Key Takeaways

• Q3 is an ideal time to revisit tax planning because you have actual financial results and still have time to make meaningful adjustments before year-end.
• Changes in income, hiring, compensation, investments, major purchases, debt, or personal circumstances can make the assumptions behind your original tax plan outdated.
• Retirement contributions, capital purchases, charitable giving, and other strategies often require advance planning and shouldn’t be left until the final weeks of the year.
• Scenario planning can help you understand the tax and financial impact of decisions before you make them rather than simply looking for deductions after the fact.
• Effective tax planning considers cash flow, business and personal goals, and timing—not just how to minimize this year’s tax bill.

At the beginning of the year, you probably had some idea of what 2026 would look like. You had a budget, revenue expectations, hiring plans, planned purchases, and perhaps an estimate of what you would earn and owe in taxes.

Now it’s September. How much of that is still true?

Revenue may be higher or lower than expected. You may have hired employees, bought equipment, taken on debt, changed your compensation, sold an investment, or made a major personal purchase. Congress has also changed the tax law, and some provisions that affect 2026 weren’t necessarily part of the assumptions you were making a year ago.

That’s why Q3 is such an important tax-planning checkpoint. There is enough of the year behind us to make better projections, and still enough ahead to do something with what we learn.

Start With the Assumptions You Made in Q1

Good tax planning doesn’t necessarily begin with a list of deductions. It begins by asking what has changed?

Pull out your budget or think back to what you expected in January. Then ask:

• Is business revenue and profitability tracking where we expected?
• Has my compensation changed?
• Did we hire, lose, or significantly increase compensation for employees?
• Have we purchased, or are we planning to purchase, equipment, vehicles, technology, or real estate?
• Have we taken on or paid down significant debt?
• Did we start, buy, sell, or invest in another business?
• Have there been significant changes in investment income or capital gains?
• Have there been major personal changes such as marriage, divorce, retirement, inheritance, or a child starting college?
• Are retirement contributions on track?
• Are estimated tax payments and withholding still appropriate based on what we now expect to earn?

None of these automatically means you need to make a tax move. But they can change the assumptions behind the plan you started the year with.

Some Decisions Need More Runway Than Others

Q3 also gives us time to consider decisions that shouldn’t be made during the final week of December.

Retirement planning is a good example. Depending on the plan and circumstances, there may be opportunities to adjust contributions or consider whether the current retirement plan still makes sense for the business and its employees. Those decisions can involve plan administrators, payroll providers, investment advisors, and other parties, so earlier conversations are generally more useful than last-minute ones.

Capital purchases deserve advance thought, too. Federal law now provides permanent 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025, and the Section 179 expensing limit was significantly increased. That can create valuable planning opportunities for businesses considering equipment and other qualifying investments. But the tax deduction should follow the business decision, not drive it. If you need a $100,000 piece of equipment, understanding when and how the purchase could affect your taxes is useful. Spending $100,000 solely to generate a deduction is something else entirely.

Charitable giving is another area where timing and method can matter. Beginning in 2026, new rules affect charitable deductions, including a new deduction for certain cash contributions by taxpayers who don’t itemize and changes affecting deductions for those who do. If charitable giving is already part of your financial plan, discussing it before December can give you time to consider the tax implications along with your philanthropic goals.

What Does the Rest of 2026 Look Like?

Looking backward is only half of the Q3 conversation. We also want to know what’s likely to happen between now and December 31.

Are you expecting a particularly strong fourth quarter? Planning a large purchase? Paying bonuses? Hiring someone? Selling an asset? Making a large charitable contribution? Taking a distribution? Increasing retirement savings? Buying a vehicle? Closing on real estate?

This is also the time to revisit cash flow. A higher-than-expected profit may mean a higher tax liability. If estimated payments haven’t kept pace, finding that out in September gives you time to prepare rather than being surprised later. Conversely, if the year hasn’t gone as planned, continuing to make payments based on old assumptions may not make sense.

Ask “What If?” Before You Ask “How Much Can I Deduct?”

One of the most useful things we can do during tax planning is run scenarios.

• What if you make the equipment purchase this year instead of next year?
• What if Q4 revenue comes in 20% higher than projected?
• What if you increase retirement contributions?
• What if you sell an appreciated investment?
• What if you pay a bonus in December versus January?
• What if you make the investment you’re considering in the business?

The answer isn’t always to choose whichever scenario creates the smallest tax bill. Taxes are one factor in a larger financial decision. Sometimes preserving cash is more important. Sometimes accelerating income makes sense. Sometimes paying tax today puts you in a better position tomorrow. And sometimes the smartest tax strategy is to do nothing differently.

Q3 Gives You Something December Doesn’t: Options

By December, we will know considerably more about how 2026 turned out. But knowing more isn’t necessarily helpful if there is no longer time to act on it.

Q3 gives us a useful combination: actual financial results, a clearer view of the rest of the year, current tax law, and time to consider alternatives.

In the coming weeks, Edwards & Associates will begin reaching out to clients about year-end tax planning and strategies that may be worth considering before December 31. Before that happens, take a few minutes to think about what has changed since January and what you expect during the remainder of the year.

You don’t need to figure out which tax strategies apply to you. But the more we know about what has changed, what’s coming, and what you’re trying to accomplish, the better we can help you evaluate your options.

That is what tax planning is really about, not scrambling to find deductions at year-end, but making informed decisions while you still have choices.