Updated September 25, 2026. As the final quarter of the year approaches, small business owners have an important opportunity to review their books, cash flow and tax planning before 2026 ends.
This year deserves particular attention because several federal tax rules can affect decisions involving equipment purchases, contractors, payment platforms, vehicles and business deductions. Here are six items worth reviewing before year-end.
1. 100% bonus depreciation is back for many business purchases
Current law permanently restored a 100% additional first-year depreciation deduction for certain qualified property acquired after January 19, 2025. For most qualifying business property purchased and placed in service after that date, a business may deduct 100% of the eligible cost in the first year. Source: IRS — Working Families Tax Cuts: Businesses.
This can matter for businesses planning to purchase equipment, machinery or other assets before year-end. However, the availability of an immediate deduction does not automatically mean it is the best strategy. The decision should consider whether the asset is actually needed, the business’s tax position and whether accelerating deductions is advantageous.
2. Section 179 limits are substantially higher for 2026
For tax years beginning in 2026, the maximum Section 179 expense deduction is $2,560,000. The limit begins to phase out when the cost of Section 179 property placed in service during the year exceeds $4,090,000. Source: IRS Publication 946.
Section 179 can allow qualifying businesses to expense the cost of certain assets rather than depreciating them over multiple years. The deduction is subject to specific rules and limitations, including limits tied to taxable income from the active conduct of a trade or business.
3. The reporting threshold for certain Forms 1099 increased from $600 to $2,000
For certain reportable payments made in 2026, the federal information-reporting threshold increased from $600 to $2,000. This includes certain nonemployee compensation reported on Form 1099-NEC. Source: IRS — Information Returns.
The change may reduce the number of forms some businesses must prepare, but it does not eliminate the need to keep complete contractor and payment records. If federal income tax was withheld under the backup-withholding rules, a Form 1099-NEC may still be required regardless of the payment amount.
4. The Form 1099-K threshold is back to more than $20,000 and more than 200 transactions
For third-party settlement organizations, including certain payment apps and online marketplaces, the general federal rule again requires both conditions to be met for Form 1099-K reporting: more than $20,000 in gross reportable payments and more than 200 transactions during the year. Source: IRS — Gig Economy Workers.
The reporting threshold is not a taxable-income threshold. Taxable income must still be reported even if no Form 1099-K is received, and receiving a 1099-K does not automatically mean the entire gross amount shown on the form is taxable income.
5. The standard business mileage rate changed in the middle of 2026
The IRS standard mileage rate for business use was 72.5 cents per mile from January 1 through June 30, 2026, and increased to 76 cents per mile for business miles driven from July 1 through December 31, 2026. Source: IRS — Standard Mileage Rates.
For businesses and self-employed taxpayers using the standard mileage method, this makes it especially important to separate business mileage by period and maintain contemporaneous records.
6. The Qualified Business Income deduction is now permanent
The Qualified Business Income (QBI) deduction, also known as Section 199A, is now permanent. For eligible taxpayers, its main component can be up to 20% of QBI, subject to limitations involving taxable income, type of business, W-2 wages and qualified property. Source: IRS — Qualified Business Income Deduction.
The deduction may apply to income from sole proprietorships and, under the applicable rules, to income passed through to owners from partnerships and S corporations. Business owners should not assume that every eligible business automatically receives a full 20% deduction.
What should a small business review before the end of 2026?
- Whether bookkeeping is current.
- Whether bank and credit-card accounts are reconciled.
- Which assets were purchased and placed in service during the year.
- How much was paid to contractors and whether documentation is complete.
- How much business mileage can be substantiated.
- How much has been paid or reserved for estimated taxes.
- What the business’s actual year-to-date profit is.
The goal should not be to make purchases or transactions solely to obtain a tax deduction. Year-end is an opportunity to evaluate accounting, cash flow and tax planning together while there is still time to make informed decisions.
Tax planning is not the same as tax preparation
A tax return largely reports what has already happened. Tax planning allows business owners to evaluate options while there is still time to act. Moving from reactive bookkeeping to more proactive financial management can create greater clarity and fewer surprises when tax season arrives.
Is your business ready to close out 2026?
At EH Smart Finance, we help small business owners and entrepreneurs with Accounting, Bookkeeping, Tax Services and financial organization. Services are available in English & Español.
If you are not sure how these changes may affect your business, contact us before making important year-end decisions.
Notice: This article is for educational purposes and summarizes general federal information current as of September 25, 2026. The rules that apply to you may vary based on business structure, individual circumstances, state law and other factors. It is not a substitute for personalized tax advice.