Most tax strategies expire on December 31. Business owners who plan in October and execute before year-end consistently pay less than those who wait until April. Michelet Financial provides year-end tax planning for business owners and high-income individuals across all 50 states.
Quick Answer — What Is Year-End Tax Planning?
Year-end tax planning involves reviewing your income, deductions, and business finances before December 31 to legally minimize what you’ll owe in taxes. Business owners and high-income earners who plan before year-end consistently pay less than those who wait until tax season. Most strategies must be executed before the calendar year closes — they cannot be applied retroactively.
The Hard Deadline
The IRS taxes what happened during the calendar year — not what you planned to do. Once December 31 passes, almost every major tax reduction strategy is off the table for that tax year. Specifically, you cannot:
The tax code was designed to reward forward-looking action. Business owners who begin the year-end planning process in October and execute through December consistently owe substantially less than those who hand a CPA a shoebox of receipts in March. Michelet Financial begins year-end planning conversations with clients in September.
The Full Checklist
Work through each of these before December 31. The combination you implement depends on your income level, business type, and projected tax liability for the year.
Pull deductible business expenses into the current year if your income is higher this year than you expect next year. Purchase needed equipment or vehicles (eligible for Section 179 or bonus depreciation, they must be placed in service before December 31 — not just ordered). Prepay deductible business expenses: rent, insurance, subscriptions, professional service retainers. Make planned repairs and maintenance before year-end.
If you expect lower income or lower tax rates in the coming year, push taxable income across the December 31 line. Delay billing for December work until January — if you are a cash-basis taxpayer, you are taxed when income is received, not earned. Delay completing projects or delivering services for customers who will not pay until January. Review any year-end bonuses or S-Corp distributions for optimal timing.
Retirement accounts are the most powerful legal tax reduction tool available to business owners. Contribution options and limits (2026): Solo 401(k) — up to $69,000 combined employee + employer contributions ($76,500 if 50+); plan must be established before December 31 for new accounts. SEP-IRA — up to 25% of net self-employment income or $69,000 (whichever is less); employer contributions can be made until the tax filing deadline including extensions. Defined Benefit Plan — potentially $275,000+ in annual deductible contributions depending on age and income; must be established and funded before year-end. Contributions reduce your taxable income dollar-for-dollar.
If your LLC is paying self-employment tax on all net profit, an S-Corp election could save you $8,000–$40,000+ annually by converting a portion of your income from self-employment income to distributions (not subject to SE tax). The S-Corp election for a new tax year must be filed by March 15 of that year — but December is when you review whether it makes economic sense. Michelet Financial models the S-Corp math for your specific income level before any election is made.
Review your investment portfolio for unrealized losses before December 31. Realized losses offset capital gains dollar-for-dollar, and up to $3,000 of excess losses can offset ordinary income. Remaining losses carry forward to future years. Execute any harvesting trades by December 28 to ensure settlement before year-end. See our complete tax-loss harvesting guide.
Under current law (2026), 40% bonus depreciation applies to qualifying property placed in service during the year. Section 179 allows immediate deduction of up to $1,220,000 in qualifying asset purchases. Both require the property to be placed in service — delivered, installed, and in use — before December 31. Order in November at the latest to ensure timely delivery.
Year-end giving offers multiple tax optimization layers beyond the standard cash donation. Donate appreciated stock directly to charity — you deduct the fair market value and avoid capital gains tax on the appreciation. Contribute to a Donor-Advised Fund (DAF) for a current-year deduction while recommending grants over future years. “Bundle” two or three years of planned donations into one year to exceed the standard deduction threshold, then take the standard deduction in other years.
Your Action Calendar
Year-end tax planning is not a December activity — it is a fourth-quarter process with a hard close date. Here is the timeline Michelet Financial uses with business owner clients.
Our Process
Brandt Michelet begins year-end planning conversations with clients in September — before the window starts closing. His approach is the same one he applied managing financial strategy across hundreds of business units: model the position, quantify each strategy, build a written action plan, and execute with precision.
A Michelet Financial year-end planning engagement typically includes:
Michelet Financial provides year-end tax planning for business owners and high-income individuals nationwide — fully virtual, all 50 states. There is no geographic restriction on who we can serve.
FAQ
Every year without a year-end tax plan is money permanently left on the table. Book a free consultation and let’s build your action plan before the deadline.
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