Every December, the same conversation happens in accounting offices across the country: a business owner calls in early January wanting to know what they could have done differently. Usually, the answer involves a decision that had to be made before December 31, not after.

2026 has a wrinkle that makes this year’s planning window a little different from the last few. The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, permanently restored 100% bonus depreciation and raised the Section 179 expensing limit. For years, business owners rushed equipment purchases into December because the bonus depreciation percentage was scheduled to shrink every year until it disappeared. That deadline pressure is gone. What replaced it is a different kind of planning problem: knowing which tool to use, in what order, and against which piece of income.

This guide walks through what actually deserves a decision before year-end, organized the way a strategist would look at it rather than the way a checklist app would print it.

Start With Income Timing, Not Deductions

Most year-end tax conversations jump straight to deductions. Income timing usually matters more, and it’s the piece that’s easiest to control if you look at it in November instead of January.

If your business runs on the cash method, you have real discretion over when income lands. Sending invoices in late December versus early January can shift income between tax years. The same is true in reverse: if you expect a lower-income year in 2026 than in 2027, accelerating income into 2026 might make sense. If the opposite is true, deferring it does.

For real estate investors, income timing shows up differently. Closing a sale on December 28 instead of January 3 changes which tax year absorbs the gain. So does the timing of a 1031 exchange identification period, or whether a refinance generates taxable cancellation-of-debt income in the current year.

None of this is a one-size-fits-all decision. It depends on your marginal rate this year versus next, how close you are to a Qualified Business Income (QBI) threshold, and what else is happening in your business. That’s a conversation to have before December 31, not a box to check.

Bonus Depreciation Is Now a Permanent Tool, Not a Countdown

Under the Tax Cuts and Jobs Act of 2017, 100% bonus depreciation was scheduled to phase down: 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, and 0% after that. That phase-down created a real incentive to buy equipment before the percentage dropped further.

The OBBBA reversed that schedule. For qualified property acquired and placed in service after January 19, 2025, bonus depreciation is 100%, and it’s permanent under current law. There’s no sunset date built into the statute. The IRS issued interim guidance on this change in Notice 2026-11, released January 14, 2026, which businesses can rely on while formal regulations are being finalized.

What this means practically: if you were planning real estate, a piece of equipment, a vehicle, or qualifying leasehold improvements for early 2027 anyway, there’s no longer a tax-driven reason to rush the purchase into December 2026 just to catch a shrinking percentage. The percentage isn’t shrinking. That said, timing can still matter for other reasons: cash flow, whether you need the deduction this year versus next, or whether accelerating a purchase creates a net operating loss you’d rather not generate in a particular year.

Bonus depreciation has no dollar cap and isn’t limited by business income, which means it can create a loss. That’s different from Section 179, and it’s the reason many advisors use Section 179 first and bonus depreciation second.

Section 179: A Bigger Number, With Real Limits

The OBBBA raised the Section 179 deduction ceiling to $2.5 million, with the phase-out threshold set at $4 million, both indexed for inflation starting in 2026. For the 2026 tax year, the inflation-adjusted figures are approximately $2,560,000 for the maximum deduction and $4,090,000 for the phase-out threshold.

Section 179 differs from bonus depreciation in three ways that matter for year-end decisions:

It requires an affirmative election. It’s capped by your business’s taxable income for the year, meaning it can’t create a loss. And any amount you can’t use this year carries forward, subject to the same income test in future years.

Because of the income cap, Section 179 is the deduction to reach for first if you’re trying to zero out taxable income without going negative. Bonus depreciation, with no income limitation, is the tool for anything beyond that. Most advisors coordinate the two rather than picking one exclusively.

Section 179 also covers certain improvements to nonresidential real property that bonus depreciation doesn’t automatically reach in the same way, including roofs, HVAC systems, and fire protection, alarm, and security systems. If you made building improvements this year, that’s worth a specific look before you file.

Real Estate Investors: Depreciation Is Where the Leverage Is

For real estate investors, the biggest year-end lever is usually depreciation, not deductions in the traditional sense. Cost segregation studies, which reclassify parts of a building into shorter recovery periods, become significantly more valuable when the reclassified components qualify for bonus depreciation. With 100% bonus depreciation now permanent, timing a cost segregation study around a closing or a major renovation deserves a real look before year-end rather than an afterthought in April. We cover this in more depth in a dedicated article on scheduling a cost segregation study.

A few other year-end questions worth asking if you own investment real estate:

Have you tracked your material participation hours if you’re relying on real estate professional status to use rental losses against other income? The IRS looks closely at contemporaneous logs, not year-end reconstructions.

Have you reviewed whether any properties acquired or improved this year have components that should be segregated before the return is filed?

Are there any planned dispositions where the timing of the closing, not just the price, affects which tax year absorbs the gain or any depreciation recapture?

Estimated Taxes: Check the Math Before the Fourth Payment

If you pay quarterly estimated taxes, the fourth 2026 installment is due January 15, 2027. Before that payment goes out, it’s worth running an actual projection rather than repeating the same number you paid last quarter. A year with a large equipment purchase, a property sale, or a cost segregation study can swing your liability significantly, and either overpaying or underpaying by a wide margin has real costs: one ties up cash unnecessarily, the other can trigger an underpayment penalty.

The Qualified Business Income Deduction Is Permanent, But the Details Still Matter

The Section 199A Qualified Business Income deduction, which allows eligible pass-through business owners to deduct up to 20% of qualified business income, was scheduled to expire after 2025. The OBBBA made it permanent at the same 20% rate. It did not increase the rate, despite some early proposals and a fair amount of confusion online suggesting otherwise.

What did change for 2026: the income phase-in ranges where W-2 wage and property limitations start to apply widened, and a new minimum deduction of $400 applies for taxpayers with at least $1,000 of qualified business income. If your taxable income is near the 2026 thresholds (roughly $203,000 for single filers and $406,000 for joint filers before the deduction), year-end income timing and retirement contributions can directly affect which side of that line you land on.

Retirement Contributions Are a Year-End Decision With a Later Deadline

Unlike most of the items on this list, employer retirement plan contributions for a business often have more flexibility on timing than people assume. Employee deferral elections for a 401(k) generally need to happen before year-end, but many employer-side contributions can be made up until the business’s tax filing deadline, including extensions. That doesn’t mean you should wait. It means the decision about how much to contribute should be made with real year-end numbers, not a guess made in October.

What This Looks Like on a Mississippi Return

Everything above is federal tax law, and federal law applies the same way in Oxford, Mississippi as it does anywhere else in the country. But federal law only determines your federal return. Mississippi calculates its own state taxable income under its own statutes, and it does not automatically adopt every federal provision the way some states do. Three distinctions matter here:

Section 179 lines up with the federal number. Mississippi has statutorily conformed to IRC Section 179 “as in effect for that year” since 2023 legislation took effect, which means the 2026 federal limits, roughly $2,560,000 with a $4,090,000 phase-out threshold, apply for Mississippi purposes as well.

Bonus depreciation reaches a similar result through a different rule. Mississippi historically treated federal bonus depreciation as not a “reasonable” depreciation allowance under its own regulations, decoupling from the TCJA version of Section 168(k). Separately, in 2023, the state legislature created its own election allowing Mississippi taxpayers to fully expense qualifying business property in the year it’s placed in service. In practice, that gets a Mississippi taxpayer to something close to the federal outcome, but it runs through Mississippi’s own statute rather than a direct pickup of the federal OBBBA bonus depreciation rules.

The Qualified Business Income deduction does not carry over to the Mississippi return at all. Mississippi computes state taxable income from its own definitions rather than starting from federal taxable income after the Section 199A deduction, and the state has no equivalent 20% pass-through deduction. The QBI deduction reduces what you owe the IRS. It has no effect on what you owe Mississippi.

None of this changes the federal planning decisions described above. It does mean a Mississippi-based business owner reviewing year-end numbers should look at the state and federal outcomes separately rather than assuming one mirrors the other.

A Practical Pre-December 31 Checklist

• Run an updated income and expense projection for the full year, not just year-to-date actuals.
• Decide whether accelerating or deferring income makes sense given this year’s and next year’s expected rates.
• Review any equipment, vehicle, or property improvement purchases and confirm placed-in-service dates.
• Determine the Section 179 versus bonus depreciation mix for this year’s asset purchases.
• For real estate investors, evaluate whether a cost segregation study on a property acquired or renovated this year should be commissioned before filing.
• Recalculate your fourth-quarter estimated tax payment based on current-year numbers.
• Check your qualified business income against the 2026 phase-in thresholds.
• Confirm retirement plan contribution amounts and deadlines with your plan administrator.
• Review any charitable giving plans, including whether bunching contributions into this year makes sense.
• Pull together documentation now for anything unusual this year: a sale, a cost segregation study, a new entity, or a large purchase.
• If you file a Mississippi return, review the Section 179, bonus depreciation, and QBI items separately for state purposes rather than assuming your federal outcome applies to your Mississippi return.
• Set a specific date on the calendar to review all of this with your CPA or tax strategist before December 31, not after.

The Real Work Happens Before the Calendar Runs Out

None of these decisions are complicated in isolation. What makes year-end planning valuable is looking at them together, before the window to act on them closes. A cost segregation study commissioned in February doesn’t help a property acquired the previous November. An equipment purchase made in January doesn’t help last year’s tax bill.

If you want to understand how these provisions actually apply to your situation instead of reacting to a generic list, that’s exactly the kind of decision-making the Real Estate Investors course and the Small Business Owners course are built to walk through, so you can bring informed questions to your CPA instead of finding out what you missed after the year is closed.

D. FAQ SECTION

1. What is the biggest tax law change affecting year-end planning in 2026? The permanent restoration of 100% bonus depreciation under the One Big Beautiful Bill Act, along with the increased Section 179 limit, changed how equipment and property decisions should be timed compared to prior years.

2. Do I still need to rush equipment purchases into December for tax reasons? Not for the reason people used to. Bonus depreciation is no longer phasing down, so there’s less urgency driven purely by a shrinking percentage. Purchases should still be timed based on business need and cash flow.

3. What’s the difference between Section 179 and bonus depreciation? Section 179 requires an election, is capped by business taxable income, and can’t create a loss. Bonus depreciation has no dollar cap or income limitation and can create a net operating loss. Section 179 is generally applied first.

4. What is the Section 179 limit for 2026? The inflation-adjusted limit for 2026 is approximately $2,560,000, with the deduction phasing out once qualifying purchases exceed roughly $4,090,000 for the year.

5. Did the Qualified Business Income deduction rate increase to 23% in 2026? No. The QBI deduction remains at 20% and was made permanent by the OBBBA. A 23% rate was part of an earlier legislative proposal that was not enacted.

6. When is the fourth-quarter 2026 estimated tax payment due? January 15, 2027.

7. Should real estate investors do a cost segregation study before year-end? It depends on the property and the timing of acquisition or renovation. It’s worth evaluating before year-end because the reclassified components may qualify for the same 100% bonus depreciation now in effect.

8. Can retirement plan contributions still be made after December 31? Employee deferral elections generally need to happen before year-end, but many employer-side contributions can be made up until the business’s tax filing deadline, including extensions.

9. Do these federal provisions apply the same way on a Mississippi state return? Not entirely. Section 179 conforms to the federal limit for Mississippi purposes. Bonus depreciation reaches a similar outcome through Mississippi’s own separate full-expensing election rather than direct federal conformity. The Qualified Business Income deduction is federal-only and does not reduce Mississippi taxable income.