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100 Days Left in 2026: The Year-End Tax Moves That Still Work (and the One That Gets People Indicted)
The third quarter ends September 30, which leaves roughly 100 days in 2026. That matters because most of the moves that genuinely lower a tax bill have a hard date: December 31. After that, what you owe for 2026 is mostly decided, and the only thing left is how well the return is prepared. Here is what still works, with the 2026 numbers, and the one popular "strategy" that is not a strategy at all.
First, the one that gets people indicted
Every year we meet a business owner who was told to "run everything through the business." Personal groceries, the family vacation, a car nobody at the company drives, all deducted as business expenses. That is not aggressive planning. It is tax evasion under Internal Revenue Code section 7201, a felony punishable by up to five years in federal prison and a fine of up to $100,000, plus the civil fraud penalty of 75 percent of the underpayment. The IRS does not need to prove the whole return was false; one clearly personal expense deducted with intent is enough.
The line the law draws is simple: a business deduction has to be an ordinary and necessary expense of the business, and you have to be able to substantiate it. The same goes for its cousins: leaving cash income off the return, backdating documents, and using payroll taxes withheld from employees to pay other bills. Everything below is on the right side of that line.
1. Buy what the business needs and put it in service by December 31
The 2025 tax law made 100 percent bonus depreciation permanent for qualifying property acquired and placed in service after January 19, 2025. Section 179 expensing is also available, with a 2026 limit of $2,560,000 and a phase-out starting at $4,090,000 of purchases. In plain English: equipment, software, furniture, most vehicles used more than half for business, and many building improvements can be deducted in full this year instead of over five to thirty-nine years.
Two rules trip people up. The asset has to be placed in service, not just ordered, by December 31. And a vehicle over 6,000 pounds gross vehicle weight gets the full treatment, while lighter passenger cars are capped by the luxury auto limits. If a purchase was already in the plan for early 2027, pulling it into December can be worth a lot. Buying something you do not need to "get the deduction" never is; you are still spending a dollar to save a fraction of it.
2. Fund retirement, and set the plan up before year end
Retirement contributions are the cleanest deduction there is, because the money stays yours. The 2026 limits:
401(k) and solo 401(k) employee deferrals: $24,500, plus an $8,000 catch-up at age 50 and older ($11,250 for ages 60 through 63).
Total defined-contribution limit (employee plus employer): $72,000, before catch-ups.
SEP IRA: up to 25 percent of compensation, capped at $72,000. A SEP can be opened and funded as late as the extended due date of the return.
Traditional or Roth IRA: $7,500, plus a $1,100 catch-up at 50 and older, fundable until April 15, 2027.
HSA, if you have a qualifying high-deductible plan: $4,400 self-only, $8,750 family, plus $1,000 at 55 and older.
The timing detail that matters: a solo 401(k) should be established by December 31 so employee deferrals for 2026 are available. If the S-corporation pays you a salary, the deferral comes out of that salary, which is one more reason to get the reasonable-compensation number right before the last payroll of the year.
3. The Augusta rule: rent your home to your business for up to 14 days
Section 280A(g) says that if you rent out your residence for 14 days or fewer in a year, you do not report the rental income at all. If the tenant is your own business, renting the space for a board meeting, a planning retreat, a client event, or a quarterly strategy day, the business deducts the rent as an ordinary expense. The rate has to be a fair market rate for comparable space in your area, the meetings have to actually happen, and you need minutes and an invoice. Done properly, it moves money from the business to you with no tax on either side.
4. Hire your kids, on paper and in fact
A sole proprietorship or a partnership owned only by the child's parents can pay a child under 18 for real work without Social Security or Medicare tax. With the 2026 standard deduction at $16,100 for a single filer, a child can earn up to that amount with no federal income tax, and the business deducts every dollar. The work has to be real, the pay has to be reasonable for the work, and you need timesheets and actual payments. An S-corporation can still do this, but payroll taxes apply.
5. Prepay, accelerate, and clean up the books
Cash-basis businesses deduct expenses when paid. Under the 12-month rule, a prepayment that covers a period of 12 months or less can be deducted in the year paid: next year's insurance, a software subscription, rent for January, professional fees. The mirror image applies to income: invoices sent in the last week of December that are paid in January are 2027 income for a cash-basis business.
This is also the moment to reconcile the books. Every deduction you cannot substantiate in a clean ledger is a deduction that disappears in an audit, and every quarter of sloppy records is a year-end reconstruction you pay a preparer to do. Most of the tax savings we find in a December review come from expenses that were paid and never recorded.
6. The deductions that changed for 2026
The QBI deduction of 20 percent of qualified business income is now permanent, and the phase-in ranges widened to $150,000 for joint filers and $75,000 for everyone else. Owners near the thresholds have real room to plan around them.
New for 2026: a charitable deduction for people who take the standard deduction, up to $1,000 for single filers and $2,000 for joint filers, cash gifts to public charities only.
The standard deduction for 2026 is $16,100 for single filers and $32,200 for married couples filing jointly.
If you were over the old cap on state and local taxes, the higher SALT cap in the 2025 law may make itemizing worthwhile again; run the numbers both ways.
7. Check the estimates before the penalty attaches
The fourth-quarter 2026 estimated payment is due January 15, 2027. If income jumped this year, the underpayment penalty accrues from each quarter's due date, so the time to fix it is now, not in April. A useful safety valve: withholding is treated as paid evenly through the year, so increasing withholding from a salary in November and December can cure an underpayment that a January estimate cannot.
What to do this week
Pull a year-to-date profit and loss and a list of anything you plan to buy in the next four months.
Decide on the retirement plan before December: solo 401(k) needs to exist by December 31; a SEP does not.
Reconcile the books through September and flag every unrecorded expense.
If the business uses your home, document the Augusta rental now: dates, agenda, minutes, a comparable rate.
Book a review. Twenty minutes in October is worth more than two hours in April.
Frequently asked questions
Is running personal expenses through my business really a crime?
Deducting personal expenses as business expenses with the intent to lower your tax is tax evasion under section 7201. In practice the IRS pursues most cases civilly with the 75 percent fraud penalty, but criminal referrals happen, especially when the amounts are large, the pattern is repeated, or records were altered. An honest mistake is not evasion; a pattern of personal spending labeled as business is.
Can I still get 100 percent bonus depreciation on a vehicle in 2026?
Yes, for a vehicle used more than 50 percent for business and placed in service by December 31. Vehicles with a gross vehicle weight rating over 6,000 pounds can be fully deducted; lighter passenger vehicles are limited by the annual luxury auto caps.
What is the deadline to open a solo 401(k) for 2026?
Establish the plan by December 31, 2026 to make employee deferrals for the year. Employer contributions can be made up to the due date of the return, including extensions. A SEP IRA can be both opened and funded by the extended due date.
Does the Augusta rule work if I have a home office?
It can, but the same square footage cannot be a home office deduction and an Augusta rental at the same time. Most owners rent the whole home for a specific event day and keep the home office deduction separate; that needs careful documentation.
What if I already owe the IRS for prior years?
Year-end planning still applies, and it is often more valuable because it reduces what gets added to the balance. The old balance is handled separately through a payment plan, penalty relief, or in some cases an Offer in Compromise. We look at both in the same review.
General information, not individual tax advice. Every situation depends on its own facts and no outcome is guaranteed. Sabih Shafi is an Enrolled Agent admitted to practice before the IRS.
Talk to an Enrolled Agent
Bring your year-to-date numbers and a list of what you are planning to buy. In a free 20-minute review we tell you which of these moves apply, what they are worth, and what it would cost, before you commit to anything.
Prefer email? Get the year-end checklist here: https://go.allstatetaxresolution.com/lp/yearend
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