Cash Flow Planning for 2026: What Business Owners Should Be Doing Now

The tax changes introduced by the Reconciliation Bill, which was enacted in 2025, have led to a series of significant reforms across the landscape of business taxation and deductions. As a result, companies are now able to access enhanced deductions and tax credits, which in turn contribute to a notable increase in after-tax cash flow. This shift in policy is expected to create a more favorable financial environment for businesses, enabling them to reinvest more of their earnings into growth initiatives, expanding operations, and improving overall financial stability.

Due to the tax law changes, there have been multiple updates to tax provisions that benefit business owners in reducing taxable income, including:

• 100% Bonus Depreciation – businesses can now immediately deduct the full cost of qualifying assets in the year that they are placed into service, accelerating deductions and lowing taxable income.
• Increased SALT Cap – the SALT cap has been increased to $40,000 for 2025-2029. This increases itemized deductions for business owners.
• Immediate R&E Expensing – With this act, businesses can once again deduct 100% of domestic research and experimental expenditures, so they would no longer have to be amortized over five years, providing immediate deduction.
• Qualified Business Income (QBI) Deduction – The 20% deduction was made permanent, which provides long-term certainty of continued tax savings.

To get a clear picture of your cash flow and planning, start by reviewing last year's revenue, expenses, and cash flow trends. Look for any patterns, potential trouble spots, or areas that might need attention. This will serve as the foundation for your cash flow planning. From there, you can forecast your future cash inflows and outflows based on factors like past sales, seasonal trends, and your current sales pipeline.

Key Steps for Cash Flow Planning

• Maximizing the amount of deduction that can be taken in ways such as placing assets into service after January 19th, 2025, to receive the full benefit of 100% bonus depreciation, identifying potential tax-deductible expenses to lower taxable income, and exploring tax credits like the renewable energy investment credit and the home office credit.
• Strategically time income and expenses – if a business is anticipating a high profitable year, then accelerate deductions by paying upcoming expenses before December 31^st to deduct them in current year. If cash flow allows delay invoicing or receiving payment until the start of the next year to defer the income into the next tax period, potentially lowering your current tax bracket.
• Contribute the maximum allowable amounts to retirement plans like a SEP IRA, SIMPLE IRA, or 401(k). These contributions are often tax-deductible for the business and reduce personal taxable income.
• If you are self-employed or a pass-through entity, make timely estimated tax payments. As business and income grow, it is important to manage quarterly payments to reduce the burden at the end of the taxable year.

With careful attention to these tax planning strategies, business owners can strengthen their financial foundation, reinvest in growth, and ensure long-term stability as they navigate the evolving tax landscape.

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