A Mid-Year Tax Check-In Business Owners Shouldn't Skip

We're past the midpoint of the year, and if your last real conversation about taxes happened back in April, you're not alone. Most business owners we talk to are too deep in the day-to-day to think about strategy again until a CPA calls in November with questions that needed answers three months earlier.

That gap costs money. Several of the strongest tax moves available to business owners only work if there's enough of the year left to execute them properly, and by the time the holidays hit, most of that runway is gone.

Last year also changed some of the rules that apply here directly. The One Big Beautiful Bill Act made 100% bonus depreciation permanent for qualifying equipment placed in service after January 19, 2025, doubled the Section 179 expensing limit to $2.5 million, and locked in the 20% qualified business income deduction that was set to expire at the end of this year. If your last planning conversation predates that, some of what you're working from is already out of date.

Three specific moves we'd put in front of every business owner right now.

Income splitting between W-2 and K-1. If you pay yourself through both a salary and pass-through distributions, that mix has real consequences. Too much through K-1 and you can shrink the wage base that factors into your qualified business income (QBI) deduction. Too much through W-2 and you're paying payroll tax on dollars that didn't need to go through payroll at all. Adjusting that mix is a mid-year decision, not something to look back on in March.

Mega backdoor Roth contributions. For 2026, the total amount that can go into a 401(k) from all sources, your deferrals, any employer match, and after-tax contributions, tops out at $72,000, or $80,000 if you're 50 or older. Once you've maxed the standard $24,500 employee deferral, that leaves up to $47,500 in after-tax room that can be converted to Roth, assuming your plan supports it. That's meaningful money moving into tax-free growth, but only if there's time left to fund it and convert it cleanly.

HSA contributions. The 2026 limit is $4,400 for self-only coverage and $8,750 for family coverage, with an extra $1,000 if you're 55 or older. This one's easy to underfund without noticing, and every dollar in comes off your taxable income for the year.

You don't need to overhaul anything to make these work. You need someone honest about the calendar, and a decision to act in August instead of scrambling in December.

If you downloaded our tax strategies checklist earlier this year, pull it back out. If you haven't yet, grab it here. Either way, a conversation now beats a rushed one later.

---

This article is for informational purposes only and should not be construed as legal or tax advice. Please consult with qualified professionals regarding your specific situation.

Instrumental Wealth is an investment adviser in Tampa, Florida. Instrumental Wealth is registered with the Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. A copy of Instrumental Wealth's current written disclosure brochure is available through the SEC's website.

Not an offer: This document does not constitute advice or a recommendation or offer to sell or a solicitation to deal in any security or financial product. It is provided for information purposes only and on the understanding that the recipient has knowledge and experience to understand and make an evaluation of the information, the risks associated therewith, and any related legal, tax, or other material considerations. To the extent that the reader has any questions regarding the applicability of this information to their specific situation, they are encouraged to contact David Silver or consult with the professional advisor of their choosing.