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Year End Financial Planning: Setting Up for a Strong Start in 2026
Year-End Financial Planning: Setting Up for a Strong Start in 2026
by
Jim Griffing
A Silver Fox Advisor
As 2025 comes to a close, it’s a good time to pause and take a clear look at your financial picture. Whether you run a business or manage your own household finances, year-end is the ideal moment to make sure your tax strategies, investment choices, and planning decisions are aligned with your goals for the year ahead.
This year has brought a mix of new tax rules, changing business trends, and emerging opportunities. Below are a few of the key updates and considerations that can help you prepare for a smooth start to 2026.
Research and Development (R&D) Expenses
Businesses that invest in research, innovation, or product development will benefit from a new rule allowing domestic R&D costs to be fully deductible starting in 2025. This means companies can immediately write off qualifying expenses instead of spreading them out over several years. However, costs tied to foreign research still need to be spread over 15 years. If your business invests in innovation, this could be a good time to review your current projects and plan how to take advantage of this deduction.
Business Income Deductions
The 20% Qualified Business Income (QBI) deduction—which allows certain businesses to deduct part of their profits—has been made permanent, with expanded eligibility for small business owners. This might be a good time to revisit your business structure or partnership agreements to ensure you’re positioned to get the most benefit from this deduction.
Investments and Capital Purchasing
If you’re thinking about investing in new equipment, vehicles, or technology, there’s good news. The 100% bonus depreciation rule—allowing businesses to immediately deduct the full cost of certain assets—has been permanently extended for qualified property acquired and placed in service after January 19, 2025. The Section 179 limit has also been increased to $2.5 million, providing more flexibility for small and midsize businesses. This can be an effective way to reduce taxable income before year-end while investing in your company’s future.
Clean Energy Incentives
Many clean energy tax incentives are set to phase out in the next two years. If you’ve been considering solar panels, or energy-efficient upgrades for your business or personal use, now is a smart time to explore these options. Acting before these credits expire could mean significant savings.
Reporting and Compliance Updates
Starting in 2025, the Form 1099-K threshold for third-party payment platforms (like PayPal or Venmo) will revert to the previous standard of $20,000 and 200 transactions per year. The Form 1099-NEC/MISC reporting threshold for contractors will stay at $600 in 2025 but will rise to $2,000 in 2026. It’s a good reminder to keep your bookkeeping current and double-check vendor records now to avoid headaches next tax season.
Digital Assets
If you hold or trade cryptocurrency or other digital assets, new IRS reporting requirements take effect for transactions in 2025. You may start receiving a new Form 1099-DA in early 2026 from brokers or digital platforms. Even if you don’t receive a form, you’re still responsible for reporting all digital asset transactions. Keeping clear records of purchases, sales, and transfers will help you stay compliant as the IRS increases its oversight in this area.
Overtime and Tips
For 2025, employees in eligible tipped occupations and those earning FLSA-mandated overtime may deduct substantial amounts of tip and overtime income from their federal taxable income, subject to income phaseouts and other requirements. Employers must continue to withhold payroll taxes and report these amounts, but the IRS is providing penalty relief for 2025 as systems are updated to comply with new reporting rules.
Other Smart Year-End Moves
- Review your financial statements: Make sure your income and expenses are accurately recorded before year-end. This can reveal opportunities to lower your tax bill or adjust spending.
- Plan for charitable giving: The deduction limit for corporations remains at 10% of taxable income, but beginning in 2026 contributions will be subject to the 1% floor. Strategic giving now can maximize impact and tax benefits.
- Check estimated tax payments: Ensure your quarterly payments match your projected income to avoid surprises in April.
- Revisit your retirement plan: Year-end is a good time to increase contributions or evaluate whether your current plan still fits your goals.
- Clarify employee vs. contractor roles: Proper classification can prevent penalties and ensure correct tax filings.
Final Thoughts
Year-end planning isn’t just about taxes—it’s about taking a proactive look at your overall financial health. By reviewing your business operations, personal finances, and upcoming opportunities now, you can start 2026 with clarity and confidence.
If you have questions about how these changes might affect your situation, consider reaching out to us or another trusted tax or financial advisor. A little planning today can make a big difference tomorrow.
