Business Owners: The One Tax Move Financial Advisors Say You Can’t Skip Before Year-End

On the Retire SMART Podcast episode “Year-Round Tax Planning,” the guest drew a line most business owners never think about: “owning your own home is not necessarily a tax strategy. A tax strategy is using some of those incentives to be proactive in the timing of your income.”

That distinction is the difference between filing a return and running your business like a tax operator. Claiming a mortgage interest deduction is taking what the code hands you. Choosing whether $80,000 of revenue lands in 2026 or 2027 is a strategy. With the calendar at mid-year, the window to actually do something about your 2026 return is closing.

The verdict: the advice is right, and most owners ignore it

Of the more than 1,700 provisions in the tax code, roughly 10% are worth focusing on, and most of those favor entrepreneurs. The “S” in the SMART model stands for shifting income, deliberately moving the year in which revenue or deductions hit the books. Business owners who skip this exercise leave money on the table every December.

Here is the mechanic in plain numbers. For 2026, a married couple filing jointly faces a cliff where the rate jumps from 24% to 32% at a specific bracket threshold 22% on income over $100,800, 24% over $211,400, 32% over $403,550, and 35% over $512,450. If household taxable income is on track to exceed that threshold this year but you expect it to fall back into the 24% band next year, every dollar above $403,550 is taxed eight points higher than the same dollar pulled into 2027.

Concrete scenario: a consultant invoices $60,000 of work completed in late November. Billing in December puts it in 2026 at the 32% federal rate; billing on January 2 puts the same revenue in the 24% bracket in 2027. The work, the client, and the cash look identical. The timing decision keeps thousands of dollars in the owner’s pocket rather than the Treasury’s.

The principle runs both directions. Roth conversions are the cleanest example: you deliberately accept more income now to save taxes later when required minimum distributions kick in. If you expect to land in a higher bracket later because of RMDs, a business sale, or repealed brackets, accelerating income into a lighter year is the same trade in reverse.

The single variable: this year’s bracket versus next year’s

Income shifting only works when current and future brackets diverge. If you sit in the 24% bracket in both 2026 and 2027, deferring revenue accomplishes nothing. If brackets diverge by even a few points, the math gets serious quickly.

Two scenarios make this clear. Owner A had a blowout 2026 and expects revenue to drop in 2027. Deferring $100,000 of December invoices into January can save eight percentage points on that slice of income, potentially $8,000 in federal tax. Owner B is building toward a 2027 business sale that will spike income. Pulling deductions forward into 2027 and accelerating income into 2026 is the right move, because the higher bracket is coming whether they like it or not.

The macro backdrop sharpens the choice. Real GDP growth slowed to 1.6% in early 2026, down from 4.4% in mid-2025. The personal savings rate has fallen from 6.2% in early 2024 to 3.7%. Slower top-line growth means more business owners will face uneven income years, which is precisely when shifting pays off.

The One Big Beautiful Bill Act added new levers: fixed asset investment, hiring incentives, and expanded expense write-offs. The 2026 standard deduction for joint filers rose to $32,200. The employer-provided childcare credit jumped from $150,000 to $500,000, or $600,000 for eligible small businesses. Each is an incentive. Whether it becomes a strategy depends on whether you plan around it or stumble into it in April.

What to do before December

1. Run a mid-year P&L projection. Estimate revenue and net income through December. Without those numbers, every downstream decision is a guess.
2. Map projected taxable income against the 2026 brackets. Identify whether you are near a boundary at $105,700, $211,400, or $403,550 for joint filers. The closer you are, the bigger the payoff from shifting.
3. Build a realistic 2027 forecast. The shifting decision lives in the gap between this year’s marginal rate and next year’s. No gap, no strategy.
4. List the OBBB levers you qualify for. Fixed-asset purchases, new hires, and equipment expensing all have timing components. Pulling a planned January equipment buy into December changes your 2026 deduction picture.
5. Size Roth conversions while months remain. A conversion executed in late December gets one shot at the math. One started in July can be calibrated against actual income as the year develops.

The tax code rewards entrepreneurs who plan. The penalty for waiting until April is the cost of every decision you did not make in time.