The new year is approaching, and some of the best year-end tax strategies require action well before December 31.

Whether you own rental properties, trade stocks, or operate a business, the decisions you make now could determine how much of your income you keep and how much goes to the IRS.

I’ll walk through 10 tax moves to consider before December 31, including ways to reduce taxable income, claim deductions, and prepare for 2027. 

Key Takeaways

• Run a 2026 tax projection now to identify potential tax savings before year-end.
• Paying family members, reviewing business taxes, and claiming eligible deductions are three tax strategies for business owners to consider. 
• Some of the most valuable tax strategies for landlords involve bonus depreciation, cost segregation, and short-term rental deductions.
• If you’re looking for tax strategies for stock traders, consider tax-loss harvesting and specific share identification.
• Retirement contributions, business reimbursements, and S-Corporation elections may create additional tax advantages.
• Effective year-end tax planning means knowing which decisions must happen before December 31 and which deadlines extend into 2027.

Watch 10 Tax Moves You Need To Make Before December for a closer look at each strategy.

Start With A Tax Projection

Before implementing any tax strategy, run a comprehensive projection to estimate your 2026 income, available deductions, and anticipated federal tax liability.

Landlords should evaluate rental income, operating expenses, and depreciation deductions.

Stock traders should calculate realized capital gains and losses.

Business owners need accurate bookkeeping, payroll records, and a clear understanding of their taxable income.

A comprehensive tax projection can reveal how changes in income, investment activity, and deductible business expenses affect your overall tax liability. It can also identify opportunities to maximize deductions before year-end.

Without accurate numbers, you can’t determine which tax moves will help you save money. Reducing your tax liability starts with knowing what you owe and which deductions you qualify for. 

1. Pay Your Children Through Your Business

Paying your children for legitimate work can create tax advantages for your family.

For 2026, your child could earn up to $16,100 without owing federal income tax, depending on their other income.

Your business may deduct reasonable compensation and certain family employment arrangements that qualify for payroll tax exemptions.

Document the work performed, track hours, and pay reasonable wages. The work must serve a real business purpose, and your records should support the amount you pay.

Children with eligible earned income may also contribute to a Roth IRA, creating opportunities for tax-free retirement growth.

2. Review Your Charitable Contributions

If you itemize deductions, consider bunching charitable contributions by combining donations planned for multiple years into 2026.

If charitable giving is part of your estate planning strategy, a donor-advised fund may allow you to claim a deduction now while supporting causes that matter to you over time.

Donating appreciated stocks directly may provide additional advantages by avoiding recognition of capital gains on qualifying contributions.

Review your deductions and contribution limits before December. Your income, the type of donation, and the organization receiving it can affect how much you deduct.

3. Take Advantage Of Pass-Through Entity Tax Elections

A pass-through entity tax (PTET) election may help S-Corporation and partnership owners lower their federal tax bills. It does this by allowing eligible businesses to deduct certain state taxes.

Some states let businesses pay state income taxes directly. This may help business owners get around certain limits on federal tax deductions.

For example, a business earns $100,000 and deducts $10,000 in state taxes. This could lower its taxable income passed through to owners to $90,000.

Check your state’s election and payment deadlines before year-end. Some states require separate elections or estimated payments, making it important to review the rules before filing.

4. Maximize Your Qualified Business Income Deduction

Under Section 199A, eligible business owners may qualify for the Qualified Business Income (QBI) Deduction. This allows them to deduct up to 20% of their qualified business income.

A business earning $100,000 could potentially qualify for a $20,000 deduction.

However, taxable income, business classification, W-2 wages, and qualified property can affect eligibility.

Higher-income business owners should review payroll before December, as insufficient wages may limit their deductions. The deduction also depends on the type of business you operate and your total taxable income.

5. Compare Bonus Depreciation And Section 179

Both provisions allow businesses to accelerate deductions on qualifying assets, but they work differently.

• Section 179: Allows eligible businesses to expense qualifying purchases, subject to income and annual deduction limits.
• Bonus depreciation: May allow a 100% first-year deduction on eligible property and potentially create a tax loss.

For landlords, cost segregation studies can identify shorter-lived property components eligible for accelerated depreciation.

The deadline matters: You generally must place qualifying property in service by December 31 to claim depreciation for 2026.

State tax treatment may also influence which provision provides greater savings. The best choice depends on your current income, expected future profits, and how quickly you want to claim deductions.

6. Harvest Investment Losses Before Year-End

Tax-loss harvesting allows stock traders to sell underperforming investments and use realized capital losses to offset capital gains.

For example, selling investments with $12,000 in losses could help offset $30,000 in realized gains.

However, the wash-sale rule may disallow or defer losses if you repurchase substantially identical securities within 30 days before or after the sale.

Also review specific share identification. Choosing which tax lots to sell can help you manage taxable gains rather than automatically selling your oldest shares.

Review your investment records before selling so you understand the potential tax impact of each transaction.

7. Complete Your Business Reimbursements

If you operate an S-Corporation or C-Corporation, an accountable plan may allow your business to reimburse qualifying employee expenses without treating those payments as taxable wages.

Eligible expenses may include business mileage, home office costs, and other documented business purchases.

For tax purposes, you need to document eligible expenses and follow your corporation’s reimbursement procedures.

For cash-basis corporations, the business generally needs to make the payment to claim the deduction in that tax year.

Before December: Submit outstanding expenses, complete reimbursements, and review unpaid business obligations.

8. Review Your Retirement Contributions

With a Solo 401(k), eligible business owners can contribute as both an employee and an employer. This can help them save more for retirement while receiving tax benefits.

For 2026, employees can contribute up to $24,500 to a Solo 401(k). The total contribution limit is generally $72,000, not including catch-up contributions.

Your actual contribution depends on compensation and plan requirements.

For example, a self-employed investor with strong business profits may be able to make both employee and employer contributions. This can increase retirement savings. It may also reduce current taxable income, depending on the type of contribution.

S-Corporation owners should review employee deferral elections and payroll before year-end. Employer contribution deadlines may extend into 2027.

9. Explore The Short-Term Rental Tax Strategy

Traditional rental losses generally face limits under passive activity rules. However, tax laws may treat qualifying short-term rentals differently.

Properties with average guest stays of seven days or less may fall outside the standard rental activity tax rule.

If you materially participate, qualifying losses may become nonpassive and potentially offset other income.

One test requires you to work more than 100 hours on the property. You must also work at least as many hours as anyone else.

Combining qualifying treatment with cost segregation and bonus depreciation may create significant deductions.

Keep detailed records of your participation because the IRS may require evidence of the hours you worked.

10. Determine Whether An S-Corporation Election Makes Sense

Profitable sole proprietors and single-member LLC owners may benefit from electing S-Corporation taxation.

Unlike sole proprietorship income, qualifying S-Corporation distributions generally aren’t subject to self-employment tax.

However, owners who work in the business must receive reasonable compensation, and payroll taxes still apply to those wages.

An S-Corporation can also provide opportunities for retirement contributions and accountable-plan reimbursements.

Certain businesses may qualify for late-election relief if they missed the regular deadline.

Review your income, payroll obligations, and eligibility before making the election.

Bonus: Consider Oil And Gas Tax Deductions

Certain direct oil and gas working interests may provide substantial deductions through qualifying intangible drilling costs.

Depending on the structure, some losses may receive nonpassive treatment and potentially offset other income.

However, these investments carry significant financial risks, including illiquidity, liability exposure, and potential loss of principal.

Evaluate the investment itself, not just the potential tax deduction.

Which Tax Strategies Should You Prioritize Before December?

Improving your tax efficiency starts with understanding how you earn income, manage cash flow, own your investments, and use available tax benefits.

Landlords can look for tax savings through depreciation and rental property losses. 

Stock traders can review capital gains and investment losses. 

Business owners can explore payroll, retirement contributions, and business tax planning strategies.

The goal is to find the right strategies for your situation before the year ends.

Schedule a complimentary 45-minute Strategy Session with Anderson Advisors to review your income, investments, and business structure. 

You’ll work with a tax professional to identify potential tax savings and start building a personalized plan.

Frequently Asked Questions

How Can Rental Property Owners Reduce Their Taxes?

Landlords can explore depreciation, cost segregation, deductible operating expenses, and passive loss exceptions. Short-term rental owners may qualify for additional advantages through material participation.

How Can Stock Traders Lower Their Taxes Before December?

Tax-loss harvesting, specific share identification, and capital gains planning can help traders manage taxable investment income. Wash-sale restrictions may affect deductions.

How Can Small Business Owners Save On Taxes?

Business owners can review QBI deductions, retirement account contributions, reimbursements, bonus depreciation, Section 179, and S-Corporation elections.

Can Rental Property Losses Offset W-2 Income?

Sometimes. Qualifying taxpayers may benefit from special rules for rental losses. These include the special rental loss allowance, Real Estate Professional Status, and nonpassive losses from short-term rentals.

Can You Still Reduce Your 2026 Taxes In November?

Yes. You may still have time to review payroll, sell investments at a loss, make donations, and start using qualifying business assets. Each deduction or tax move may have a different deadline. 

What Tax Deductions Must You Take Before December 31?

Some tax deductions have a December 31 deadline. You may need to start using new business equipment, make donations, or sell investments at a loss before year-end. Others have deadlines that extend into the next year.

Is It Better To Defer Income Or Accelerate Deductions?

It depends on your tax bracket now and what you expect to earn in 2027. Deferring income or claiming deductions sooner could lower your tax bill, but the rules and timing matter. 

Can You Deduct Business Expenses Paid Personally?

Yes, you may be able to deduct business expenses you paid personally. The rules depend on your business structure, and corporations generally need proper records and reimbursement procedures.

Can You Claim Bonus Depreciation On Rental Property?

Yes, certain parts of a rental property may qualify for bonus depreciation. A cost segregation study can identify which parts qualify for faster deductions.

Can You Make An S-Corporation Election After The Deadline?

Some businesses can still elect S-Corporation tax status after the deadline. They must meet IRS rules and keep up with payroll and tax filings.

How Can Business Owners Reduce Their Taxable Income Before Year-End?

Business owners can lower their taxes through retirement contributions, business deductions, employee reimbursements, depreciation, and paying family members for legitimate work. Savings depend on income, business structure, and deadlines.

Can You Reduce Capital Gains Taxes Without Selling All Your Stocks?

Yes. You may lower your capital gains taxes by selling investments at a loss or selling shares you paid more for. IRS rules apply.

Should You Meet With A Tax Professional Before Year-End?

Yes, especially if you own rentals, trade stocks, or run a business. A tax professional can review your income, find missed deductions, and show you which tax moves to make before December 31.