2026 Year-End Tax Planning Checklist for Central New York Businesses

The end of the year is approaching, and for Central New York businesses, that means it’s time to take a closer look at tax planning. Decisions made before December 31 can have a meaningful impact on 2026 tax liability. For many businesses these last few weeks of the year present a great opportunity to make essential tax saving moves.  The challenge is knowing which strategies apply and when action needs to be taken. Since tax planning requires careful consideration, it is important to consult with a qualified tax advisor. To help clients, prospects, and others, Dermody, Burke & Brown, CPAs has summarized the key details below.

Key Tax-Saving Opportunities for Businesses

Review the Timing of Income and Expenses — Depending on the accounting method, businesses may have some flexibility in when income is recognized and expenses are deducted. For a cash-basis business, that could mean paying certain operating expenses before December 31 or deferring some income until January.

However, this is not the most favorable approach for every business owner, especially if the business expects higher taxable income in 2027. A tax advisor can look across multiple years and model different scenarios to see how these decisions would affect tax liability in 2026 and beyond.

Maximize Equipment and Property Deductions — Two tax provisions allow businesses to claim deductions in the year qualifying property is placed in service. The OBBBA permanently restored 100% bonus depreciation for qualifying property acquired after January 19, 2025. Section 179 also allows businesses to immediately deduct eligible purchases, up to $2.56 million in 2026. That deduction begins phasing out once qualifying purchases exceed $4.09 million. State deductions may differ, with New York State specifically decoupling from federal bonus depreciation rules.

Businesses should compare both options before making a purchase, and remember that property generally must be placed in service by December 31 to qualify for a 2026 deduction.

Maximize Research and Development Tax Benefits — Two R&D incentives are available across many industries. A manufacturer, for example, may be conducting qualified research when developing a new production process. Or a construction company may be working with a software engineer to develop a bespoke WIP reporting system. These activities generally have a component of uncertainty and experimentation, making them excellent candidates for the R&D incentives; however, it’s important to work with an experienced advisor before filing the official claim.

Under Section 174A, businesses can generally deduct qualifying domestic research expenses in the year incurred, rather than amortizing the costs over five years. The federal R&D tax credit under Section 41 can provide additional savings. Both benefits can be used together, although special rules prevent businesses from claiming the deduction and credit on the same expenses.

New York State tax returns have different rules and generally require research expenses to be amortized over five years. Businesses with ongoing development projects will want to take a closer look at qualifying activities and the documentation needed to support available federal tax benefits before year-end.

Protect the Qualified Business Income Deduction — The OBBBA made the Qualified Business Income (QBI) deduction permanent, allowing eligible owners of pass-through businesses to deduct up to 20% of qualified business income. For 2026, the full deduction is generally available when taxable income is at or below $201,750 for single filers or $403,500 for married couples filing jointly.

Business owners getting close to these thresholds still have time to make adjustments before year-end. Options include accelerating expenses or increasing eligible retirement plan contributions may help bring taxable income down in time and preserve more of the QBI deduction.

Review Charitable Giving Opportunities — Businesses planning charitable donations will want to be aware of new rules for 2026. C corporations can generally deduct contributions only to the extent they exceed 1% of taxable income, subject to the existing 10% ceiling.

For pass-through businesses, eligible contributions generally flow through to the owner’s individual tax return. Taxpayers who itemize now face a 0.5% adjusted gross income floor. Those who don’t itemize may qualify for a deduction of up to $1,000 in eligible direct cash contributions, or $2,000 for married couples filing jointly. Contributions passed through from businesses are subject to different rules.

Before making a year-end donation, it’s worth checking how much will actually be deductible under the new limits.

Evaluate New York PTET Opportunities — For owners of partnerships and S corporations, New York’s Pass-Through Entity Tax (PTET) may offer a way to reduce federal tax liability. The program allows eligible businesses to elect to pay certain state income taxes at the entity level and generally deduct those payments federally. Owners receive corresponding New York State income tax credits.

The 2026 election deadline has passed, but businesses that participated should review projected tax liability and payments before year-end. The final scheduled estimated payment is due December 15, 2026. Businesses that didn’t elect PTET this year can begin evaluating whether to participate in 2027.

Verify Business Meals, Entertainment, and Mileage Deductions — As a reminder, qualifying meals with clients, vendors, and business associates are generally deductible at 50%. Company-wide employee social events may qualify for a 100% deduction. New for 2026, most meals provided in employer-provided eating facilities or provided to employees on premise are now nondeductible. Snacks and beverages provided in a breakroom remain 50% deductible. Most entertainment expenses remain nondeductible.

Businesses will also want to check mileage records. The standard business mileage rate was 72.5 cents per mile for the first half of 2026 and increased to 76 cents per mile beginning July 1. Only qualified business travel is deductible.

Contact Us

Central New York businesses have an opportunity to reduce tax liability and improve cash flow for the year ahead. With several important tax changes now in effect, reviewing available strategies before December 31 is especially important. If you have questions about the information outlined above or need assistance with another tax or accounting issue, Dermody, Burke & Brown, CPAs, can help. For additional information call 315-471-9171 or click here to contact us. We look forward to speaking with you soon.