Preparing Your Business for 2027 Tax Changes

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.