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New rules under the One Big Beautiful Bill Act have changed how deductions, credits, and write-offs work. With the right tax planning strategies, you can minimize your tax bill, improve cash flow, and pay less in taxes.
If you own a small business, 2026 is not a year to “wing it” with taxes; it’s time to make informed decisions through tax planning strategies.
Tax Planning Strategies for Business Owners – A 2026 Special
The tax rules keep changing. But here are the 2026 tax planning tips that can help business owners lower their taxes.
1. Buy Smart and Write It Off Fast
Section 179 and bonus depreciation allow businesses to deduct the cost of equipment and certain property much faster.
In 2026, you can:
- Expense up to $2.5 million of qualifying purchases under Section 179, with phaseouts beginning after this threshold
- Use 100 percent bonus depreciation on eligible equipment with no dollar cap
Let’s take an example. You buy $80,000 worth of equipment for your business in October 2026. Instead of taking depreciation expense slowly over several years, you can deduct the full $80,000 in the first year.
This strategy works best when:
- Your business is profitable
- You already planned to make the purchase
- You want to reduce your current tax bill, not future tax liabilities
Get an in-depth review of your situation from a CPA who is proactive and specializes in working with business owners. Reach out to us.
2. Protect the 20 Percent QBI Deduction
Your income level controls your discount.
If you run a pass-through business like an LLC, S corporation, or sole proprietorship, you may qualify for the Qualified Business Income deduction, which can reduce taxable income by up to 20 percent.
In 2026:
- Income thresholds are higher
- A minimum deduction applies for active business income
Let’s assume your business earns $100,000 of net income. If you qualify, up to $20,000 of that income may not be taxed at all. Stacking other planning strategies such as managing retirement contributions, timing income recognition, and managing expenses can help keep you within the ideal range.
3. Turn Buildings into Bigger Write-Offs
Your building is hiding tax savings.
If you own rental or commercial property, a cost segregation study can significantly increase deductions.
This strategy breaks a building into parts like lighting, flooring, wiring, and fixtures, and depreciates them faster. That means, instead of writing off a building over 27.5 or 39 years, parts of it can be written off over 5, 7, or 15 years.
Ultimately, it leads to large deductions upfront and better cash flow in the early years of ownership.
4. Use Credits That Pay You Back
Credits beat deductions every time.
Tax credits reduce taxes dollar for dollar, which makes them extremely powerful.
Key credits expanded or made permanent for 2026 include:
- Paid family and medical leave credits
- Employer-provided childcare credits
- Immediate expensing for domestic research and development
Again, understanding credits vs. deductions is critical. A $10,000 deduction might save you $2,500 in tax. A $10,000 credit saves you the full $10,000. However, many business owners make the mistake of treating credits like deductions and failing to track eligible expenses, which can lead to underclaiming or missing out on significant tax savings.
5. Deduct More of Your Business Interest
Debt is not always bad when used properly and is even rewarded by the tax code.
Rules around business interest deductions are more favorable in 2026 because EBITDA (earnings before interest, tax, and depreciation) add-backs are restored. This means businesses with loans or financing may deduct more interest compared to what they could deduct in previous years.
So, if your business uses financing for equipment, real estate, or expansion, more of that interest may now reduce your taxable income.
This is especially important for growing businesses that rely on leverage.
6. Rethink Your Business Structure
Your entity type controls your tax ceiling.
Your business structure determines how you are taxed. LLC, S corporation, partnership, or C corporation each come with tradeoffs.
For instance, an S corporation might save on self-employment taxes, while a C corporation could benefit from stacking retained earnings and only creating taxable events with dividends/distributions. The right choice for you depends on how much you earn and how you pay yourself.
7. Pay Yourself the Right Way
How you pay yourself matters just as much as how much you pay yourself.
Compensation rules have tightened, especially for businesses with related entities.
Planning salary, bonuses, and distributions properly can improve deduction timing, reduce audit risk, and align pay with IRS rules.
This is especially important for owner-employees and growing leadership teams.
8. Use Opportunity Zones for Long-Term Wins
Reinvest gains and defer taxes simultaneously.
Opportunity Zones are now permanent and allow investors to defer and potentially reduce capital gains.
If your business is expanding or investing in certain areas, this strategy can align tax savings with growth. So, if you sell an asset at a gain and reinvest in a qualifying zone, taxes on that gain may be delayed or partially eliminated.
9. Understand IRS relief re: Disaster Losses
If your business is affected by a federally declared disaster, special tax rules apply.
You may be able to:
- Deduct losses in the prior year
- Access extended filing deadlines
- Exclude certain relief payments from income
However, you must maintain proper and contemporaneous documentation.
10. Use Retirement Plans to Lower Taxes Now
Build tomorrow’s wealth. Cut today’s taxes.
Retirement contributions are one of the simplest tax planning strategies available.
Options like Solo 401(k)s, SEP IRAs, and employer-sponsored plans can significantly reduce taxable income while building long-term wealth. For example, a $30,000 retirement contribution could reduce your taxable income by the same amount.
11. Stay Ahead of Reporting and Loss Limits
Compliance mistakes are expensive and avoidable.
Here are the two most important changes for 2026 that you should remember:
- The 1099 reporting threshold has increased to $2,000 from $600
- Excess business loss limits are permanent
This means better bookkeeping and proactive planning are more important than ever, especially for business owners with fluctuating income.
If you want expert help with your bookkeeping or tax planning, contact us.
Final Thoughts
Proactive tax planning strategies for 2026 require you and your advisors to make informed decisions throughout the year. You should start early to avoid last-minute panic. There are two things you need to take into account. First, make sure that you align your tax planning strategies with your business goals. Second, ensure that you’re using personalized tax planning strategies that maximize benefits to your situation. Tax planning strategies work best when they are proactive, not reactive.
Want to get personalized tax planning strategies for your specific case? Attracct’s experts are seasoned to cater to business owners. Book a commitment-free meeting today.
