Preparing Your Business for 2027 Tax Changes
Article details provided by David Theiss, VP, Senior Wealth Management Advisor & Financial Planner
David Theiss, CPA, CFP®
VP, Senior Wealth Management Advisor & Financial Planner
What business owners should review before year-end.
The One Big Beautiful Bill made several tax provisions permanent for business owners, which gives more certainty for long-term planning. According to David Theiss, CPA, CFP®, VP and Senior Wealth Management Advisor at Croghan Colonial Bank, the third quarter is a good time to review three provisions in particular before filing for 2027.
The pass-through deduction is here to stay
Section 199A, the qualified business income deduction, is now permanent. Pass-through businesses such as sole proprietorships, partnerships, and S corporations can continue to deduct 20 percent of qualified business income. This provision was previously set to expire, so making it permanent gives owners more confidence when projecting future tax liability.
More room to expense equipment purchases
The Section 179 deduction, which allows businesses to expense qualifying equipment purchases immediately rather than depreciating them over time, has been expanded. The maximum deduction is now 2.5 million dollars.
“If a business is having a really good year, an extraordinary year, they can write off more, and they don’t have to depreciate it over time,” Theiss said. “That gives a business owner a lot of wiggle room.”
A bigger break for owners planning an exit
For owners of qualified small business stock, the capital gains exclusion under Section 1202 increased to 15 million dollars, up from 10 million. This is worth a conversation for anyone thinking about succession planning or an eventual sale, since it can meaningfully change the tax outcome for the original owner of a privately held company.
Theiss noted that an advisor’s role in succession planning is often to point owners in the right direction early, even though the technical work gets handed off from there. “We’ll spot opportunities for success in planning, but then we hand things off to draft the actual documents and memorialize it,” he said. “We know enough to point business owners in the right direction, especially when it comes to succession.”
Whether it’s these deductions or the bigger picture of what a business will look like after ownership changes hands, Q3 is a good time to start that conversation. Croghan’s wealth management and business banking teams are available to help you review these changes ahead of tax season. Contact us to schedule a conversation with your Croghan advisor.
FAQs
Is the 20% pass-through deduction permanent now?
Yes. Section 199A, the qualified business income deduction, no longer has an expiration date. Sole proprietorships, partnerships, and S corporations can continue to deduct up to 20 percent of qualified business income, which makes multi-year projections more reliable.
How much equipment can my business write off in one year?
The Section 179 deduction now allows up to 2.5 million dollars of qualifying equipment to be expensed in the year it is placed in service instead of depreciated over several years. The best timing depends on how strong your year is, so it is worth modeling before you buy.
What changed for owners planning to sell?
The capital gains exclusion on qualified small business stock under Section 1202 increased to 15 million dollars, up from 10 million. For anyone weighing a sale or a succession plan, that can meaningfully change the after-tax outcome, so eligibility is worth confirming early.
Which businesses see the biggest impact?
Pass-through entities, capital-intensive businesses that buy equipment regularly, and owners of privately held companies who expect to sell or transfer the business. If your company fits more than one of those descriptions, a Q3 review is time well spent.
What should I bring to a year-end tax planning conversation?
Your year-to-date financials, any planned equipment or property purchases, and a sense of your ownership timeline. That is usually enough for an advisor to flag which provisions apply to you and what to act on before filing.
These deductions matter, and so does the bigger picture of what a business will look like after ownership changes hands. Q3 is a good time to start that conversation.
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Important Legal Disclosures
*Investment products and services may lose value, are not a deposit, are not guaranteed by any financial institution, and are not FDIC insured or insured by any government agency.