For business owners, the final weeks of the year are about more than closing the books; they’re a chance to make smart decisions that can meaningfully shape next year’s financial results. With the passage of the One Big Beautiful Bill Act (OBBB), understanding how the new provisions impact your business before December 31 is critical. From timing income and deductions to determining whether to accelerate investments, proactive planning can help you maximize tax efficiency and strengthen your financial position heading into 2026.
At Opsahl Dawson, we encourage clients to approach year-end with clarity and intention. We’ve summarized the OBBB’s most relevant business provisions and planning opportunities for you to consider.
Key OBBB Provisions That Impact Year-End Planning
Several OBBB updates directly influence the decisions you make before year-end. Reviewing these provisions now—and taking action in the coming weeks—helps ensure you’re structuring transactions and investments to your advantage.
- 100% Bonus Depreciation Restored: The OBBB restores full expensing for qualified property placed in service beginning January 19, 2025. If your business is considering equipment, machinery, software, or technology upgrades, placing those assets in service before year-end can significantly reduce taxable income and strengthen your 2026 cash position.
- R&D Expensing and Incentives: Domestic research and development (R&D) costs are fully deductible again. This affects how you time project completion, payroll allocations, and software development. Businesses with substantial R&D activity may also benefit from amending prior returns.
- Permanent Qualified Business Income (QBI) Deduction: The 20% deduction for eligible pass-through entities is now permanent. Understanding your income and expense mix before year-end allows you to maximize this deduction, particularly if you are near phase-out thresholds.
- Pass-Through Entity (PTE) SALT Workaround: The OBBB maintains the ability for pass-throughs to deduct state income tax at the entity level. For 2025, the individual SALT deduction cap temporarily increases to $40,000 before phasing back to $10,000 based on MAGI. Determine now whether a PTE election is appropriate for your business.
- Excess Business Loss Limitations: With permanent thresholds in place, the timing of recognizing losses matters. A year-end analysis can clarify whether accelerating expenses or deferring income results in a more favorable limit, or whether some losses will carry forward.
- Qualified Opportunity Zone (QOZ) Timing: Investing deferred capital gains into QOZs before year-end can defer recognition until 2026, while also providing potential step-ups in basis after five or ten years. Planning now ensures investments meet the required deadlines.
- Updated Interest Deduction Rules: Revisions to §163(j) exclude depreciation, amortization, and depletion from the interest limitation calculation, allowing many businesses to deduct more interest expense. A year-end review of financing and debt structures can optimize deductibility under these rules.
How the OBBB Changes Classic Year-End Decisions
With new rules in place, many traditional year-end strategies deserve a second look:
- Accelerating or deferring income: Stable tax rates make it worthwhile to evaluate whether shifting income or bonus payouts between 2025 and 2026 improves your QBI deduction or cash flow.
- Timing deductions: Moving forward large deductions, such as R&D costs, depreciation-eligible purchases, or other expenses, can reduce 2025 taxable income.
- Capital investments: The return of 100% bonus depreciation makes year-end equipment or technology upgrades far more attractive.
- Compensation planning: Aligning wage, bonus, or retirement plan contributions with QBI and excess business loss rules can maximize deductions.
- Estimated tax payments: Reviewing year-to-date liability helps prevent penalties and improve year-end liquidity.
Here’s an example of how this plays out in practice: A professional services firm projected high Q4 revenue. By accelerating planned R&D expenditures and making a bonus depreciation-eligible equipment purchase before December 31, the firm reduced taxable income by $250,000 while securing deductions that also positioned them for a strong 2026 start.
Washington-Specific Considerations
Integrating WA-specific considerations alongside federal changes creates a complete and accurate end-of-year strategy. If your business operates in Washington State, factor in these local updates:
Tiered B&O tax for services: Review revenue and pricing to understand your tax exposure under the new tiered structure effective October 2025.
Sales tax expansion: Confirm your compliance systems are up to date. Services like IT consulting, staffing, advertising, and software development are now taxable.
Capital gains tax: Consider year-end timing for any transactions subject to WA capital gains tax.
Future B&O increases: Forecast your 2026 exposure to avoid unexpected cash-flow impact.
A Five-Step Compliance Checklist Before Year-End
Strategy only works if the compliance pieces are in place. Following these steps can help you take full advantage of deductions and avoid unnecessary complexity during filing season. Before December 31:
- Document R&D expenses, payroll allocations, and software development costs
- File any necessary PTE elections
- Confirm depreciation methods and capitalization policies
- Review entity-level decisions such as S-Corp elections or partnership allocations
- Validate your final estimated tax payments
The OBBB has reshaped the year-end planning landscape, and thoughtful preparation can have a meaningful impact on your tax position. Our trusted advisors can help you make sense of the new rules and develop a customized year-end plan.
Schedule a consultation today to ensure your strategy is complete, compliant, and aligned with your business goals.
