It’s October. Your business has had a good year. Revenue is growing, customers are coming in, and you’re starting to think about how much you’ll owe in taxes.
You reach out to your accountant in December, hoping there are still ways to lower the bill.
Some options may still be available. Others required decisions months earlier.
That’s the problem with treating tax planning as something you do at year-end. By the time you know what you owe, you may have fewer opportunities to change the outcome.
For Seattle small business owners, 2026 brings important federal tax changes that make proactive planning worth a closer look. From expanded depreciation deductions to new business tax incentives, understanding what’s available before December can make a difference.
At Count On That®, tax planning is part of the Count on Growth stage of our DreamWalk® framework, where financial clarity and forward-looking decisions help business owners plan for what’s next.
Why Timing Matters in Tax Planning
Good tax planning starts with understanding your financial position while there’s still time to make decisions.
Waiting until December can limit your options, especially when those decisions involve business structure, retirement contributions, employee benefits, or major purchases.
Consider an S Corporation election.
For an existing calendar-year business seeking S Corporation status starting January 1, the standard filing deadline is generally March 15 of that year. In 2026, that deadline was March 16 because March 15 fell on a Sunday.
Certain eligible businesses may qualify for late-election relief, but that should not replace planning ahead.
Before making an election, business owners should also evaluate eligibility requirements, potential tax benefits, payroll obligations, and reasonable compensation for shareholder-employees.
The same principle applies to other financial decisions. Some require action before year-end, while others have deadlines extending into the following tax year.
The earlier you understand your options, the more flexibility you have to make decisions that support your business.
Source: IRS, Instructions for Form 2553
The 2026 Estimated Tax Deadlines Small Business Owners Should Know
For many small business owners, federal estimated income tax payments are an important part of annual tax planning.
These payments generally apply to individuals who receive income without sufficient tax withholding, including sole proprietors, partners, and S Corporation shareholders.
The following are the federal individual estimated income tax deadlines for the 2026 tax year:
| Payment Period | Due Date |
| First payment | April 15, 2026 |
| Second payment | June 15, 2026 |
| Third payment | September 15, 2026 |
| Fourth payment | January 15, 2027 |
These dates do not necessarily apply to corporate income taxes, Washington state excise taxes, or local business tax filings, which can have different reporting requirements and deadlines.
As of October 2026, the first three federal individual estimated payment deadlines have passed.
For most calendar-year individual taxpayers, the remaining payment is due January 15, 2027. Taxpayers who file their 2026 federal income tax return and pay the full balance due by February 1, 2027, may qualify for an exception to making the fourth estimated payment.
Understanding the IRS Safe Harbor Rules
The IRS generally allows individual taxpayers to avoid estimated tax underpayment penalties when they meet certain payment requirements.
In many cases, taxpayers must pay at least the smaller of:
- 90% of their current-year tax liability.
- 100% of their prior-year tax liability.
For taxpayers whose prior-year adjusted gross income exceeded $150,000, or $75,000 for married taxpayers filing separately, the prior-year percentage generally increases to 110%.
The prior-year safe harbor generally requires a prior-year federal income tax return covering a full 12-month tax year and showing a tax liability.
There is another important detail: estimated tax penalties are generally evaluated by payment period, not simply by the total amount paid during the year.
This means paying the correct annual amount in January may not eliminate a penalty for an earlier missed or insufficient installment.
Taxpayers with uneven income may qualify to calculate required payments using the annualized income installment method. Other exceptions may also apply.
For business owners, the goal is to review estimated payments against actual income and determine whether adjustments are necessary before the next deadline.
Source: IRS Publication 505, Tax Withholding and Estimated Tax
What Year-Round Tax Planning Actually Looks Like
Tax planning works best when it’s connected to your regular business decisions.
Instead of waiting for year-end, business owners can use the calendar as a guide for reviewing their financial position and preparing for upcoming obligations.
Q1: Establish Your Tax Strategy
The first quarter is an opportunity to review the previous year’s financial results and establish expectations for the new year.
This may include reviewing business structure, projecting taxable income, calculating estimated payments, and evaluating potential retirement contributions or equipment investments.
For businesses considering S Corporation status, early planning also allows time to evaluate election requirements and reasonable compensation.
Q2 and Q3: Adjust as Your Business Changes
Business rarely follows the exact plan you made in January.
Revenue may increase faster than expected. A major customer could leave. You might hire additional employees or expand your operations.
Each of these changes can affect your cash flow and projected tax liability.
Reviewing financial reports throughout the year can help you identify changes early and determine whether your tax strategy still makes sense.
This is also where accurate bookkeeping becomes valuable. Reliable records make it easier to understand what your business has earned, what it has spent, and what financial decisions may be coming.
Q4: Make Informed Year-End Decisions
By October, some tax planning opportunities have passed, but others remain.
Depending on your circumstances, you may still be able to evaluate qualifying equipment purchases, retirement contributions, deductible expenses, and other year-end decisions.
Consider a business owner planning to purchase $20,000 in equipment.
If the equipment qualifies for accelerated depreciation and is placed in service within the required period, the purchase could generate a federal tax deduction.
But that doesn’t automatically mean buying it before December 31 is the best decision.
The owner should also consider whether the equipment is needed, how much cash is available, whether financing makes sense, and how the deduction would affect their overall tax position.
Spending $20,000 solely to create a deduction is not the same as saving $20,000 in taxes.
Good tax planning helps business owners understand the financial impact before committing to a decision.
What’s Changed for Small Business Tax Planning in 2026?
Federal tax legislation enacted in 2025 introduced changes that businesses should consider when planning for the 2026 tax year.
Three developments are particularly relevant to business investment, pass-through taxation, and employee benefits.
100% Bonus Depreciation Is Back
Under federal legislation enacted in 2025, permanent 100% bonus depreciation was restored for certain qualifying property acquired and placed in service starting January 20, 2025.
This can allow eligible businesses to deduct the full qualifying cost of certain assets in the year they are placed in service, rather than recovering the cost over multiple years.
For business owners considering investments in machinery, equipment, or qualifying technology, this is an opportunity worth evaluating.
However, eligibility depends on the type of property, acquisition date, business use, and when the asset is placed in service.
Federal depreciation treatment can also differ from state tax treatment.
For Washington businesses, taking a federal depreciation deduction does not automatically reduce Washington Business & Occupation tax liability, because B&O tax is generally based on gross receipts rather than net profit.
Before making a major purchase, consider both its operational value and its tax consequences.
Sources: IRS Publication 946, How to Depreciate Property and Washington Department of Revenue, B&O Tax
The Qualified Business Income Deduction Is Permanent
The Qualified Business Income deduction, also known as the QBI deduction or Section 199A deduction, was made permanent under the 2025 federal tax legislation.
Eligible business owners may deduct up to 20% of qualified business income, subject to applicable limitations.
The deduction generally applies to qualifying income from sole proprietorships, partnerships, and S Corporations. It does not apply to income earned by C Corporations.
Eligibility and the amount deductible can depend on several factors, including:
- The owner’s taxable income.
- The nature of the business.
- W-2 wages paid by the business.
- The unadjusted basis of certain qualified business property.
- Applicable income thresholds and deduction limitations.
For specified service trades or businesses, additional restrictions may apply as taxable income increases.
A profitable business does not automatically qualify for the full deduction.
This is another reason to review taxable income projections and business structure before the year closes.
Source: IRS, Qualified Business Income Deduction
Employer-Provided Childcare Tax Credits Expanded in 2026
For employers considering ways to support employees with childcare needs, an expanded federal tax credit may be worth reviewing.
Starting January 1, 2026, the enhanced employer-provided childcare credit applies to qualifying expenditures paid or incurred on or after that date.
Under Section 45F, the credit includes:
- 40% of qualified childcare expenditures, increasing to 50% for eligible small businesses.
- 10% of qualified childcare resource and referral expenditures.
- A maximum annual credit of $500,000, increasing to $600,000 for eligible small businesses, with inflation adjustments beginning in 2027.
Qualified childcare expenditures may include eligible costs associated with operating a qualifying childcare facility or contracting with a qualifying facility to provide childcare services to employees.
Certain arrangements involving intermediary organizations may also qualify.
Childcare resource and referral expenditures are subject to separate qualifying rules.
Not every childcare benefit automatically qualifies. Businesses must meet the applicable requirements for eligible facilities, expenditures, and employee benefits.
The IRS also provides rules concerning the treatment of expenses used to claim the credit, including restrictions intended to prevent receiving duplicate tax benefits.
For employers evaluating childcare support as part of their employee benefits strategy, these changes create another opportunity to assess both the financial cost and potential tax benefit.
Source: IRS, Employer-Provided Child Care Credit: Tax Year 2026 and Later
Washington Business Owners Have Additional Tax Planning Considerations
Federal income taxes are only part of the picture for businesses operating in Seattle and throughout Washington.
Washington’s Business & Occupation (B&O) tax is generally based on gross receipts rather than net income.
That means ordinary business expenses that may reduce federal taxable income do not necessarily reduce B&O tax liability. Specific Washington exemptions, deductions, and credits may still apply.
Business owners should also review applicable sales tax obligations, local B&O taxes, and filing requirements based on their business activities and reporting frequency.
This distinction matters because a business may reduce its federal taxable income while still having state or local tax obligations based on revenue.
Understanding both sides helps business owners develop a more complete tax strategy.
Source: Washington Department of Revenue, Business & Occupation Tax
How Count On That® Connects Tax Planning With Business Growth
Tax planning becomes more useful when it’s supported by reliable financial information.
If your bookkeeping is several months behind, your income projections are incomplete, or you don’t have a clear picture of cash flow, it becomes harder to make informed tax decisions.
At Count On That®, our accounting, bookkeeping, financial reporting, tax planning, and business consulting services help business owners gain clarity and make better decisions.
Through our DreamWalk® framework, those services connect to a broader goal.
Count on Foundation focuses on organized finances, compliance, and financial clarity.
Count on Growth builds on that foundation through tax planning, financial insights, and forward-looking decisions.
Count on Freedom connects financial strategy with the owner’s longer-term goals.
For a business owner, that means looking beyond the immediate tax bill.
Should you invest in equipment now or preserve cash?
Are your financial records giving you enough information to plan?
Would a different business structure better support your goals?
And are the decisions you’re making today helping you build the business you want in the future?
These are the questions that make proactive accounting and tax planning valuable.
The goal isn’t simply to find deductions. It’s to understand your numbers, consider your options, and make decisions with greater confidence.
Learn more about Count On That’s DreamWalk® framework.
Don’t Wait Until Tax Season to Find Out What Your Business Owes
There’s still time to review your financial position before 2026 comes to a close.
Whether you’re evaluating estimated tax payments, considering an equipment purchase, reviewing retirement contributions, or planning for 2027, understanding your options now can help you prepare.
At Count On That®, we help business owners connect accurate financial information with proactive tax planning and long-term business goals.
Connect with Count On That® to discuss your financial position, explore potential tax planning opportunities, and prepare for the year ahead.
Schedule a Free Discovery Call
Frequently Asked Questions
Is October too late to start tax planning for 2026?
No. Although some deadlines have passed, certain planning opportunities may still be available.
Business owners can review their projected tax liability, evaluate qualifying equipment purchases, consider retirement contributions, and plan for upcoming payments.
The appropriate options depend on your business structure, income, and circumstances.
What happens if I missed an estimated tax payment deadline?
Missing a required federal individual estimated tax payment can result in an underpayment penalty.
These penalties are generally evaluated for each payment period, so paying the remaining annual amount later does not automatically eliminate an earlier penalty.
You should review the amount due, make any appropriate payment, and determine whether an exception or alternative calculation applies.
Taxpayers with uneven income may benefit from reviewing the annualized income installment method.
Source: IRS, Underpayment of Estimated Tax by Individuals
Can I still elect S Corporation status for 2026?
The standard deadline for an existing calendar-year business seeking S Corporation status starting January 1, 2026, was March 16, 2026.
However, certain businesses may qualify for late-election relief under IRS rules.
Eligibility, shareholder requirements, and reasonable compensation obligations should be evaluated before making an election.
If relief is unavailable or inappropriate, planning for a future effective date may be an option.
Source: IRS, Late Election Relief
Can I still make retirement contributions for the 2026 tax year?
Possibly. The answer depends on the type of retirement plan.
For example, a SEP may generally be established and funded by the business’s tax return filing deadline, including valid extensions.
For a 401(k), plan establishment requirements, employee deferral elections, and deposit deadlines are separate considerations. Different rules can apply to employees and qualifying self-employed business owners.
Review the requirements for your specific plan before assuming a December 31 deadline applies to every contribution.
Source: IRS Publication 560, Retirement Plans for Small Business
Does buying equipment before December 31 automatically reduce my taxes?
Not necessarily.
The equipment must meet applicable requirements, including rules concerning qualifying property, business use, acquisition timing, and when it is placed in service.
Even when a deduction is available, its value depends on your overall tax situation.
Before purchasing equipment, consider whether the investment is necessary and how it will affect your cash flow.
Does reducing federal taxable income also reduce Washington B&O tax?
Generally, no.
Washington B&O tax is based on gross receipts, not net business income.
A deduction that reduces federal income tax liability does not automatically reduce the amount subject to Washington B&O tax.
Specific state deductions, exemptions, and credits may apply depending on the business and its activities.
Source: Washington Department of Revenue, B&O Tax
How does DreamWalk® help with year-round tax planning?
DreamWalk® connects reliable accounting, tax planning, financial insights, and business strategy.
In the Count on Growth stage, the focus is on using financial information to evaluate opportunities and make informed business decisions.
The approach helps business owners think about tax planning as part of their broader financial goals, rather than something to address only when filing their returns.
Your Next Step Starts Here
Your business deserves more than a last-minute review of its tax bill.
With clearer financial information and the right planning conversations, you can make decisions that support both your business today and the future you’re building.
Let’s build your DreamWalk®.
Schedule a Free Discovery Call
Disclaimer: This article is intended for general informational purposes and should not be considered individualized tax advice. Tax rules, deadlines, and eligibility requirements vary based on each business’s circumstances. Consult a qualified tax professional before implementing any tax planning strategy.
