A dozen 2026 tax-planning moves to help your business owner clients

January 23, 2026 10:35 AM

The One Big Beautiful Bill Act of 2025 reshaped several baseline assumptions for 2026 planning — especially around state and local tax, new above-the-line deductions and updated inflation adjustments.

Below are 12 planning moves to deliver the largest after-tax dollar impact for small and midsize businesses owners in 2026. There's still time to discuss these strategies with your entrepreneurial clients.

1. Revisit SALT strategy and model out PTE elections

Individual and business tax forms 1040, 1065, 1120 and 1120S

Garry L. - Fotolia

The OBBBA raised the itemized SALT deduction cap to $40,000, subject to certain income-based limits and phasedowns. The Act also provided for future inflation adjustments, with the cap scheduled to revert to $10,000 beginning in tax year 2030. If you reside in a state with high real estate and/or income taxes, making a PTE election can allow you to absorb more of the $40,000 annual SALT cap through other taxes while paying the remainder through the PTE strategy.

Actions:

Evaluate (or re-evaluate) state pass-through entity tax elections for the S corporations and partnerships you work with. In many states, a PTE election can convert the individual SALT that's otherwise capped into a fully deductible entity-level tax (state-by-state rules vary). Provided the flow-through entity is an active trade or business, it is generally eligible to benefit from a PTE election.
Model the following for your clients: (1) entity-level tax deduction, (2) owner credits, (3) resident/nonresident treatment, (4) estimated tax timing and (5) interaction with apportionment and composite filings.

2. Treat withholding and estimates as a planning project

Because many OBBBA changes began in 2025 and carry into 2026, many taxpayers will have mismatches between (a) what their payroll department withheld and (b) what the law now allows. IRS guidance highlights that taxpayers may need to update withholding due to new/enhanced deductions and SALT changes.

Actions:

For owners: Align safe harbor estimated tax planning with pass-through income volatility.
For employers: Confirm their payroll systems are tracking any new reporting categories that they rely on for deductions (where applicable).

3. Harvest capital losses and manage gains around brackets and surtaxes

Even with "unchanged" concepts, the dollar thresholds move, and good capital gain/loss planning is still one of the highest ROI moves you can make for your business clients.

Actions:

If clients are planning an exit, recap or major distribution year, coordinate capital gains with compensation, distributions, and charitable planning (see No. 7 below).

4. Formulate a tax efficient retirement portfolio

The OBBBA provides an opportunity to re-evaluate the owner's taxable accounts, non-taxable accounts, and non-taxable retirement accounts to allow for long-term distribution tax efficiency.

Actions:

Business owners often hold concentrated positions and illiquid interests. Coordinate planned liquidity events with retirement distributions and any entity-level tax payments.

6. Review accounting methods and “timing levers” (cash/accrual, inventory, capitalization, repairs)

This is one of the biggest business tax planning opportunities for many enterprises because it drives the period in which income and deductions are recognized.

Actions:

Re-evaluate eligibility for cash vs. accrual, inventory methods and capitalization policies.
Identify "timing levers": prepaid expenses, bonus/Section 179 positioning, repair vs. improvement studies, cost segregation for real estate, and year-end accrual planning.
If your client's business is scaling fast, revisit whether their current method is still optimal (or still permissible).

Note: For individuals with pass-throughs, ensure that businesses' timing decisions match the owner's personal marginal-rate forecasts and SALT/PTE posture.

8. Evaluate the legal and tax structure of all entities in which clients are active — and document why that structure still makes sense

Entity structures should evolve as the client's income, ownership roles and business activities change. A 2026 review ensures that each entity still provides the right mix of liability protection, tax efficiency, and state-level advantages under OBBBA-era rules.

Actions:

Re-evaluate whether your client's entity choice (sole proprietorship / partnership / S corp / C corp) still aligns with their facts:
- W-2 compensation vs. distributions (S corp reasonableness);
- State footprint and apportionment;
- Financing needs, liability containment and exit strategy;
- Whether entity structure supports (or blocks) PTE election optimization;
- Retain, or restructure, to allow the more liberalized IRC Section 1202 for C corp structures.

9. Exploit OBBBA-specific deductions where you qualify (and where documentation will survive an audit)

The IRS has summarized several OBBBA deductions effective for tax years 2025 through 2028 (with income-based phaseouts), including deductions tied to qualified tips, qualified overtime, personal vehicle loan interest and an additional senior deduction.

Actions:

Ensure your client's payroll and reporting support their employees' ability to claim what they're entitled to (where the business is responsible for reporting).

11. Utilize cost segregation studies

A cost segregation study can accelerate a business's depreciation by reclassifying portions of real estate into shorter-lived property. For 2026 planning, consider a cost seg study for property placed in service in 2025 — and intentionally "spike" 2025 deductions. This is acceptable and often advantageous because the additional depreciation can create or increase a net operating loss (NOL), which can then be carried forward to offset your client's future income.

Actions:

Use cost segregation to front-load depreciation on 2025 property even when the study is performed in 2026. This intentionally increases 2025 deductions and creates an NOL that can reduce future taxable income.
Coordinate cost segregation with an entity-level tax strategy (including PTE elections, bonus depreciation, and accounting method planning) to maximize the benefit of accelerated deductions.

12. Evaluate medical and life insurance coverage, including HSA strategy

Health and risk-management choices directly affect both cash flow and tax efficiency. A 2026 review ensures your client's medical, life and health savings account arrangements still match their income level, family needs, and entity structure — especially as premiums, deductibles and contribution limits shift.

Actions:

Evaluate employer-provided health and life benefits to ensure they're compliant, cost-efficient and aligned with owner and employee needs.

Confirm that HSA and cafeteria plan structures are optimized for tax savings and properly integrated with payroll and entity-level compensation strategies.

Tax planning in 2026 requires proactive coordination across entity structure, timing strategies and OBBBA-specific provisions. Work with business clients early to model scenarios, optimize deductions and avoid costly phaseouts.