Key takeaways
- Itemizing vs. the standard deduction requires deliberate analysis. With the 2026 standard deduction at $32,200 for married filers and a SALT cap of $40,400 (with additional limits for high earners), many taxpayers must carefully weigh whether their mortgage interest, charitable gifts and other deductions actually exceed the threshold — and time their charitable giving accordingly to maximize the benefit.
- Pass-through business owners should coordinate QBI planning before December 31. The 20% qualified business income deduction is now permanent, but its value depends heavily on taxable income levels, wages paid and retirement contributions. Owners of S corporations, partnerships, LLCs and sole proprietorships have a narrow window to make elections, incur deductible expenses or fund retirement plans that preserve or increase their deduction.
- Accelerated depreciation and retirement contributions remain two of the most powerful year-end tools. With 100% bonus depreciation restored for qualified property placed in service after January 19, 2025, and expanded retirement plan options available to individuals and closely held businesses alike, strategic decisions made before December 31 can materially reduce taxable income — but only when coordinated with entity structure, cash flow and multi-year planning.
As year-end approaches, now is a good time to review income, deductions, investments and business purchases to identify opportunities before December 31. The following items are intended as practical planning reminders; please contact us before taking action so we can evaluate how these rules apply to your specific situation.
Review whether you will itemize or claim the standard deduction
For 2026, the standard deduction is $32,200 for married filing jointly, $16,100 for single filers and $24,150 for heads of household. Because the standard deduction remains relatively high, many taxpayers will not benefit from itemized deductions unless their mortgage interest, state and local taxes, charitable gifts and other deductions exceed the standard deduction. The 2026 SALT deduction cap is generally $40,400, with additional limitations for taxpayers in the highest bracket.
Plan charitable giving before year-end
If you itemize, consider completing charitable gifts by December 31 and retaining proper documentation. If you do not itemize, beginning in 2026, you may be able to deduct up to $1,000 of qualifying cash charitable contributions, or $2,000 for married couples filing jointly, in addition to the standard deduction. Higher-income taxpayers should also be mindful of new limits that may reduce the tax benefit of itemized deductions.
Coordinate pass-through income and the QBI deduction
Owners of S corporations, partnerships, LLCs and sole proprietorships should review projected taxable income, wages, retirement contributions and year-end deductions. The 20% qualified business income deduction has been made permanent, and 2026 planning may involve managing taxable income around applicable thresholds, especially for specified service businesses. Year-end retirement contributions or deductible expenses may help preserve or increase the deduction in the right circumstances.
Consider equipment purchases, bonus depreciation and Section 179 expensing
Businesses planning to buy vehicles, machinery, equipment, furniture or certain qualified improvements should consider whether assets can be placed in service before year-end. Current rules restore 100% bonus depreciation for qualified property generally acquired and placed in service after January 19, 2025. Section 179 expensing may also provide an immediate deduction, but the best choice depends on taxable income, financing, future profit expectations and state tax treatment.
Maximize retirement plan contributions where appropriate
Individuals and business owners should review contributions to 401(k), 403(b), SIMPLE IRA, SEP IRA, traditional IRA, Roth IRA and other retirement arrangements. Employer and self-employed retirement plans can be especially valuable because contributions may reduce taxable income while building long-term savings. Closely held businesses should also evaluate whether a new plan or plan design change could provide additional tax and retirement benefits.
Solar facilities — December 31, 2027, the placed-in-service date is critical
Under IRC §§ 45Y and 48E, the OBBBA generally terminates the clean electricity production credit and clean electricity investment credit for applicable solar facilities placed in service after December 31, 2027, if construction begins after July 4, 2026.
Trump accounts — enrollment required
The OBBBA created Trump accounts under IRC § 530A for eligible U.S.-citizen children under age 18 with a Social Security number, with contributions permitted beginning July 4, 2026.
Under recent regulations, the Treasury Secretary has been provided authority to automatically create an account for all eligible children. But to get the $1,000 in government seed funding for kids born from 2025 through 2028, or to make contributions to their child’s savings vehicle, a parent or guardian must still “claim” the account through the program’s mobile app.
Evaluate income and deduction timing
Depending on your expected tax bracket for this year and next year, it may make sense to accelerate or defer income, bonuses, business receipts, deductible expenses, charitable gifts or capital transactions. For cash-basis businesses, year-end billing, collections and payment timing can materially affect taxable income. However, timing decisions should be coordinated with cash flow, financing needs, QBI planning, retirement contributions and the availability of deductions or credits.
R&D credit and research expense planning
Businesses should evaluate potential IRC § 41 R&D credit opportunities and strengthen documentation of qualified research activities by business components. Consider whether the regular credit (generally 20%) or the alternative simplified credit (ASC, generally 14%) is more beneficial and review the IRC § 280C reduced-credit election to manage the interaction between the credit and deductions. Coordinate year-end planning with the treatment of research expenditures under IRC § 174A (generally immediate deduction for domestic R&E, with continued amortization for foreign R&E) and any related method change considerations.
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Wipfli offers proactive individual tax planning and preparation that reflects complex financial lives, business ownership, compensation structures and evolving tax legislation. We help clients optimize their personal tax position, reduce compliance risk and make better strategic timing decisions. For closely held business owners, Wipfli’s strategic tax planning services are designed to minimize tax exposure and align tax strategy with business objectives. Develop your year-end strategy.