Q4 Tax Planning Guide
The fourth quarter is your last real window to lower this year's tax bill. Once December 31 passes, most of the levers are no longer pullable. This is a checklist of the moves worth running through before year-end.
1. Project your taxable income
You can't plan what you can't see. Before any year-end move makes sense, you need a realistic projection of where this year's net income will land. That requires:
- Books closed through at least September.
- A reasonable estimate of October–December activity.
- Owner compensation (salary, distributions) projected through year-end.
If your books aren't current, fixing that is the first Q4 move — every other lever depends on it.
2. Accelerate or defer income
Cash-basis businesses can shift the timing of when income is recognized:
- Defer income: delay year-end invoicing to push receipts into January.
- Accelerate expenses: prepay rent, insurance, supplies for the next 12 months (Section 162 rules apply).
Accrual-basis businesses have less flexibility but should still plan AR/AP cutoffs.
3. Section 179 + bonus depreciation
If you need equipment or vehicles for the business, placing them in service before December 31 lets you write off most of the cost in the current year. Section 179 in 2026 is $1.16M with a $2.89M phase-out; bonus depreciation is at 60%.
Be sure the asset is actually in service — not just ordered or paid for. A vehicle delivered December 27 is fine; one delivered January 3 is not.
4. Retirement contributions
Owner retirement vehicles offer substantial tax shelters:
- Solo 401(k) — up to $23,000 employee deferral + 25% of compensation employer match.
- SEP-IRA — up to 25% of compensation, capped at $69,000.
- Defined benefit plan — six-figure deductions for the right profile.
Most plans need to be established by December 31, even if funded later.
5. S-Corp owner compensation true-up
If you're an S-Corp owner, December is when you reconcile your reasonable salary. Underpaid salaries get IRS attention; overpaid salaries waste self-employment tax savings. Now is the time to run a payroll true-up.
6. Charitable giving
Bunching charitable contributions into a donor-advised fund lets you take the deduction this year and grant the funds out over future years — useful if you're alternating between standard and itemized deductions.
7. Loss harvesting
Investment portfolios should be reviewed for tax-loss harvesting opportunities — selling underwater positions to offset realized gains.
What to do now
Run the checklist above with your numbers. If any of it lands as "I don't actually know," that's the first place to start. Our contact form is open if you want help running the numbers.