\">Working Families Tax Cuts: Businesses<\/a>.<\/p>\n\n  <h2 id=\"retirement\">Retirement contributions for 2026<\/h2>\n  <p>Retirement contributions are one of the few year-end moves that both lower your taxes and keep the money for you. Here are the 2026 limits:<\/p>\n  <div class=\"table-wrap\">\n    <table>\n      <thead><tr><th>Plan or contribution<\/th><th>2026 limit<\/th><\/tr><\/thead>\n      <tbody>\n        <tr><td>401(k) employee deferral (including solo 401(k))<\/td><td>$24,500<\/td><\/tr>\n        <tr><td>401(k) catch-up, age 50 and over<\/td><td>$8,000<\/td><\/tr>\n        <tr><td>401(k) catch-up, ages 60 to 63<\/td><td>$11,250<\/td><\/tr>\n        <tr><td>Total defined contribution limit, including SEP IRA<\/td><td>$72,000<\/td><\/tr>\n        <tr><td>SIMPLE IRA employee deferral<\/td><td>$17,000<\/td><\/tr>\n        <tr><td>Traditional or Roth IRA<\/td><td>$7,500<\/td><\/tr>\n      <\/tbody>\n    <\/table>\n  <\/div>\n  <p class=\"note\">Sources: IRS, <a href=\"https:\/\/www.irs.gov\/newsroom\/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500\" target=\"_blank\" rel=\"noopener\">401(k) limit increases to $24,500 for 2026<\/a> and <a href=\"https:\/\/www.irs.gov\/retirement-plans\/cola-increases-for-dollar-limitations-on-benefits-and-contributions\" target=\"_blank\" rel=\"noopener\">COLA increases for dollar limitations<\/a>.<\/p>\n  <p>Timing matters. Employee deferrals into a 401(k) generally run through payroll, so S corporation owners need them on a 2026 paycheck. A SEP IRA can be funded later, up to your tax filing deadline including extensions. Check your plan&#8217;s rules before December so you don&#8217;t miss the window.<\/p>\n\n  <h2 id=\"paperwork\">Mileage, contractors and estimated taxes<\/h2>\n  <h3>Mileage<\/h3>\n  <p>The 2026 business standard mileage rate is <strong>72.5 cents per mile<\/strong>, according to the <a href=\"https:\/\/www.irs.gov\/newsroom\/irs-sets-2026-business-standard-mileage-rate-at-725-cents-per-mile-up-25-cents\" target=\"_blank\" rel=\"noopener\">IRS<\/a>. The deduction is only as good as your log, so rebuild any missing months from your calendar and client records while you still remember the trips.<\/p>\n  <h3>Contractors and 1099s<\/h3>\n  <p>For payments made in 2026, you only file a Form 1099-NEC for contractors you paid <strong>$2,000 or more<\/strong>, up from $600. Collect missing W-9s now. Because January 31, 2027 falls on a Sunday, 1099-NEC and W-2 forms are due <strong>February 1, 2027<\/strong>. Our guide to the <a href=\"\/1099-threshold-2026\/\">1099 threshold for 2026<\/a> covers the details, including California&#8217;s separate $600 reporting rule.<\/p>\n  <h3>Fourth-quarter estimated taxes<\/h3>\n  <p>If you&#8217;re self-employed or own a pass-through business, your fourth 2026 estimated tax payment is due <strong>January 15, 2027<\/strong>. A year-end profit and loss report tells you whether your earlier payments were enough, before a penalty tells you they weren&#8217;t.<\/p>\n\n  <h2 id=\"california\">California differences<\/h2>\n  <div class=\"callout\">\n    <p><strong>California doesn&#8217;t follow the federal equipment rules.<\/strong> For California purposes, the maximum Section 179 deduction is <strong>$25,000<\/strong>, and it begins phasing out once you place more than $200,000 of property in service. California also hasn&#8217;t adopted federal bonus depreciation. A purchase you deduct in full on your federal return may be deducted over several years on your California return.<\/p>\n  <\/div>\n  <p>Source: Franchise Tax Board, <a href=\"https:\/\/www.ftb.ca.gov\/forms\/2025\/2025-3885a-instructions.html\" target=\"_blank\" rel=\"noopener\">Instructions for Form FTB 3885A<\/a>.<\/p>\n  <p><strong>Pass-through entity (PTE) elective tax.<\/strong> California partnerships, LLCs taxed as partnerships, and S corporations can still elect the PTE tax, which the FTB says is available for tax years beginning before January 1, 2031. The first payment for each year is due <strong>June 15<\/strong> of that year: the greater of $1,000 or 50% of the prior year&#8217;s PTE tax. If you miss it, you can still elect, but the owners&#8217; credit is reduced by 12.5% of the unpaid amount. For 2026, that June payment date has passed. If you made it, finish the election with your return. If you didn&#8217;t, put June 15, 2027 on the calendar now (<a href=\"https:\/\/www.ftb.ca.gov\/file\/business\/credits\/pass-through-entity-elective-tax\/index.html\" target=\"_blank\" rel=\"noopener\">FTB<\/a>).<\/p>\n\n  <h2 id=\"checklist\">Year-end tax planning 2026 checklist<\/h2>\n  <div class=\"table-wrap\">\n    <table>\n      <thead><tr><th>Task<\/th><th>Do it by<\/th><\/tr><\/thead>\n      <tbody>\n        <tr><td>Reconcile all accounts and run a year-to-date profit and loss report<\/td><td>Early December<\/td><\/tr>\n        <tr><td>Decide on equipment purchases and make sure items are placed in service<\/td><td>December 31, 2026<\/td><\/tr>\n        <tr><td>Make 401(k) deferrals through payroll<\/td><td>Last 2026 payroll<\/td><\/tr>\n        <tr><td>Request missing W-9s from contractors<\/td><td>December 2026<\/td><\/tr>\n        <tr><td>Rebuild missing mileage records<\/td><td>December 2026<\/td><\/tr>\n        <tr><td>Pay fourth-quarter estimated taxes<\/td><td>January 15, 2027<\/td><\/tr>\n        <tr><td>File and send 1099-NEC and W-2 forms<\/td><td>February 1, 2027<\/td><\/tr>\n        <tr><td>File Form 2553 if you want S corporation status for 2027 (calendar-year businesses)<\/td><td>March 15, 2027<\/td><\/tr>\n        <tr><td>Fund a SEP IRA for 2026<\/td><td>Your filing deadline, including extensions<\/td><\/tr>\n      <\/tbody>\n    <\/table>\n  <\/div>\n  <p>If you&#8217;re weighing an S corporation election, hiring your first employee, or planning a large purchase, that call is worth making with someone who sees your whole financial picture. Our <a href=\"\/home-page\/fractional-cfo-san-francisco\/\">fractional CFO services<\/a> are built for exactly those decisions.<\/p>\n\n  <section class=\"cta\">\n    <span class=\"label\" style=\"color:var(--gold)\">Free 20-minute consultation<\/span>\n    <h2>Want a year-end review before December 31?<\/h2>\n    <p>We&#8217;ll look at your 2026 numbers, flag the moves worth making before year-end, and give you a clear estimate for anything we&#8217;d handle.<\/p>\n    <a class=\"btn\" href=\"\/#services\">Book a free consultation<\/a>\n  <\/section>\n\n  <h2 id=\"faq\">Frequently asked questions<\/h2>\n  <details open>\n    <summary>When should a small business start year-end tax planning for 2026?<\/summary>\n    <p>Start in November, or early December at the latest. Most moves, such as buying equipment, running payroll contributions and closing your books, need to be finished by December 31, 2026.<\/p>\n  <\/details>\n  <details>\n    <summary>What is the Section 179 limit for 2026?<\/summary>\n    <p>Federal law sets the Section 179 limit at $2.5 million, phasing out above $4 million of qualifying property, with both amounts indexed for inflation after 2025. California limits the deduction to $25,000.<\/p>\n  <\/details>\n  <details>\n    <summary>Is bonus depreciation 100% in 2026?<\/summary>\n    <p>Yes, federally. The One Big Beautiful Bill Act made 100% bonus depreciation permanent for qualified property acquired after January 19, 2025. California does not allow federal bonus depreciation.<\/p>\n  <\/details>\n  <details>\n    <summary>When are fourth-quarter 2026 estimated taxes due?<\/summary>\n    <p>January 15, 2027.<\/p>\n  <\/details>\n  <details>\n    <summary>What is the 2026 mileage rate for business?<\/summary>\n    <p>72.5 cents per mile for business driving in 2026.<\/p>\n  <\/details>\n\n  <div class=\"sources\">\n    <strong>Sources<\/strong>\n    <ul>\n      <li>IRS, <a href=\"https:\/\/www.irs.gov\/newsroom\/working-families-tax-cuts-businesses\" target=\"_blank\" rel=\"noopener\">Working Families Tax Cuts: Businesses<\/a><\/li>\n      <li>IRS, <a href=\"https:\/\/www.irs.gov\/newsroom\/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500\" target=\"_blank\" rel=\"noopener\">401(k) limit increases to $24,500 for 2026<\/a><\/li>\n      <li>IRS, <a href=\"https:\/\/www.irs.gov\/retirement-plans\/cola-increases-for-dollar-limitations-on-benefits-and-contributions\" target=\"_blank\" rel=\"noopener\">COLA increases for dollar limitations on benefits and contributions<\/a><\/li>\n      <li>IRS, <a href=\"https:\/\/www.irs.gov\/newsroom\/irs-sets-2026-business-standard-mileage-rate-at-725-cents-per-mile-up-25-cents\" target=\"_blank\" rel=\"noopener\">2026 business standard mileage rate<\/a><\/li>\n      <li>California FTB, <a href=\"https:\/\/www.ftb.ca.gov\/forms\/2025\/2025-3885a-instructions.html\" target=\"_blank\" rel=\"noopener\">Instructions for Form FTB 3885A<\/a><\/li>\n      <li>California FTB, <a href=\"https:\/\/www.ftb.ca.gov\/file\/business\/credits\/pass-through-entity-elective-tax\/index.html\" target=\"_blank\" rel=\"noopener\">Pass-through entity elective tax<\/a><\/li>\n    <\/ul>\n    <p class=\"note\">This article is general information, not tax or legal advice for your situation. Tax rules change; contact us or a tax professional before you act.<\/p>\n  <\/div>\n\n  <div class=\"author\">\n    <div class=\"mark\" aria-hidden=\"true\">L<\/div>\n    <p><strong>Luminara LLC<\/strong> provides bookkeeping, payroll, tax and fractional CFO services for startups, small businesses and freelancers in the San Francisco Bay Area and nationwide. Questions? Call 510-306-4016 or email <a href=\"mailto:inquiries@luminarallc.com\">inquiries@luminarallc.com<\/a>.<\/p>\n  <\/div>\n<\/article>\n\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@graph\": [\n    {\n      \"@type\": \"BlogPosting\",\n      \"headline\": \"Year-End Tax Planning 2026: A Small Business Checklist\",\n      \"description\": \"Year-end tax planning 2026 for small businesses: Section 179, bonus depreciation, retirement limits, 1099s and key deadlines, plus California differences.\",\n      \"datePublished\": \"2026-11-02\",\n      \"dateModified\": \"2026-11-02\",\n      \"author\": {\"@type\": \"Organization\", \"name\": \"Luminara LLC\", \"url\": \"https:\/\/luminarallc.com\/\"},\n      \"publisher\": {\"@type\": \"Organization\", \"name\": \"Luminara LLC\", \"url\": \"https:\/\/luminarallc.com\/\"},\n      \"mainEntityOfPage\": \"https:\/\/luminarallc.com\/year-end-tax-planning-2026\/\",\n      \"about\": [\"Year-end tax planning\", \"Section 179\", \"Bonus depreciation\", \"Retirement contribution limits 2026\"]\n    },\n    {\n      \"@type\": \"FAQPage\",\n      \"mainEntity\": [\n        {\"@type\": \"Question\", \"name\": \"When should a small business start year-end tax planning for 2026?\", \"acceptedAnswer\": {\"@type\": \"Answer\", \"text\": \"Start in November, or early December at the latest. 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