As the calendar year winds down, small business owners across Haddon Heights—whether running a cozy boutique on Station Avenue, a home-based design firm, or a family-owned service business—have an opportunity to make strategic financial moves that can significantly reduce their tax burden and strengthen their financial outlook for the year ahead. Here are a few key areas to focus on before December 31.
- Make the Most of Depreciation Rules
If you’ve recently invested in new equipment, vehicles, or technology for your business, you may qualify for accelerated depreciation under Section 179 or bonus depreciation rules. These provisions allow you to deduct the full cost of qualifying purchases rather than depreciating them over several years. Even smaller businesses can benefit—think of that new delivery van, upgraded POS system, or office renovation. Timing your purchases before year-end can make a big difference come tax season.
For eligible property, businesses can utilize 100% first-year bonus depreciation. The Section 179 expensing limit also increases to $2,560,000, with a phase-out threshold of $4,090,000, giving business owners additional opportunities to maximize deductions on qualifying investments.
- Maximize Retirement Contributions
Contributing to a retirement plan is one of the most tax-efficient ways to lower your taxable income while building long-term wealth. SEP IRAs, SIMPLE IRAs, and Solo 401(k)s all provide different advantages depending on your business size and structure. For example, a Solo 401(k) allows both employee and employer contributions—meaning higher potential savings and deductions for self-employed individuals. Setting up or funding these accounts before the end of the year can be a smart move for both you and your employees.
For 2026, the elective deferral limit for workplace retirement plans, including 401(k), 403(b), 457, and Thrift Savings Plans, increases to $24,500, up from $23,500 in 2025. The catch-up contribution for those age 50 and older increases to $8,000, while the special catch-up contribution for ages 60 through 63 remains at $11,250 under SECURE 2.0 rules. The defined contribution limit under Section 415 also increases to $72,000, up from $70,000.
SIMPLE retirement plans will also see higher limits in 2026. The elective deferral limit increases to $17,000, up from $16,500, while the catch-up contribution for those age 50 and older increases to $4,000, up from $3,500.
- Time Your Expenses Wisely
Strategic expense timing is another way to manage taxable income. If you expect higher income this year, consider prepaying recurring business expenses such as rent, insurance, or marketing costs. Conversely, if next year looks stronger, it might make sense to delay certain payments or invoice collections. Your accountant can help you project the best approach for your unique cash flow.
- Keep Records in Order
Accurate and organized records are the foundation of good financial management. Review your bookkeeping before year-end to ensure all receipts, invoices, and mileage logs are complete. Cloud-based accounting software can simplify this process and save you headaches during tax preparation. Remember: documentation is your best defense in the event of an audit and can help you capture every deduction you deserve.
Payroll records deserve extra attention as well. New deductions for qualified tips and overtime require updated payroll tracking and adjustments to withholding procedures through Form W-4 guidance. Making sure those systems are in order can help keep year-end reporting accurate and make tax preparation smoother.
Additional 2026 Tax Changes to Keep in Mind
Business planning does not happen in isolation, and several individual tax changes may also affect your broader financial picture in 2026. Roth IRA income phase-out ranges increase to $153,000-$168,000 for single filers and heads of household and $242,000-$252,000 for married couples filing jointly, up from $150,000-$165,000 and $236,000-$246,000, respectively.
The standard deduction rises to $16,100 for single filers and married individuals filing separately, $32,200 for married couples filing jointly and surviving spouses, and $24,150 for heads of household. Under the OBBBA, these expanded standard deduction amounts are made permanent rather than allowing the previous cuts to expire.
Taxpayers age 65 and older may also claim a new additional deduction of $6,000 per qualified individual, or up to $12,000 on a joint return when both spouses qualify. The deduction begins to phase out when modified adjusted gross income exceeds $75,000 for single filers or $150,000 for joint filers.
The State and Local Tax (SALT) deduction cap increases to $40,400 for the 2026 tax year. The higher limit begins to phase out for individuals with modified adjusted gross income over $252,500, or $505,000 for joint returns.
A Local Perspective
Here in Haddon Heights, small businesses are the heartbeat of our community. Whether you’re serving customers their morning coffee, crafting custom landscaping designs, or helping neighbors find their dream home, your business contributes to the town’s unique character and economy. With thoughtful planning and professional guidance, you can make sure your hard work pays off—literally.
Now’s the perfect time to plan for tax season.
For personalized guidance and year-end tax strategies tailored to your business, contact me 856-854-2440 or freedomfinancial@comcast.net.
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