7 Tax Planning Moves to Make Before Year-End (That Most Founders Miss)

7 Tax Planning Moves to Make Before Year-End (That Most Founders Miss)

You have until December 31 to cut your 2026 tax bill. Most founders waste this window pretending tax strategy happens in March.

It doesn't. The deadline for almost every meaningful tax move is December 31—not April 15.

Here are seven concrete moves to make before the ball drops. CPA on Fire walks their clients through every one of these before November ends.

1. Max Out Your Solo 401(k) or SEP-IRA Before December 31

Your deadline is December 31. Not January 15. Not "whenever you file your tax return."

For 2026, a Solo 401(k) lets you contribute up to $71,500 as an employee-deferral (or $78,500 if you're 50+). If you're self-employed, you can also contribute as the employer—up to 25% of your net self-employment income on top of that.

A SEP-IRA is simpler: you can stash up to 25% of your net self-employment income, capped at $71,500.

But here's the thing—the money has to be in the account by December 31. Setting up the account by December 31 works. The actual contribution can happen until your tax filing deadline (with an extension, that's October 15). Still, most CPAs push their clients to fund by year-end to avoid confusion.

If you made $150,000 in net self-employment income and you're 49 years old, maxing a Solo 401(k) saves you roughly $24,000 in federal taxes alone (37% marginal rate + 15.3% self-employment tax).

2. Review Q4 Estimated Payments—Year-End Tax Strategy to Avoid Penalties

If you're a founder, you're probably making estimated quarterly tax payments. The Q4 payment is due December 15.

Miss it or get it wrong, and the IRS charges an underpayment penalty. This happens even if you get a refund when you file. One CPA on Fire client paid a $2,100 penalty after missing their Q4 adjustment—completely avoidable.

December 15 is your deadline to adjust. If your income is trending higher than you expected, make a bigger Q4 payment. If your income tanked, you might skip it. But you can't wait until January to decide.

An income spike of $85,000 in Q3 and Q4 can mean a $2,100+ penalty. A quick December adjustment eliminates it.

3. Accelerate Business Expenses Before December (Year-End Tax Strategy)

Here's the strategic part: accelerate deductible expenses only if your 2026 income is higher than you expect 2027 to be.

If you're expecting a down year, pull forward business expenses—equipment, contractor invoices, conference registrations, software subscriptions. Deduct them in 2026 when you're in a higher tax bracket.

Say you expect $180,000 in income this year but only $100,000 next year. You're moving from the 24% federal bracket to 22%. If you accelerate a $10,000 software invoice from January 2027 to December 2026, you can save roughly $200 in taxes ($10,000 × 2% difference).

But—critical point—don't accelerate expenses if your 2027 income will be similar or higher. You're just deferring deductions into a higher-bracket year.

4. Elect S-Corp Status Before Year-End (Self-Employment Tax Savings)

If you're an LLC or sole proprietor making over $60,000 in net income, an S-corp election can cut your tax bill.

Here's the math: as an S-corp, you split income into "salary" (which pays 15.3% self-employment tax) and "distributions" (which don't). If you're netting $150,000, paying yourself $80,000 in salary and taking $70,000 as a distribution can save you roughly $10,500 in self-employment tax.

The catch: the IRS requires "reasonable compensation" for the work you do. You can't pay yourself $1 and distribute $149,000. A CPA will help you figure out what sticks.

The deadline to make an S-corp election for 2026 taxes is January 1, 2027. After that, the election applies to 2027 and beyond. CPA on Fire handles this for clients every December. Call in the next two weeks if this might apply to you.

5. Place Equipment in Service Before December 31 (Section 179 & Bonus Depreciation)

If you're buying equipment—servers, furniture, vehicles, machinery—it must be in service by December 31.

Section 179 of the Internal Revenue Code lets you deduct up to $1,360,000 of equipment placed in service in 2026 (the cap resets annually and phases out). Bonus depreciation lets you deduct 100% of the cost immediately on most property placed in service after September 27, 2017.

The key: the equipment has to be in use by December 31. Buying it doesn't count. Using it does.

If you're buying a $50,000 piece of equipment and placing it in service before year-end, you can deduct it entirely in 2026—saving you roughly $15,000-$18,000 in federal taxes depending on your bracket.

6. Make Charitable Donations Before Year-End (Tax-Deductible Giving)

Charitable donations are deductible only in the year they're made. December 31 is the deadline.

If you're planning to donate $25,000 to your favorite nonprofit, make it by December 31 to claim the deduction on your 2026 tax return. A donation made January 2, 2027 is deductible in 2027, not 2026.

Most founders underuse this—especially donor-advised funds (DAFs), which let you take a deduction now and recommend grants to charities over time. It's a way to batch charitable giving into high-income years.

7. Review Pass-Through Entity Elections (IRC §1368 for S-Corps & Partnerships)

If you own an S-corp, LLC taxed as an S-corp, or partnership, you might be eligible for the pass-through entity tax (PET) election.

The PET election lets you pay a 21% entity-level tax on your share of business income. For some founders, this is more favorable than paying top marginal rates (up to 37%) on a pass-through return. States are adding their own versions, and this is evolving fast.

This one is genuinely complex—worth a 30-minute conversation with your CPA before year-end if you're netting $500,000+ annually.

December 31 Is Your Deadline—Not April 15

Tax planning in April is tax damage control. The moves that move the needle happen in December.

Every single one of these requires a CPA who understands your full business picture—not a generalist who files returns on autopilot.

CPA on Fire specializes in exactly this: concierge-level tax strategy for founders. They've got the former Big Four experience to spot the moves most CPAs miss. They walk their clients through every one of these moves before Thanksgiving.

If you don't have a CPA locked in who's calling you in December to talk tax planning, you're leaving money on the table. Reach out to CPA on Fire or your current advisor now. You've got about eight weeks to plan.