Year-End Tax Moves for Texas Business Owners

For a Texas business owner, December is the last chance to shape the year's tax bill. After the calendar turns, most of what happened is simply recorded on the return. Before it turns, you still have choices about timing, structure and investment.

The 2025 federal tax law, commonly called the One Big Beautiful Bill Act (OBBBA), made several business provisions permanent and raised others. That makes 2026 a good year to review your plan with current numbers instead of last year's assumptions.

Time equipment purchases with intention

If you plan to buy vehicles, machinery, technology or other qualifying equipment, timing matters. Under the new law, qualified property acquired after January 19, 2025 is eligible for a permanent 100% first-year bonus depreciation deduction. Section 179 expensing is also available, with a 2026 limit of $2,560,000 that begins to phase out once qualifying purchases for the year exceed $4,090,000.

Points owners often miss:

• The asset generally has to be placed in service by December 31, not just ordered or paid for.
• A large deduction this year means smaller depreciation deductions later. If you expect higher income in future years, spreading deductions out can make more sense.
• Cash flow comes first. A purchase you don't need is still a cost, even after the tax savings.

Revisit your entity and owner pay

The 20% deduction for qualified business income (QBI) from pass-through businesses no longer has an expiration date. For 2026, the income levels where its limits start to apply are $403,500 for married couples filing jointly and $201,750 for most other filers, with a wider phase-in range than before.

If you own an S corporation, your salary affects both payroll taxes and the QBI calculation. A salary set years ago may no longer be reasonable for the work you do today. Year-end is the right time to compare it with your role and the company's results, before the final payroll runs.

Growing companies should also confirm the entity itself still fits. An LLC taxed as a partnership, an S corporation and a C corporation each treat profits, distributions and a future sale differently.

Fund retirement plans on purpose

Retirement contributions are one of the few deductions that also build your own wealth. Deadlines vary by plan type: some plans must be set up before year-end, while others can be opened and funded up to the filing deadline. If you want a new plan for 2026, check the rules now so a deadline doesn't make the decision for you.

Don't overlook the Texas items

Texas has no personal income tax, so most year-end planning focuses on federal taxes. Two state and local items still deserve attention:

• Franchise tax. For reports due in 2026 and 2027, entities with annualized total revenue at or below $2.65 million owe no franchise tax, though they generally still have an annual report to file. If you're close to that line, how and when revenue is recognized can matter.
• Property tax. Texas taxing units start mailing bills in October, and most are due by January 31. Paying a bill before December 31 can move the deduction into 2026. Individual deductions for state and local taxes are capped at $40,400 for 2026, reduced for higher incomes but not below $10,000. Property taxes on business property are generally deducted by the business and aren't subject to that individual cap.

Time income and expenses where you can

If your business uses the cash method, you may have some control over when income and expenses land. Sending invoices in January instead of December, or paying deductible bills before year-end, can shift taxable income between years. The goal isn't to defer everything. It's to even out income so less of it is taxed at your highest rate.

A short year-end checklist

• Project 2026 taxable income from year-to-date numbers, not last year's return.
• List planned equipment purchases and confirm in-service dates.
• Review owner salary, distributions and estimated tax payments.
• Confirm retirement plan deadlines and contribution targets.
• Compare franchise tax revenue with the no-tax-due threshold.
• Decide on property tax timing.
• Coordinate any family gifting or charitable giving with your estate plan.

Every one of these moves depends on your numbers. A strategy session in the fourth quarter gives you time to act while the choices are still yours.

General information, not tax or legal advice. Consult a CPA about your situation.